What if I never lease and a well is drilled in my section? Wise investment for the future?

I'm considering not leasing my seven acres in section 13 in western Shreveport. 100 percent and no bonus is a lot better deal if it all plays out. This section is mostly wooded, somewhat rural, and should be attractive for a company to drill on. I have found very little on the subject and can find no one that receives royalties and did not lease. One website gave this information:


What are our options if we didn’t sign a lease with the gas company?

You either become a participating member or a non-participating member.
Explain these.

1) As a Participating Member you would participate in the expenses of drilling and maintenance for that well. You would also be entitled to 100% of the gas under your property. The gas company would have to approve you as a Participating Member.

2) As a Non-Participating Member you would not participate in the expenses of the well and you would be entitled to 100% of the gas under your land AFTER the gas company has recouped 100% of their drilling expenses and in some cases 200% of their drilling expenses.


I have heard talk of "forced pooling" and don't understand how that works either. Maybe its just a part of the above. Thanks in advance for any advice. Don Stamper, Shreveport



This is a repost from the south Caddo group since it got no replies there. Thanks, Don

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Permalink Reply by MB on August 19, 2008 at 3:07
KB, excellent questions. Wondered the same. Maybe a knowledgable land or geo professional can assist with response. Best
Permalink Reply by Grice on August 19, 2008 at 5:46
IMO, you should not have deleted the risk charge section. It is directly related to the topic.

"In the event pooling is required, the cost of development and operation of the pooled unit chargeable to the owners therein shall be determined and recovered as provided herein.

Should a owner elect not to participate in the risk and expense of the unit well, the owner drilling same shall be entitled to own and recover from the tract belonging to the nonparticipating owner the actual reasonable expenditures incurred in drilling, testing, completing, equipping, and operating the unit well, including a charge for supervision, together with a risk charge, which risk charge shall be one hundred percent of such tract's allocated share of the cost of drilling, testing, and completing the unit well.

The provisions above with respect to the risk charge shall not apply to any unleased interest not subject to an oil, gas, and mineral lease."

The way I interpret this is the unleased owner would be responsible for payment(s) to the construction, operation and maintenance of the well, but would be released from obligations resulting in the abandonment of the well (risk charge). Part of the abandonment process is to plug the well, reducing the degree of public harm. Unless I am wrong, the expense of plugging the well will be shared among the operator and the leased landowners. This, along with any damages occurred, is part of the "risk" of drilling a well.

can someone confirm or deny this?

Mr.McConnell, I am not trying to refute your statements. I am merely trying to grasp the nature of the law as it applies to the subject.
Permalink Reply by louisiana lady on August 19, 2008 at 14:03
KB,

The HS might be the beginning of change...some of us in the northern part of the state tend to get "contrary" when pushed by the big guys. There just might be more unleased mineral owners than anticipated by O & G. I have personal knowledge of one high profile accountant who is being "enticed" by an attorney to rise from retirement to practice on behalf of unleased mineral owners of small tracts. I can even envision a new category for this site.
Permalink Reply by Don on August 19, 2008 at 3:03
I did the search DB and found enough to keep me reading for days. Thanks to all!

Money is nice BW but MANY things are more valuable. I wish I had a picture to show you BW. If they would have moved the site 100 yards either way it wouldn't have been a problem. They had a pad built before they sent notification. The rig was in place before a lawyer could file a cease order. My $110k investment is worthless now. They sent me $375 to cover the 300 yards by 45 feet for the road plus 1.75 acres of hardwood trees they wasted where the pad sits.

My check comes tomorrow but I can't enjoy it near as much thanks to KCS.
Permalink Reply by The_Baron on August 19, 2008 at 3:12
I hate to say it, but this could have been avoided if in your lease you had required written permission for any surface operation. The company would have had to come to you and agree on a site.
Permalink Reply by P.G. on August 19, 2008 at 3:30
Isn't it sad that a lease must say they should come to the landowner in order for them to show a little consideration? What ever happened to good will or trying to be a good neighbor?
Permalink Reply by P.G. on August 19, 2008 at 4:05
Apparently it doesn't!
A smile is cheaper than litigation though. It's a shame being considerate has to be in writing. I'm not talking about fighting over money. Some folks would put their mothers on the street for money. I'm talking about being considerate about such as pad placements or roads. Sometimes money isn't an issue for those things. It's a shame the o&g doesn't spend much on public relations nor apparently care.
Permalink Reply by drillbit on August 19, 2008 at 15:55
From.... A Comparative Review of Oil and Gas Law in Texas, Oklahoma, Arkansas, New Mexico Mississippi & Louisiana By George A. Snell, Timothy C. Dowd, Thomas A. Daily, Gregory Nibert, John S. McDavid and Richard W. Revels… “If an unleased mineral owner is included in a compulsory unit and does not participate in the drilling of the unit well, he is not entitled to receive any share of production or proceeds therefrom until the unit operator recovers the cost of drilling, completing, equipping and operating such well. This right to recover the unleased mineral owner's proportionate share of costs out of production can be lost by failure of the operator to timely respond to the mineral owner's request for a detailed, itemized statement of the cost of drilling operations. See La. R.S. 30:103.1 and 103.2.”
Permalink Reply by BIGWOOD66 on August 19, 2008 at 3:44
"The price of apathy towards public affairs is to be ruled by evil men."
Permalink Reply by BIGWOOD66 on August 19, 2008 at 6:24
Apathy/indifference toward affairs that will affect the public (you) will cost you by way of others(evil men) making all the decisions ....... or .......allowing others to make your desisions will cost you. Kinda the cause is the effect, and the effect is the cause. Yen/Yang, unbroken circle,paralleluniversechoasthreorysortathing....get it. It works both ways. The advice behind it is to Lead,Follow,or Get Out of the way. But I know Plato was a Ford guy.
Permalink Reply by boo on August 19, 2008 at 5:49
I did not lease my portion of mine & my ex's property. the well is now drilled and flowing since march of this year. I have talked to Camterra who was assigned our leases about leasing my portion and they do not seem concerned. It was not my fault that they did not come to me to lease do to the error of the land man who was leasing for Empressa Energy ( his mistake) and now I have been forced pool. Nobody wants to lease with me now. So Now What. I have talked to a lawyer and he advised me that I should sign but nobody wants to lease.
Permalink Reply by boo on August 19, 2008 at 8:19
No, there was no will and no succession., this property is the only thing that was left by my mother which would go to me and my 2 sisters. The lawyer said that I would never see any money if I did not sign because each well that they put up I would still have to pay my part.

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