Replies to This Discussion

Permalink Reply by Joseph-Ohio on October 2, 2012 at 5:40pm

Thank you for the response Randall.

We've also heard of the four Chesapeake Transactions and like you have no more information to share regarding them.

The EnerVest offerings are of great interest to us as it is our current understanding that many of our neighbor's have their acreage leased to EnerVest; and especially so, considering how important contiguity is pertaining to the formation of drilling units.  It seems reasonable to us that any new Lessee would be interested in our acreage as well.

For information Randall, we've read in other posts (elsewhere) that the EnerVest Utica Point Pleasant Leaseholds currently being offered involve 539,000 acres in Ohio and EnerVest values the offering at $6 Billion - that works out to be an average of about $11,131.73 per leased acre if you apply the simple math.

Also, for information Randall, we've just freed ourselves of an old Leasehold written prior to the Utica Point Pleasant era and now we would like to roll our land over (a nominal 52 acres in the potentially high yield oil and wet gas window as so defined by the Ohio Geological Survey) into a new Utica Point Pleasant Landowner cognizant Leasehold Agreement but have not been honored with any meaningful offers as of yet.  Also for information, our land is situated in Ashtabula County in Richmond Township near Dorset with no HBP involved and is Title Clear.

Neither participating in a well or being force pooled (missing a meaningful signing bonus and settling for only 12.5% net royalty) seems at all desireable to us and especially undesireable when we've learned that Landowners to our south and east (only a few miles away) have signed Utica Point Pleasant Landowner cognizant Leasehold Agreements for as much as $4,250.00 per acre and 18% royalty.

Noting here that perhaps we've got the 100% of production criteria transposed from the 'well participation rules' into the 'force pooling rules' mistakenly - we don't know - if you find better definition please post. 

Your posts indicate to us that you know much more about the Leasehold business than we do and we appreciate your interpretations / insight.

Also, Randall, we're not taking your posted informative writings as legal advice by any measure but, rather only as a sharing of understandings between Landowners - and considering that, please note that we are certainly not offering any legal advice either. 

Thanks once again and best wishes to you as well.

Kindly keep posting.

Regards,

Joseph-Ohio

 

Permalink Reply by 0i7okn54zwbdo on October 3, 2012 at 2:30am

Randall is right about forced pooling.  You get a 100% "super royalty" for your acreage in the unit once drilling expenses are paid.

Permalink Reply by Utica Shale on October 3, 2012 at 2:46am

Marcus,

"... once drilling expenses are paid ..."

 

 Can the driller use accounting tricks with "expenses" such that it takes many years before a force pooled landowner starts getting a "super royalty" ?

 

 How does this "super royalty after expenses" compare to a normal "20% Gross Royalty" - about the same, significantly more or significantly less over the lifetime of the well ?

 

 Do "Force Pooled" landowners typically get a Signing Bonus or not ?

 

Permalink Reply by 0i7okn54zwbdo on October 3, 2012 at 3:32pm

No signing bonus, as there is no signing.  Your acreage is pooled into the unit, you receive no payment until the well is paid for (which is usually spelled out from the outset) and then you are paid 100% of all monies received for your parcel for the life of the well.  It's not really a good deal.

Permalink Reply by Joseph-Ohio on October 4, 2012 at 5:37am

Marcus,

The way we read the 1509.27 Mandatory pooling orders it appears to us that the landowner (designated as a non-participating owner) would earn (and one would think also be paid) royalty interest on the non-participating owner's share of the production (during the interim the non-participating owner is paying his share of the drilling and production expenses plus the chief determined additional percentage all as would be garnished from the well's production).

Also, if the purpose of the Mandatory pooling orders is "to protect correlative rights" then one would interpret that the rights of the pooled non-participating owner(s) must also be protected.  But then again -  there we go - that's got "COURT" written all over it, doesn't it ? 

There seems to be alot of wiggle room available for the developer doesn't there ?

Permalink Reply by Joseph-Ohio on October 3, 2012 at 3:16am

Randall,

We downloaded "1509.27 Mandatory pooling orders" from the web page http://codes.ohio.gov/orc/1509.27 and when we read it we interpret it to mean (only our interpretations / opinions and still less benefit of legal advice) the following:

We read / interpret that if a landowner's land becomes included in a drilling unit by virtue of a Mandatory pooling order that the landowner would then be allocated a pro-rated portion of the production based on the landowner's surface acreage relative to the state minimum acreage requirements established under rules governing drilling units - or - if the geologic structure containing the oil or gas is larger than the minimum acreage requirement then the pro-rated portion would be taken as the same proportion that the landowner's acreage is relative to the geologic structure. 

Then it goes on to rule that each landowner tract pooled would share all reasonable costs and expenses of drilling and production but only if the landowner elects to participate in the drilling and operation of the well. 

Then further down the page it rules that if the landowner does not elect to participate in the drilling and operation of the well that the landowner would be designated as a non-participating owner in the drilling and operation of the well on a limited or carried basis and is subject to terms and conditions determined by the chief to be just and reasonable. 

Then it goes on to rule that if a landowner is designated as a non-participating owner that the landowner is not liable for actions or conditions associated with the drilling or operation of the well. 

Then it goes on to rule that if an applicant bears the costs of drilling, equipping and operating a well for the benefit of a non-participating owner, then the applicant would be entitled to the non-participating owner's entire share of the production from the drilling unit, except for the non-participating owner's royalty interest until the non-participating owner's share of costs plus such additional percentage as determined by the chief (but in no case would the total charged to the non-participating owner be more than 200% of the non-participating owner's share of costs) are paid from the non-participating owner's pro-rated portion of production.

Based on all of that we also interpret that once the non-participating owner's share of the costs plus such additional percentage as determined by the chief but totally not greater than 200% of the non-participating owner's pro-rated share of cost is paid, then, all of the pro-rated portion of the production would belong and proceeds paid to the non-participating owner.

Only our read / interpretation here, put in our parlance / terms we personally more easily can understand. 

We also conclude that we would rather be leased than force pooled.

If you have some time, go to the link above and have a read and tell us what you make of it all.

Thanks again.

Regards,

Joseph-Ohio

 

Permalink Reply by Joseph-Ohio on October 3, 2012 at 11:25pm

More Regarding Force Pooling:

As we read the 1st paragraph of 1509.27 we see that "the owner of the tract who also is the owner of the mineral interest" and who "has been unable to form a drilling unit under agreement.........., on a just and equitable basis,..........may make application..........for a mandatory pooling order."  We read that the application is madeto the division of oil and gas resources management.

Then we read further that "the chief of the division of oil and gas resources management" would notify affected landowners of the application and their right to a hearing.  Then we read further that after the hearing or after thirty days from the date the notice of application was mailed to the affected landowners that "the chief, if satisfied that the applilcation is proper in form and that mandatory pooling is necessary to protect correlative rights and to provide effective deveolpment, use, and conservation of oil and gas, shall issue a drilling permit and a mandatory pooling order complying with the requirements for drilling a well.........."

Points being that all of this takes time and time is something we in particular (speaking for me and mine) personally don't want to waste.

Standing by for the 1st reasonable landowner cognizant leasehold agreement.

Since that hasn't happened as yet, maybe it's time for us to sign up with a landowner group to sell our deep rights for us.

 

Permalink Reply by Shower Bath on October 3, 2012 at 6:35am

Interesting video from Reuters on leasing in Ohio, please check it out.

http://www.reuters.com/video/2012/10/01/reuters-tv-amid-fracking-bo...

Randy

Permalink Reply by dan gladyszewski on October 3, 2012 at 8:08am

Very interesting, thanks.

Permalink Reply by Joseph-Ohio on October 3, 2012 at 8:43am

More good info. Randall.

Thanks again.

J-O

Permalink Reply by Shower Bath on October 5, 2012 at 10:33am

For those of you in the oil window, check out this story on nodding donkeys.

http://www.bloomberg.com/news/2012-10-04/utica-shale-needs-nodding-...

Randy

Permalink Reply by Utica Shale on October 5, 2012 at 12:49pm

No ODNR Weekly update.

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