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 Joseph-Ohio on December 13, 2013 at 8:36am
Mr. Moore,
Didn't know / understand that.

And thank you very much for your clarification / description.

I wonder if it would hold true enough to keep a non-participating owner out of court battles should the fecal matter hit the fan and / or they also change those rules as they apply to natural gas & oil wells ?
Permalink Reply by babette wyatt on December 13, 2013 at 5:15am

A bill just introduced into the West Virginia legislature would allow for “forced pooling” in very specific cases. Forced pooling laws, in case you’re unfamiliar with the term, require or “force” landowners who have not signed a lease to allow drilling because their neighbors have all signed a lease and drilling under the holdout’s property is required in order to access the other leased properties. However, the WV bill adds a big twist: It will allow forced pooling only in cases where the owner of the mineral rights can’t be determined, or the owner can be determined but can’t be found. Supporters of the bill, introduced by Sen. Brooks McCabe (D-Kanawha), are careful to point out the new bill (unlike previous failed forced pooling bills) does not force known, unwilling landowners to be placed into a “unit” for drilling…

Permalink Reply by Joseph-Ohio on December 13, 2013 at 5:43am
Our impression is that no surface development / disruption is permitted to occur on force pooled tracts; is that correct ?

Also, is there latitude to allow a landowner whose tract of land is force pooled that would allow the landowner to negotiate a limited surface development agreement (such as a pipeline ROW and / or a storage pad / parking pad / equipment pad (for a metering station / compressor station) etc.) ?
Permalink Reply by babette wyatt on December 13, 2013 at 7:15am

I own 335 acres, personally I just want the sign on bonus to be fair!!! 

Permalink Reply by Booger on December 13, 2013 at 7:42am

Henry - I too have two unleased acres in a prime spot and i have considered the same as your freind........i think if i have the opportunity, i will not sign, and be force pooled........and take 100% of the production (after the well is paid off).....and 12.5% until then............having 2 acres at 100% royalty is like having 5 times the acrege at 20% royalty.

Permalink Reply by henry summers on December 13, 2013 at 8:19am

Booger you say that she will still get the 12.5 after the well is in production and when the company recouped the cost of the well she would then get 100 percent of her 2 acres?  She's really just looking to leave as much to her grandchildren as possible.  Thanks

Permalink Reply by TM on December 13, 2013 at 8:38am

I dont get why she does not want to sign the lease and get $12,000 in bonus money upfront. She would then be leased and put into the drilling unit and would get paid royalties every month on her 2 acres. What royalty percentage are they offering to sign the lease?

Permalink Reply by henry summers on December 13, 2013 at 9:25am

I believe she said 20 percent. I think the main thing is she had an attorney go over their lease and the attorney changes some things.  They agreed and made the changes then in another part they worded things differently which put it right back to where it was.  She's just tired of , as she said " the Tom foolery ",  Haha you gotta love her

Permalink Reply by Sam Moore on December 13, 2013 at 10:12am

Henry - I too have two unleased acres in a prime spot and i have considered the same as your freind........i think if i have the opportunity, i will not sign, and be force pooled........and take 100% of the production (after the well is paid off).....and 12.5% until then............having 2 acres at 100% royalty is like having 5 times the acrege at 20% royalty.

not exactly, First off the ODNR generally sets the amount the producer gets at 200 to 300% payback before the land owner gets an equal cut and that is going to be after all cost right down to the secretary in the office in Texas.  Some wells will never make 2 to 3 times what it cost to drill them.  Not many but sum.  Forced pooling is not a bad deal for the landowner if the company is not offering a fair bonus and royalty.

Permalink Reply by Joseph-Ohio on December 13, 2013 at 8:39am

I would like to thank everyone for their contribution.

I believe we all understand more about forced pooling than before this discussion began.

Keeping an eye on it for any new info.

Thank each of you once again.

J-O

Permalink Reply by Philip Brutz on December 13, 2013 at 1:34pm

http://codes.ohio.gov/orc/1509.27

No surface operations or disturbances to the surface of the land shall occur on a tract pooled by an order without the written consent of or a written agreement with the owner of the tract that approves the operations or disturbances.

If an owner of a tract pooled by the order does not elect to participate in the risk and cost of the drilling and operation of a well, the owner shall be designated as a nonparticipating 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. In addition, if an owner is designated as a nonparticipating owner, the owner is not liable for actions or conditions associated with the drilling or operation of the well. If the applicant bears the costs of drilling, equipping, and operating a well for the benefit of a nonparticipating owner, as provided for in the pooling order, then the applicant shall be entitled to the share of production from the drilling unit accruing to the interest of that nonparticipating owner, exclusive of the nonparticipating owner's proportionate share of the royalty interest until there has been received the share of costs charged to that nonparticipating owner plus such additional percentage of the share of costs as the chief shall determine. The total amount receivable hereunder shall in no event exceed two hundred per cent of the share of costs charged to that nonparticipating owner. After receipt of that share of costs by such an applicant, a nonparticipating owner shall receive a proportionate share of the working interest in the well in addition to a proportionate share of the royalty interest, if any.

Permalink Reply by Joseph-Ohio on December 13, 2013 at 3:35pm

Reads to me like :

The non-participating owner (the force pooled landowner) once the well is in production (and when the well goes into production and how much production there will be is determined by the applicant E & P Operator) will only receive 100% of the non-participating owner's acreage pro-rated share of the production value after the non-participating owner has paid a maximum of 200% of whatever charges the applicant E & P Operator levies plus whatever additional percentage of costs the Chief determines all subject to terms and conditions determined to be just and reasonable by the Chief.

Well production continues for the life of the well and I can envision there will be operational expenses for the life of the well.

What's everyone's guess on an applicant E & P Operator and the Chief being benevolent enough to stop charging a non-participating owner operational expenses (as determined by the applicant E & P Operator) plus the Chief's additional percentage of the share of costs (as determined by the Chief) for the life of the well ? 

I'll guess neither would.

Sounds a lot like the non-participating owner writing a blank check for charges over the life of the well with the non-participating owner getting only a no surface operations or disturbances clause and whatever terms and conditions that are determined by the Chief to be just and reasonable (noting here that 1509.27 only mentions a royalty interest being paid and does not mention a percentage or a per acre bonus amount).

We don't like it.

Needs to be changed in our opinion.

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