A 4 Acre Mineral Owner Holding up Hilcorp--This is why forced pooling was invented
How would you like to own the lions share of minerals in this unit and have a 4 acre owner stop its' development. Welcome to Pennsylvania.
Jay
NEW BEDFORD, Pa. (AP) — An energy company is dusting off an old, unused state law that can force property owners to accept oil and gas drilling under their land, pitting neighbor against neighbor in a Pennsylvania community and raising the possibility that lawmakers will have to take sides.
Houston-based Hilcorp seeks to use a 1961 Pennsylvania law to drill under the property of four holdout landowners in New Bedford, near the Ohio border an hour north of Pittsburgh. The concept, known as “forced pooling,” means that people who don’t sign leases get bundled in with those who do, to make drilling more efficient and compensate all the landowners.
The stakes are high. Property owners can reap royalties totaling hundreds of thousands or even millions of dollars from drilling in the Utica Shale formation, which lies below the better-known Marcellus Shale.
Suzanne Matteo, one of the four who has refused to sign a lease, said she is furious that the company may be able to drill under her property without her permission.
“It’s un-American,” she said.
On the other side are many neighbors who have signed leases, such as Bruce Clingan, who owns the roughly 200-acre Tanglewood Golf Course with his wife, Jody. They signed a lease with Hilcorp a few years ago and received a signing bonus of more than $500,000, plus 18 percent royalties on future production.
“I don’t understand how people that own 4 acres of ground can hold up such a big thing. I don’t agree with that,” Clingan said.
Hilcorp said that 99 percent of the property owners in the 3,267-acre tract have signed leases, and that drilling would occur a mile or more under the surface of the holdout’s property. Invoking the old law, the company said, would ensure that “all participants, leased or unleased, are compensated for the minerals they own.”
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Replies to This Discussion
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Permalink Reply by Two Dogs, Pirate on
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I think it was a good while before they found the mistake. Probably when an abstract was done. She may have flew the coop.
I had one like it in another parish where the family was trying to get an interdict out of the chain of title. The family asked someone in the assessors office how to do it and they told them to let the property go through a tax sale so the family member stopped paying the taxes and his brother bought it in the tax sale. I told them that made it a redemption because the brother owned part of the estate. They hired a real estate attorney that said that she could fix the problem. I called the attorney and inquired as to how she was going to fix the problem and she questioned me as to me being an attorney and I told her I was a landman. She told me that she had been practicing real estate law for 15 years and she had never heard of such a thing although I had given her all the title documents. She asked me to cite case law and I did and she wouldn't answer my calls for about 3 months after that.
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Permalink Reply by John Parker on -
Two Dogs:
Sounds like another case of suit, tie and fancy degree don't always mean "all that" as a good friend and mentor whom I have a tremendous amount of respect for quite often says.
Good for you, that you knew your business much better than her. An experienced fair and honest landman is an invaluable tool to mineral owners, Operators and their attorneys similar to a paralegal at a law firm. Many times a lawyer is made or falls flat on their face because of the quality and thoroughness of work performed by those really in the trenches.
~ ~ John
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Permalink Reply by Two Dogs, Pirate on
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Part of my college degree and lifetime degree is in dealing with crazy people.
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Permalink Reply by John Parker on
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I suspect you have mastered the art Two Dogs.
One thing I have observed about life is that most everyone is crazy, it is just how much. LOL
Some are just too far out there.
~ ~ John
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Permalink Reply by 1kw6x71km1v37 on
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<There is no wide spread conspiracy to cut out small mineral interests in order to steal their share of production>>>
Perhaps not. But the technique seems to be well known by many operating in Louisiana. I won't go into detail here, but I've had this B.S. scam worked on me four times by three different operators. I can take you down the road and show you over thirty landowners who are being played on a well that is over ten years in production. None of them ever got a nickle out of the deal to my knowledge. This is not coincidence. There is obvious intent to defraud.
However, the next move is the burden on the landowner, and unless he places the operator in default under LRS 30:10, nothing further can proceed. Without a claim, the operator simply keeps the landowners share of production revenue. End of story.
The danger to the public interest here is that there is nothing but economics to keep operators from drilling once they have a permit, regardless of how many acres of unleased property are in a unit. That victimizes the small landowner who does not know what to do, and who typically has a claim too small to be of interest to an attorney.
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Permalink Reply by Skip Peel - Mineral Consultant on
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The danger to the public however real is exceedingly slight. That "many" operators may know of the particular nefarious behavior, that you elude to but do not describe in sufficient detail to refute or explain, does not mean they practice it.
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