ATTENTION Landowner Group Members

The IDEA of "strength in numbers (acres)" is quite apparently agreed upon by many members. Let’s not forget that a portion of those "numbers' will not have a chance at the lease being paid.  Because if your "numbers" are not connected/contiguous to other "numbers" the valve of your numbers are not as appreciated by the potential LESSEE. And an outfit, no matter how financially secure, only has so much capital it is willing to spend/risk on a project.

Hypothetical Question: What if a group of 25,000 acres agrees to sign but only 10,000 of those acres are contiguous, what would be the incentive to pay the remaining 15,000 ac scattered all over the area? After-all, 10,000 ac would be quite enough leasehold to form producing units.

Also remember lawyers are paid directly from the amount of time spent "consulting" with the client(s) board leaders and it is very profitable to drag the process along for themselves. Every time a call/letter/email/fax is addressed concerning the process of your group.....cha ching, time is being billed. Another thing to remember, your area is not the
only area.....rather than drag it out, an outfit (especially a proven profit making producer not a flipper) just may pack in it and move to another more open-minded area and spend their money there. Which would leave your area open for another round of negotiations with another outfit and the much anticipated billed time for your friends at the law firm?

Hope you didn’t have plans for the bonus money anytime soon, yet the possibilities of a royalty check. Don’t worry, that new roof on your house/barn can wait (it isn’t leaking "that bad"). You can always wait for next year’s model of the truck/tractor you were planning on buying.  Paying off those loans can also wait...after all you've been paying on them for
years already. College tuitions can be paid for by the loans you were planning on getting anyhow. Your daughter’s/son's wedding will be fine downsized, their so in love it won’t matter. Vegas....you can do just as good at the local casinos that are closer to home and are popping up everywhere, you can’t afford to take that much time off of work anyhow.



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Permalink Reply by Blindsquirell on November 11, 2011 at 11:30am

Sam......I APOLOGISE FOR MY ERROR IN THINKING YOU WANTED TO BE "FORCED POOLED".  My reply was directed towards PA.  I like your example of its intentions.  In PA it would be detrimental to the "holdout(s)".  But as in OH, its rarely used.

Permalink Reply by Finnbear on November 13, 2011 at 2:41pm

ODNR tells me it was done once in OH.

Permalink Reply by Nelson Roe on November 14, 2011 at 4:12am

ORC 1509.27 Mandatory Pooling orders states:

"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."

 

Granted it is a rather vague definition, but I believe that this is where they get that a person who is force pooled becomes a partner in the well.  You may google the ORC referenced above to read the particulars as I did not want to post the entire section.

Permalink Reply by Nelson Roe on November 14, 2011 at 6:59am

That it does. 

But, please decipher this for me then... "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".  Again taken straight from the ORC. 

This to me sounds like in addition to the regular royalties, the individual who has been force pooled also receives additional compensation or a  "proportionate share of the working interest in the well".   This is of course after deductions.

Permalink Reply by Jim Litwinowicz on November 14, 2011 at 9:21am

Can a "nonparticipating partner" be held liable for civil damages as a named defendant in a civil lawsuit?  Say a well goes bad and contaminates an aquifer, can he/she be named in a lawsuit?

That term "partner" is very scary to me.

Permalink Reply by Nelson Roe on November 14, 2011 at 9:40am

Jim,

According to this section of the code, in my opinion, it does not sound like the nonparticipating owner would be able to be held liable... But then again, I am no attorney, so my interpretation of this could be way off...

 

"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."

Permalink Reply by Sam Moore on November 14, 2011 at 4:26am

I did not make my self very clear.  I would not want to be force pooled.  The reason for the comments was to let people know that the O & G companies don't want to force pool anyone as it is not in their best interest.  The salesman that are telling people sign this or we will just force pool your property are full of crap.

To your question as where the 6.25% comes from  40 / 640 = 6.25%

Permalink Reply by Sam Moore on November 14, 2011 at 8:29am

OK, now I guess you are confused.  At no point did I ever say anything about a nonparticapating  owner.

Permalink Reply by Nelson Roe on November 14, 2011 at 8:50am

Sam,

In one of your earlier posts you referenced becoming a partner in the well if one was force pooled.  The wording in ORC 1509.27 does not mention an individual becoming a partner in the well, it says that they will be considered a "nonparticipating owner".

Permalink Reply by Finnbear on November 14, 2011 at 9:45am

Sam Moore,

I believe a force pooled landowner is seen as a nonparticipating owner under current law.

Permalink Reply by George Brown on November 11, 2011 at 3:51pm

Katherine, sit down before you read this because I'm going to agree with you regarding government. Your reference to the railroads is exactly correct.  Abe Lincoln as an attorney and later a legislator was bought and paid for by the railroads and he practiced crony capitalism that makes our current president look like a mere piker by comparison. "Honest Abe," no way!

Permalink Reply by Blindsquirell on November 11, 2011 at 12:22pm

Really, 150 ac units?  I dont see spending millions to drill a Utica horz well and only be able to draw from 150 ac. 

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