Possible force pooling , maybe

My friend in Noble county has a delimma, A company wants to sign a lease with her because they have a unit about completed and shes almost in the middle of it. She's thinking she may be better off to make them force pool her land. Their offering close to 6000 to lease but she thinks she may be better to hold off and become a part owner in the well when they drill. Isn't it after they recoup 200 percent of the cost of drilling then she will receive he money. I told her how would you ever know when that is and in the long run would you make any more money.. About forgot she owns 2 acres. Any opinions would be appreciated because she's an older woman that doesn't know what to do.. Thanks

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Permalink Reply by mike4t on December 12, 2013 at 8:12pm

I guess I wasn't aware that if you get force pooled, you become a part owner of the well???

Anyway, if it were me, I would take the bonus money and negotiate for a good royalty and terms. If your friend is older, who knows how long until the well recoups 200 percent ( see the blog regarding Shell/Swepi plugging wells). It may be a LONG time before she sees any money. It may be a dry hole and never recoup 100% of cost, then again, if its a gusher, they may recoup it in year.... maybe....

Me? Take the money now and hope for a gusher

Permalink Reply by Billy Park Whyde on December 12, 2013 at 8:19pm

My misunderstanding as I thought of a drilling unit near completion not in establishing a unit. It would seem to me for what it worth I'd want to see where my 2 acres rested in the unit. insure a no surface use in a lease. no enhancement, transport charges, any and all severance taxes / any additional taxes created to be paid by the producer.

Permalink Reply by TM on December 12, 2013 at 8:13pm
I believe the drillers only need 65% of the unit leased, then they can force pool the rest of unleased parcels in. Working interest owners can also be force pooled in aka other drilling companies.
Permalink Reply by TM on December 12, 2013 at 8:41pm
The unleased mineral owners get 85% share of net production revenue. The net production revenue will begin to pay out only after driller recovers 300% of the costs for the first well. This can also be 200% for the first well and 150% of subsequent wells drilled just depends on the order.

You can be paid bonus per acre when force pooled just depends on the unitization order. Most mineral owners who are force pooled only get 12.5% royalty but it can be higher like 15% just depends. There are way too many variables to take into account.

If I was this lady I would take my bonus money and sign a lease then look forward to royalties every month. Another thing being force pooled makes you a working interest holder in the well which I would not want if it was me.
Permalink Reply by henry summers on December 12, 2013 at 8:44pm

Thanks for all the great info so far. I will relay this to her . Still don't know if she can decide but at least the balls in her court..

Permalink Reply by Joseph-Ohio on December 12, 2013 at 8:47pm

Do you know (or does anyone know) if a landowner can be force pooled and not also be designated as an owner of any stake in a well (or wells) ?

From your reply above it appears that some terms of being force pooled are variable - is that true - do you know if some of the force pooling terms can be negotiated ?

Permalink Reply by TM on December 12, 2013 at 8:53pm
I believe if you are force pooled you become a working interest owner in the wells that are drilled. I could be wrong though not entirely sure.
Permalink Reply by henry summers on December 12, 2013 at 8:57pm

I know it's a hard question but what could a person that was force pooled expect money wise opening 2 acres on an average Utica well.  It's hard to guess money wise what they could expect. Especially if the company is holding a grudge against you.

Permalink Reply by Joseph-Ohio on December 12, 2013 at 9:20pm

TM :

That's the way I understood it originally also.

But above your reply opened the door to various options - all of which you wrote 'just depended on the order' (in so many words and to paraphrase a little).

With that door seemingly open I wondered if it were possible to be force pooled and not be an owner.

Permalink Reply by Joseph-Ohio on December 13, 2013 at 6:11am
This part about 200% for the 1st well and 150% for subsequent wells being recovered before paying the force pooled owner any return :

The force pooled owner has no control over production - production is at the discretion of the E & P.

Maybe it would take 1000 years for the E & P to recover 200% of the 1st well's cost - maybe never.

The E & P is at the throttle not the force pooled 'partner'.

Isn't all of the above a correct interpretation of how things might unfurl ? ?
Permalink Reply by Joseph-Ohio on December 13, 2013 at 6:43am
Having some trouble with the term 'unleased mineral owners'.

Have been thinking in terms of 'force pooled mineral owners' as their lands are bound by the order of the ODNR Oil & Gas Division Chief dictates - which seem to me to be a form of agreement (albeit not a lease agreement).
Permalink Reply by The Hiker on December 13, 2013 at 5:22pm

Ask/demand 20-21% royalty (going rate in Noble) and a good lease (many examples on GMS), get your bonus money, sit back and collect the royalties and forget the headaches.   If the unit is almost formed and the pad location has been chosen, chances are good the well will be very productive since Antero/Consol/Eclipse are only drilling the good stuff in Noble right now.  What township is she in?   Are these the companies?

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