Forced Pooling
Does anyone know for sure what happens if we do not sign a lease? I'm told we would get placed into forced pooling (consent or non-consent). Some say forced pooling could equal 100% royalties? Some say they can give you as little as 3/16 royalty? I've heard you can wait forever to receive your royalty money and there are costs and legal issues you could be liable for? What's the real deal with forced pooling?
Views: 314
Replies to This Discussion
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Permalink Reply by Skidmark on
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Les B - Ditto. Speaking for myself, I'm engaging in educated guesswork, hypotheticals, and speculation. I'd welcome any debunking.
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Permalink Reply by Johnson on
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The more we know the better. I'd rather not feel like I have to agree to a sub par lease just because I have no other option.
From what I've heard so far from Les and others, I'd say partnering in with O&G would be something I would consider if I didn't get the lease I wanted.
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Permalink Reply by J Stewart on
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Is there any use in forming a "Super Group” of "Haynesville Hold Outs" that could negotiate the best possible deal at the eleventh hour (when we get the notice of force pooling)? I realize this will not be contiguous land but nevertheless it could be a sizeable amount that could be very enticing to the gas companies. What have the keynote speakers of this forum (who I respect immensely) done with their land? Any suggestions to maximize the royalty portion of this equation?
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The Super Group is a good idea.....but it seems to me that each section would get notice of forced pooling at a different time.
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Permalink Reply by Bobi Carr ("parker") on -
Nothing says that you cannot negotiate a lease after drilling has occurred.
I HAVE SEEN A LEASE SIGNED AFTER THE WELL WAS DRILLED.
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Permalink Reply by Kassi on
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Typically units are formed as 640 acre blocks based on section lines. Land owners must be notified and a hearing is held in Baton Rouge. Force pooling is a means by which a company may be declared the primary drilling company in the unit. this in effect places other drilling companies with leases in the section in the role of being working interest partners.
Force pooling does not mean the land owner "misses out" if he has not signed a lease. If a section is force pooled and the land owner is not leased he becomes an unsigned lease holder. The land owner is then entitled to his share of profits after the well pays for itself from production. Costs are taken out of production. The land owner must be diligent in keeping up with what is going on with wells in the section and must communicate with the drilling companies in order to ensure payment. The land owner is NOT penalized or left out for not signing a lease (see LA Revised Statute 30, Sec 10). Most drilling companies prefer to have land owners sign a lease rather than remain unsigned lease holders.
For example:
If you have 3.5 acres in a 640 acre unit (pool) then your share of the unit is figured by: 3.5/640 = 0.0054 (0.54%). This is your decimal or percentage ownership in the unit.
If you sign a lease for 25% royalty then your share of proceeds from a well in the unit are figured by taking your decimal percentage share and multiplying it by your royalty percentage:
0.0054 x 0.25 = 0.0013 (0.13%)
If a well is producing $500,000.00 in revenue per month then your share would be $$650.00 per month prior to taxes and expenses. If all land owners in the unit are leased at 25% then the total share for land owners would be: $125,500.00 before taxes and expenses. The company then gets $374,500.00 per month from the well production.
If you are an unsigned lease holder then your share is figured by multiplying your original decimal ownership by the proceeds: 0.0054 x $500,000.00 = $2,700.00 per month. BIG DIFFERENCE! Over the course of a year tha amounts to $24,600.00 of course that is figured based on gross not net but over the life of a well it amounts to a serious amount of money for a company to have a lot of unsigned lease holders.
Yes, you can lease after the well is drilled..it saves them money. Especially if there are several people together..
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Permalink Reply by Two Dogs, Pirate on -
Lets say that after you have drawn your first check from "Riding the well down" and something bad happens and the well is on Toledo Bend and the well spits salt water laced with uranium all into Toledo Bend and it kills all the fish in the lake, would you be liable for your part of the damage?
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Permalink Reply by Two Dogs, Pirate on
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If you take to money don't you become a working interest in the well?
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No, the working interest partners are the other companies with leases in the section. The land owner is an unsigned lease holder.
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Permalink Reply by Two Dogs, Pirate on
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If you take the money then you say you agree with the deal.
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