Ohio: Forced Pooling: How Many Acres?

Ohio does have forced pooling; a buddy of mine without a lease thinks he cannot be forced pooled because of the size of his acreage which is 150 acres and drilling is occurring close to his property Is this true is their a limit on the amount of acres that can be force pooled?  If this answer has been given before just point me to the discussion--sometimes the answer is in an unlikely discussion.   Thanks in advance.

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Permalink Reply by Mike Sero on June 10, 2013 at 7:55am

Great answer Keith. I would recommend your buddy, do a lease with Pugh clause - then they would try to put in the Unit as much as possible. Or otherwise have to release the open acres eventually or unitize them.

Permalink Reply by PA Joe on June 10, 2013 at 9:39am

The way it works in Ohio is anything less than 5% can be pooled automatically. More than that requires a hearing and if there are any objections its likely the objector will win. So if an operating company is trying to form a 640 acre drilling unit and they already have ~ 610 acres under lease they could pool about 30 acres of your buddies lease into the unit to make 640, (5%). He would be paid his 5% of anything the wells in that unit make and they could not use any of his surface. The reason this exists is that its likely the 640 acre unit is made up of lots of separate people with 10, 20, 50, 100 acre tracts and if they all want a well, one lone hold out can't prevent all the neighbors from having a well. Hope that helps. Oh and he would get zero dollars for a lease bonus. However, almost any company would rather have him under lease and if they are planning on moving a rig in its 99.9% certain that they will pay him the market rate for whatever acreage of his they need. All he needs to do is say give me market rate and I am in (he needs to know what that is though). The dollars/acre for the lease bonus, even at 5k/acre are chicken feed compared to what he will get if a successful well is made. CHICKEN FEED.

Permalink Reply by Billy Park Whyde on June 10, 2013 at 10:14am

 "The reason this exists is that its likely the 640 acre unit is made up of lots of separate people with 10, 20, 50, 100 acre tracts and if they all want a well, one lone hold out can't prevent all the neighbors from having a well."

  Although I am for O&G production I do not approve of the taking of personal property rights away from a land owner. Case in point was Ohio's smoking ban where the mass took away the right of property owners bar owners and private clubs to decide what legal activities could be done upon their own property. This same situation could be done by antifrackers as well, by throwing it to a vote upon the masses by declaring it to be a public health issue, the same could apply to gun control as well. Slippery slopes to go down.

  Due process through a court of law should never be  avoided for the simplicity of the masses.

 

 

Permalink Reply by Jeffrey E. Fort on June 11, 2013 at 2:51pm

PA Joe, I think you are getting pooling (to form a spacing-required drilling unit) and unitization, which can be much larger. Check out my blog at the Porter Wright web site > "confused?"

Permalink Reply by Jeffrey E. Fort on June 11, 2013 at 1:42pm

Ohio Revised Code requires that 65% of the area to be unitized be already on board. If his 150 acres amounts to 35% or more, he would not be susceptible to being forced in. Then there is the math -- the payment of royalty, risk penalty and revenue interest v. a bonus payment and a higher royalty. "A bird in the hand ...." Check out our blogs on the Porter Wright web site where we discuss this.

Permalink Reply by Keith A Williams on June 11, 2013 at 6:51pm

Jeffrey E. Fort

I want to thank you and Andrew Trafford for these helpful articles (and your employer Porter Wright).

Keith A. Williams

Permalink Reply by Mike Sero on June 21, 2013 at 9:57pm

FYI - Drilling companies have to make a legit and fair offer before the force pool. I'm working onwith drilling company right now who, realized in the final drilling opinion that 7 acres were unaccounted for they did the title found my client and made a legit offer.

If they had been unable to find the mineral owner, they have to send letters, even certified to last known addresses etc.... then they would unitize the 7 acres. They hate forge pooling lot of paper work.

I'm very familiar with how it works and don't have time to respond to every post - but if an individual would like to contact me I can get into further details.

M

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