Landowner "pooling"

Can someone answer a few questions about the "pooling of property" process? If indivual propery owners sign leases without "pooling" do they only get royalties if a well is drilled on or under them? If  landowners get together to form a "pool" unit of approx 600 to 1000 acres, do they need to organize and sign together in order for all to benift or do the gas co's determine the "pool" area based on the best location for a well?

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Permalink Reply by Mike Knapp on January 11, 2011 at 3:34am

If you sign a lease that forbids unitizing, then you would only get royalties if a well is drilled on your actual property.  

 

If landowners or a gas company puts together 600-1000 acres of contiguous ground and unitize it together, it will not matter where the actual well is located (as long as it is somewhere in the unit).   Everyone in the unit will receive royalties, based on how much acreage they contributed to the unit (if you have 200 acres in a 600 acre unit, you have 1/3 of the acreage and therefore would get 1/3 of the royalty payment).   

 

Mike Knapp

President

Knapp Acquisitions & Production LLC

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on January 11, 2011 at 10:20am

good topic...

 

ok Mike...then would that royalty payment be based on the lease of the landowner with the well on his/her property or the lease of the person that has acreage in the pool even if the well is not on their property?

Permalink Reply by Mike Knapp on January 11, 2011 at 10:53am

it would be based on the lease that you signed, whether the well is on your property or not.  

 

-Mike

Permalink Reply by john ginkel on January 11, 2011 at 10:31am

Thanks for info Mike.

So if a lease does not forbid unitizing and reeds "No unit shall exceed 640 acres, plus or minus 10% tolerance" and the landowners around a given area sign it, then gas company will devide up the area into units? and if a unit cannot exceed 704 acres (640 plus the 10% 64), just how small can a unit be?

Permalink Reply by Mike Knapp on January 11, 2011 at 10:59am

John,

 

Landowners don't sign unitization papers (also referred to as Unit Operation Designation).  Landowners sign a lease that grants the right to unitize, and then a gas company can unitize or "pool" the acreage as they see fit to.   They can only pool acreage that is contiguous. 

 

No minimum unit size.   No maximum unit size in PA unless restricted by verbiage in your lease. 

 

-Mike

 

 

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on January 11, 2011 at 11:03am

Hi Mike...what about my question above?   does the royalty percentage apply to the lease one has whether or not the well is drilled on their land...or does it apply to the lease of the landowner who has the well?

I looked at the unitization clause in my contract (and there is one) and it doesn't state how the royalty amount is derived.

Permalink Reply by FXEF on January 11, 2011 at 11:34am

VG,

In a pooled unit each landowner would get royalty percentage as per each individual lease.  

Permalink Reply by john ginkel on January 11, 2011 at 12:22pm
I understand that in a pooled unit everyone get a percentage, I'am trying to figure out the pooling process. so it apears that the gas co. would tell the landowners what pooled unit they fall into.  Are the gas companys forthcoming with this info.? Or do they just put you into a unit then just proceed? Should a landowner expect to know who his unit consists of, from the gas co.?
Permalink Reply by Mike Knapp on January 11, 2011 at 1:56pm

Unit Operation Designations have to be recorded at the courthouse in the county where the unit is.   They will list what all properties are in the unit, for how much acreage, etc.  Some companies are better than others about informing you of their plans, but they would have no legal obligation to do so.  

 

-Mike

Permalink Reply by Mike Knapp on January 11, 2011 at 1:54pm
I replied, it's up under your question
Permalink Reply by john ginkel on January 11, 2011 at 1:59pm
Thanks Mike.
Permalink Reply by Mike Knapp on January 11, 2011 at 2:20pm
No problem buddy, good luck!

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