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 JK on December 12, 2013 at 3:06pm

She has 2 acres.

She can negotiate a higher bonus with her terms defined.

Sign the lease.

For 2 acres and the liability associated with ownership, it can not be worth it.

It's found money for goodness sakes..

 

Permalink Reply by Joseph-Ohio on December 12, 2013 at 3:27pm

JK :

Your reply implies that terms would not be defined if the person / person's land were force pooled - is that so ?

The rules seem to define them - they're just (perhaps) different terms - how different ?

What is negotiable ?

What isn't negotiable ?

But to cut to the chase - being force pooled and also designated as an owner or part owner in a Gas / Oil well - is not something I would want to do or would do.

However, to me, it is also abusive and a trespass of private ownership.

When we invested in our land and mineral rights force pooling did not exist.

Now that it does exist (apparently) I'll compare buying land to buying an automobile complete and operational and then the government removing the engine as if you never bought it with an engine to begin with.

Stinks to me.

Permalink Reply by Joseph-Ohio on December 12, 2013 at 3:47pm

I don't think our leadership should be writing legislation to circumnavigate private ownership rights - they should be writing legislation to protect it instead.

Permalink Reply by JK on December 12, 2013 at 4:50pm

Forget forced pooling altogether is what I am saying.

Yes it stinks to be in a situation of incredible liability via an owner instead of just being in a lease.

It's a situation of you must make a decision and be willing to live with it.

I for one would not want the added stress in my life of all of the unknowns were I to hold out and be an owner of 2 acres in an unit. It's crazy to me to even consider this option.

Make it easy on yourself and do the lease and then all you have to do is wait for royalty checks. Even if you owned 100 acres it would be the same. If you own it then you are not in control of anything happening and could find yourself in a big mess that bankrupt's you.

It seems to be a no brainer to me.

 Get an attorney and get to work on getting a good GROSS lease.

Permalink Reply by Joseph-Ohio on December 12, 2013 at 5:05pm
'Forget forced pooling altogether....'
I agree.
And further, in my ever so humble opinion, the State should forget about forced pooling as well.
Permalink Reply by Joseph-Ohio on December 12, 2013 at 11:22pm
Thinking the answer to the question is nothing can be negotiated if lands are force pooled.

Sounds like it's whatever the ODNR Oil & Gas Division Chief says it will be.

That in itself sounds like a trespass (by the State however) and especially so if some catastrophe occurs. Sounds like it would follow then that the State (since it forced the development) could be held liable for any and all the damages doesn't it ? ?

Maybe what I'm missing here is the tenet that 'if the State does it it's not a trespass'.

Not a lawyer - don't know - but sounds plausible (to me anyway).


Any lawyers out there care to contribute answers ? ?

Anyway - it's way too much of a burden for us to be thinking about bearing.

That's the main reason we see to seek / enter a lease agreement in the 1st place - but it needs to be an agreement that we could agree to.
Permalink Reply by Joseph-Ohio on December 13, 2013 at 1:07am
I get that but what part of the bag does the government end up holding ? ?

Or does the government just rule on (and reserve the option to change their mind) about who holds the bag ? ?

And how about the damages / injuries (financial / other variety) wrought by their changes ? ?
Permalink Reply by Sam Moore on December 13, 2013 at 3:40am

The only option the landowner has when being force pooled is to be a participating or non participating owner.  If they chose to be a participating owner then they need to come up with their share of the money to drill the wells and they receive 100% of what their share produced.  Non participating will still receive a royalty 12.5%  until the well has made back 200 to 300% of its cost and then will receive 100% of their share.

For those of you that think force pooling should not be aloud ask your self if you would feel the same way if you where one of the other 10 landowners in this unit that would not get drilled and would not receive royalties just because one person with 2 acres decides they don't want to go along.  The forced pooling law IMHO is a good law for all landowners.  The law protects this lady from being taken advantage of.  If this company came and offered her 50$ an acre take it or leave it then see has the option of being force pooled and becoming an owner.  On the other hand if this law was not here she could demand $500,000 an acre or prevent surrounding land owners from being able to produce their land.

It appears she is being offered a fair price in her area and since the company will not want to force pool if they don't need to she should be able to get a very landowner friendly lease.

Permalink Reply by Joseph-Ohio on December 13, 2013 at 4:23am

I guess the parts of the forced pooling law we're having trouble with are the parts that dictate that the force pooled landowner would also be forced into an ownership stake in the well or wells and as such also be forced into assuming unknown liabilities / developmental costs / production costs / post production costs / Real Estate Tax increases and any other Taxes (Severance Tax for instance)  wrought by the development of any Oil & Natural Gas Well.

Ok - force the dissenting landowner to accept the prevailing Core Lease Terms such as 'Signing Bonus', 'Primary Term', 'Lease Renewal Term' etc. that the other 65% of landowners agreed to; but, not also to force the dissenting landowner to accept ownership and various other costs some samples of which are described above. This would disallow a dissenting landowner (not part of the 65% of the landowners who have agreed to the lease) to hold up the show for simply more money (more 'Signing Bonus' / higher % royalty payment). 

Why bludgeon the dissenting landowner with ownership liabilities ? ?

It's over kill in our opinion.

Why not try negotiations instead ?

In our opinion (speaking for myself and Mrs. as landowners and prospective lessors) : The way it's written now is landowner oppressive and it's a bad law in that regard and needs modification / amendment.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 13, 2013 at 4:31am

"Why bludgeon the dissenting landowner with ownership liabilities ? 

It's over kill in our opinion.

Why not try negotiations instead ?"

They are trying negotiations.  They've offered a lease.  Take it, don't take, there are consequences for both.

Permalink Reply by Joseph-Ohio on December 13, 2013 at 4:35am
In our opinion if you don't take it you shouldn't have to own a well or wells.
It is overkill.
Being forced is not negotiation.
Permalink Reply by Sam Moore on December 13, 2013 at 4:33am

As a non participating owner you would have no more liability than a stock owner in IBM.

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