Replies to This Discussion

Permalink Reply by William W. Lynn on October 27, 2009 at 11:54

Skip....would you take a moment and explain "forced pooling", especially as it pertains to unleased properties. This sounds like the drilling company can buy what is essentially emminent domain of privately owned property for $755 if they can find a sympathetic hearing officer from DNR. My property is not all that far from the Lisbon area, and while the idea of a new well is good, running roughshod over property owners who don't particularly care to be screwed by the leasing process right now is scary. Comments please. Can unleased property owners be forced to accept a couple hundred dollars an acre when multiples of that could be gotten down the road?

Permalink Reply by Skip Peel - Mineral Consultant on October 27, 2009 at 12:20

William. Do a search of the discussions archived on the site and you will find days worth of reading under the key words "force pool". The short answer to your question is that force pooling is intended to require competing energy companies to enter into joint operating agreements that will allow production of the minerals contained in the unit to be produced. The awarding of a unit order by the LOC gives one company the lead as operator for that particular unit. Other companies are then reduced to Working Interest Owners and must comply with LOC regulations that compel them to perform or suffer reduced share in the minerals produced. Mineral owners are not forced to lease and may remain unleased if they choose to do so. A different set of LOC regulations govern UMI's (Unleased Mineral Interests). After the well pays out those UMI receive 100% of the royalties accruing to their proportional share of the unit production. Spend a little time looking through the prior discussions and you will get a much more in depth understanding. However, you will not be forced to accept a lease that you are not satisfied with as you have the option to be a UMI.

Permalink Reply by treeman on October 28, 2009 at 3:31

Skip -- What are your thoughts on this well, potential etc, also, potential for area, nearby mineral owner.

Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2009 at 3:38

treeman. I am not familiar with development activity in the area. There are interesting discussions in several groups (North Caddo and Arkansas) concerning Smackover wells possibly being drilled and completed as horizontals. There are several members who follow this general area and are much more knowledgeable than myself. I posted the unit order (it's not a well permit but one or more should follow) as I wished members to be aware of it and provide us with some follow on updates.