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Permalink Reply by Tony Yurina on January 8, 2013 at 2:17pm

There is a mandatory pooling statute in Ohio. 
A given company can only force pool five times in one year.

There is a rigid process that must be followed.  

You can go to the ODNR website and read about mandatory pooling.

I think a good tactic is to always keep negotiating, never close the door.  A landowner may eventually get most of the terms desired, but if you close that door, mandatory pooling is an option for an oil company.

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Permalink Reply by Mickgyver on January 8, 2013 at 9:05pm

Hello if I read the mandatory pooling law correctly I will try to base this explanation on a normal leasing deal we have been familiar with .  Lets use a royalty of 20% landowner 80% for drilling company like many leases

.The way it is now each landowner that accepts upfront bonus payment money will be entitled to his share of the landowners 20% royalty based on the amount of acres he owns in the unit .

Basically a landowner under lease with 100 acres in a 1000 acre unit will receive 1/10 of the 20% share of the landowners royalty . if monthly 20% royalty payment to the landowners is a total of $200,000 the landower with the 100 acre lease gets his share in the amount of $20,000 and the company would get $800,000

Now if a person refuses to sign a lease the company can apply to have the property force pooled . just for example if the unit is 1000 acres and the pooled acres is equal to 100 acres from a non leasing landowner

. According to what I read if the well cost is 10 million to drill and be ready for production the unleased landowner would be responsible for 1/10 of the cost .

If the unleased landowner cannot afford to pay his 1 million cost then the drilling company can pay this cost and basically carry the unleased landowners normal costs .

For doing this the drilling company can charge the unleased landowner a total of 2 million which is equal to  200% of the normal landowners cost since the drilling company footed the bill for the unleased landowner .

When the production starts once the unleased landowers 10% produces a profit of 2 Million (200% recovery) the driller is considered as repaid for the money they invested for the unleased landowner

At this point the unleased landowner is then entitled to continue to receive a 10% share of the driillers future profits from this point forward of the  80% royalty rights which would be about 4 times more profit than the unleased landowner  would have made if he had leased and taken the bonus money in the first place .

As long as the well comes in good this would be better for any landowner if I understand the pooling laws correctly . I hope im right with the pooling law and this helps , pooling is not as bad as it sounds in all cases

best wishes to everyone

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Permalink Reply by jb379 on January 9, 2013 at 6:07am

Susanne,

 

Are you absolutely certain you own the OGM rights under the property or is there a chance someone else owns them and they have in fact signed an agreement?

 

JB

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