Is Forced Pooling being used to get around old gas lease limitations?

http://oilandgas.ohiodnr.gov/portals/oilgas/pdf/unitization/2014/Gr...

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Permalink Reply by Philip Brutz on July 31, 2014 at 11:38am

I wonder what  "curative document" they wanted him to sign?

Permalink Reply by evan on July 31, 2014 at 2:11pm

Wow good work. 

Permalink Reply by Dexter Green on July 31, 2014 at 3:31pm

Depending on the wording of his old lease he may be compelled to sign any documents necessary in order to properly operate the lease.  This might not fall under forced pooling as much as it falls under what his obligation(s) were in:re to the old contract.  Very interesting.

Remember, unitization is not the same as forced pooling.

Permalink Reply by Joseph-Ohio on July 31, 2014 at 11:24pm

Forced Unitization.

Forced Pooling.

Still being Forced.

Kindly explain the differences.

For any given well development / lease agreement, are the dollars and cents impact on involved landowners the same or different ?

Permalink Reply by Joseph-Ohio on August 1, 2014 at 12:04am

I see six (6) Scenarios :

1) Force Pooled without a well development

2) Force Pooled with a well development

3) Force Unitized without a well development

4) Force Unitized with a well development

5) Force Pooled and Force Unitized without a well development

6) Force Pooled and Force Unitized with a well development

Permalink Reply by Joseph-Ohio on August 1, 2014 at 1:28am

Looks to me like :

Scenario 1) Force Pooled without a well development would pay the landowner a prevailing lease agreement (which probably would pay the landowner a signing bonus).

Scenario 2) Force Pooled with a well development would pay the landowner a prevailing lease agreement (which probably would pay the landowner a signing bonus) + a royalty

Scenario 3) Force Unitized without a well development pays the landowner nothing

Scenario 4) Force Unitized with a well development pays the landowner nothing until after the penalty phase (which is a variable and I think could be further complicated by deductions / market enhancement charges, etc.).

Scenario 5) Force Pooled and Force Unitized without a well development probably would pay the landowner a signing bonus based on the prevailing lease agreement.

Scenario 6) Force Pooled and Force Unitized with a well development probably would pay the landowner a signing bonus based on the prevailing lease agreement but nothing in way of royalty until after the penalty phase (which is a variable and I think could be further complicated by deductions / market enhancement charges, etc.).

Do I understand it correctly ?

Can (is it possible) for a landowner be Force Pooled and Force Unitized with or without a well development ?

Permalink Reply by Dexter Green on August 1, 2014 at 1:58am

"Forced Unitization.

Forced Pooling.

Still being Forced."

Not exactly.  This is a scenario where there was a lease in place, which means nobody is being forced to do anything but live up to their end of the contract.  If you sign a lease and it says that you agree to execute any and all additional documents necessary for the operator to actually maintain and use the lease then there is no coercion or forcing.  Based on what this tells me--and admittedly it is one-sided--this guy is just being obstinate for the sake of being obstinate.  He was offered the dollar amount that he asked for and still said no.  That has some deeper meaning.

Permalink Reply by Joseph-Ohio on August 1, 2014 at 2:20am

OK  - in the Matt Kramer instance that is outlined in this post - I got that.

But generally, in a bonafide Forced Pooling / Forced Unitization circumstance (other than detailed in rhe Matt Kramer instance above) do I have all of the other Scenarios covered above in my last reply ?

Comes to mind also, that the Matt Kramer instance is probably an example of a Forced Pooling and Forced Unitization instance isn't it ?

Permalink Reply by Dexter Green on August 1, 2014 at 3:21am

Yes, you have it mostly right when it comes to pooling.  Unitization is entirely different and needs to be a separate conversation entirely. 

Permalink Reply by Joseph-Ohio on August 1, 2014 at 5:51am
When you have a chance perhaps you can give us your read on the Forced Unitization issue.

Thanks Dexter

J-O
Permalink Reply by Dexter Green on August 1, 2014 at 6:12am

Ok, so they're both the same thing, but not really.  They have the same goal, which is to build a unit to the specifications of the operator.  Forced pooling almost always refers to state intervention where there is no lease in place and a landowner or landowners won't sign.  Unitization, as it has been used in my experience, is when a landowner is under lease but the owner of said lease will not play ball with the operator of the future unit.  These terms are used interchangeably by most people now, so I suppose my objection is more pedantic than anything else.  At any rate, their similarities are enough that I should just stop caring about the subtle differences and join the colloquial crowd.

Permalink Reply by Joseph-Ohio on August 1, 2014 at 8:27am
Dexter,

Don't be a crowd pleaser unless it's the right thing to do !

Anyway it reads like they're two very similar tools to meet the same end result to me.

Thanks.

J-O

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