Forced pooling - GoMarcellusShale.com2024-03-28T12:49:00Zhttps://gomarcellusshale.com/forum/topics/forced-pooling?feed=yes&xn_auth=noWhat do they mean by "risk pe…tag:gomarcellusshale.com,2011-08-12:2274639:Comment:1370602011-08-12T21:35:52.518ZJim Litwinowiczhttps://gomarcellusshale.com/profile/JimLitwinowicz
<p>What do they mean by "risk penalty?" And I see that even in the new law one forced into a pool still gets only 12.5% and I see no mention of a bonus or delay rental payments. And what lease is used? Pugh Clause? Commitment to drill at least one horizontal or can it all be HPB with a shallow or straight vertical well? What costs can be deducted? Will all surface activities be permitted?</p>
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<p>Lots of questions...few answers.</p>
<p>What do they mean by "risk penalty?" And I see that even in the new law one forced into a pool still gets only 12.5% and I see no mention of a bonus or delay rental payments. And what lease is used? Pugh Clause? Commitment to drill at least one horizontal or can it all be HPB with a shallow or straight vertical well? What costs can be deducted? Will all surface activities be permitted?</p>
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<p>Lots of questions...few answers.</p> Yes, but ... that's not based…tag:gomarcellusshale.com,2011-08-12:2274639:Comment:1369352011-08-12T17:03:45.058ZAnn Ticopahttps://gomarcellusshale.com/profile/AnnTicopa
<p>Yes, but ... that's not based on the legislation proposed last year in PA. Under the Gergely/Everett draft Conservation Pooling Act, the non-consenting party's risk penalty is 400% and there is no mention of a pass-through royalty. <br/><br/>Section 10. Integration of Unleased Oil and Gas Interests. [line 836-888]<br/><a href="http://www.marcellus-shale.us/pdf/Forced-Pooling-Act_6-15-10.pdf" target="_blank">http://www.marcellus-shale.us/pdf/Forced-Pooling-Act_6-15-10.pdf</a></p>
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<p>Yes, but ... that's not based on the legislation proposed last year in PA. Under the Gergely/Everett draft Conservation Pooling Act, the non-consenting party's risk penalty is 400% and there is no mention of a pass-through royalty. <br/><br/>Section 10. Integration of Unleased Oil and Gas Interests. [line 836-888]<br/><a href="http://www.marcellus-shale.us/pdf/Forced-Pooling-Act_6-15-10.pdf" target="_blank">http://www.marcellus-shale.us/pdf/Forced-Pooling-Act_6-15-10.pdf</a></p>
<p>..</p> This excerpt is from an email…tag:gomarcellusshale.com,2011-08-12:2274639:Comment:1367112011-08-12T13:06:40.261ZJim Litwinowiczhttps://gomarcellusshale.com/profile/JimLitwinowicz
<p>This excerpt is from an email to an attorney about forced pooling in Pa for strata below the Marcellus like the Utica;</p>
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<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">1. There is a force-pool law on the books that applys to Utica.</span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">2. It has never been used, to the best of my knowledge.…</span></font></em></div>
<p>This excerpt is from an email to an attorney about forced pooling in Pa for strata below the Marcellus like the Utica;</p>
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<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">1. There is a force-pool law on the books that applys to Utica.</span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">2. It has never been used, to the best of my knowledge.</span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">3. If a petition is filed, the DEP has jurisdiction to hear and decide it.</span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">4. The compensation depends on how the unleased landowner elects to proceed. He can proceed as a lessor under a "fair and reasonable" lease as determined by the DEP (??? - see #2), or as a working interest partner. As a working interest partner, the landowner would get paid 12.5% and the 87.5% would be used to repay the gas company the lessor's operating share, times 2 (if the landowner would actually have the cash, he could pay the costs up front and not get the times 2 penalty!). After the gas company is repaid the landowner would get to keep 100% of the gas attributed to his property.</span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">5. I have no idea how long this process would take.</span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">6. A petition could be filed by a gas company or a landowner.</span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;"> </span></font></em></div>
<div><em><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">Jake and I have done the math and we think that if a landowner would have the cojones to actually file one of these, they should be able to come out ahead in the long run versus leasing. The drawback is no bonus, of course, and there is no track record with the process, so no one would know what to expect. Now if the landowner had the cash to pay the operating costs, then they'd really come out ahead.</span></font></em></div>
<div><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;"> </span></font></div>
<div><font color="black" face="Verdana" size="2"><span style="font-size: 10pt;">So if your are forced into a unit in Pa you get no bonus payments and the royalty is only 12.5%<br/></span></font></div> Only the future can tell us t…tag:gomarcellusshale.com,2011-08-09:2274639:Comment:1347232011-08-09T21:06:16.472Zcraighttps://gomarcellusshale.com/profile/craigsmith
Only the future can tell us the answers.
Only the future can tell us the answers. First, some people are agains…tag:gomarcellusshale.com,2011-08-09:2274639:Comment:1344762011-08-09T20:30:08.581ZJim Litwinowiczhttps://gomarcellusshale.com/profile/JimLitwinowicz
<p>First, some people are against any drilling and wouldn't sign no matter the money. Second,the Utica is an unknown, unproven shale. No one knows for sure where the shale is productive and where it is of little value. They need to drill a lot of exploratory wells to determine the most productive areas.</p>
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<p>Also, what lease terms are used when one is forced pooled? How would the financial issues be determined? Would there be a Pugh Clause? What about deductions for process on the…</p>
<p>First, some people are against any drilling and wouldn't sign no matter the money. Second,the Utica is an unknown, unproven shale. No one knows for sure where the shale is productive and where it is of little value. They need to drill a lot of exploratory wells to determine the most productive areas.</p>
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<p>Also, what lease terms are used when one is forced pooled? How would the financial issues be determined? Would there be a Pugh Clause? What about deductions for process on the royalty payments? If a company applies for a Utica forced pooling, does that also grant them other strata that may be deeper?</p>
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<p>And the Utica and Marcellus do not overlap perfectly. Some areas of the Utica, especially in the eastern parts of Pa are assumed to be worthless because of their depth and age. Some areas of the Utica are dry gas which doesn't bring the premium they are after. Where the Utica seems best, the Marcellus is very thin.</p>
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<p>Now if they gain the right, via forced pooling, to drill the Utica can they also drill the Marcellus? I don't know for sure but I doubt it. They are 2500 to 4000 feet apart. Can't drill both from same well. And since the Marcellus can't be forced pooled....yet.....then it should be off limits even if the Utica rights are acquired by forced pooling. But that is a good question.</p> You're probably correct in th…tag:gomarcellusshale.com,2011-08-09:2274639:Comment:1347142011-08-09T20:28:43.994ZAnn Ticopahttps://gomarcellusshale.com/profile/AnnTicopa
You're probably correct in the limited sense that there has been earlier drilling here because of existing leases than there would have been otherwise. But it was primarily to hold the leases, not to market the gas. The majority of the wells have been vertical and single horizontals, which were then shut in. The more intense development activity has been in counties with thicker Marcellus Shale ... the "sweet spots". <br></br><br></br>"Do what you think is right, and live with your…
You're probably correct in the limited sense that there has been earlier drilling here because of existing leases than there would have been otherwise. But it was primarily to hold the leases, not to market the gas. The majority of the wells have been vertical and single horizontals, which were then shut in. The more intense development activity has been in counties with thicker Marcellus Shale ... the "sweet spots". <br/><br/>"Do what you think is right, and live with your decision."<br/>Forced pooling would over-ride the landowner's ability to decide if/when to lease. <br/><br/>Understood that there is risk in waiting; like the stock market, prices go up/down. But I don't buy that once a landowner is drilled around, he/she is toast. The price of natural gas will trend higher. At some point the gascos will return to areas with infrastructure in place to refrack existing wells and drill fill-in wells. While I don't agree with some gasco tactics, I don't think the companies would pass up a chance to make $$ out of spite. still dont understand why som…tag:gomarcellusshale.com,2011-08-09:2274639:Comment:1344582011-08-09T18:54:22.498Zchelipedhttps://gomarcellusshale.com/profile/lara
still dont understand why someone would not sign? couldnt a gasco drill in the utica wherever they wanted? if they are told no in the marcellus they could just say we will drill the utica.
still dont understand why someone would not sign? couldnt a gasco drill in the utica wherever they wanted? if they are told no in the marcellus they could just say we will drill the utica. Had the folks that signed up…tag:gomarcellusshale.com,2011-08-09:2274639:Comment:1344432011-08-09T17:52:51.391Zcraighttps://gomarcellusshale.com/profile/craigsmith
<p>Had the folks that signed up originally for $5/acre not done so, your area may have not been developed at all. Kinda a catch 22 situation. No one will pay top dollar for something that has no, as of yet, determined value. Waiting too long and asking too much will force the companies to move onto greener pastures. I've seen a few folks left out locally because they waited and waited and waited. Now they don't have to wait any longer, because they are not going to be leased, they are drilling…</p>
<p>Had the folks that signed up originally for $5/acre not done so, your area may have not been developed at all. Kinda a catch 22 situation. No one will pay top dollar for something that has no, as of yet, determined value. Waiting too long and asking too much will force the companies to move onto greener pastures. I've seen a few folks left out locally because they waited and waited and waited. Now they don't have to wait any longer, because they are not going to be leased, they are drilling right around them.</p>
<p>It is a tough nut to crack as when to lease. Do what you think is right, and live with your decision.</p>
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<p> </p> What if the landowner is not…tag:gomarcellusshale.com,2011-08-09:2274639:Comment:1343892011-08-09T16:57:51.488ZAnn Ticopahttps://gomarcellusshale.com/profile/AnnTicopa
<p>What if the landowner is not satisfied with the terms of the lease the gasco is offering? I'm in northcentral PA, where there was conventional Trenton/Black River development preceeding Marcellus shale development. The initial offer in 2000 was a 10-year lease with $5/acre bonus. In 2005, the bonus offer went to $50 and the lease term to 5 years, with the provision that all the leased acreage could be held past the primary term by including a portion of it in a declared unit and…</p>
<p>What if the landowner is not satisfied with the terms of the lease the gasco is offering? I'm in northcentral PA, where there was conventional Trenton/Black River development preceeding Marcellus shale development. The initial offer in 2000 was a 10-year lease with $5/acre bonus. In 2005, the bonus offer went to $50 and the lease term to 5 years, with the provision that all the leased acreage could be held past the primary term by including a portion of it in a declared unit and "initiating" development. By late 2007, the bonus offer was $200 and in mid-2008 it jumped to $1500.<br/><br/>It's understandable that some landowners who signed for a low bonus are suffering from seller's remorse. But it was their free choice to sign leases when they did ... or not. Had there been forced pooling, force pooled landowners would have been denied the choice of waiting for a better offer.</p>
<p>.</p> if 90% of the individual land…tag:gomarcellusshale.com,2011-08-09:2274639:Comment:1343162011-08-09T11:02:18.917Zchelipedhttps://gomarcellusshale.com/profile/lara
if 90% of the individual land owners agree - i do not see a problem. this is the only way i see pooling used. I do not think it is right for the government to allow gascos free range in areas where nobody signs. I still dont understand why someone would not sign! especially with the Utica forced pooling law.
if 90% of the individual land owners agree - i do not see a problem. this is the only way i see pooling used. I do not think it is right for the government to allow gascos free range in areas where nobody signs. I still dont understand why someone would not sign! especially with the Utica forced pooling law.