Saturday, August 1, 2009

Forced Pooling

With Cherokee Horns recent push to get people to sign, many have been asking about what happens in a "Forced Pool" situation. Well here it is right from Cherokee Horn's website.

It says that those who do not initially sign would not get the bonus but receive the 20% royalty. After drilling costs were recouped and well was producing, the forced pooled lots would get 100% royalties while the signers still got their 20%. It almost seems too unreal but I have read legal blogs too and they all say the same. So it seems not signing is a better deal and the best protection for our homes no matter what. Why? Because of our O & G ordinance, we still get to fight for the distance of 1000' or with variance of 500'. The signers automatically give permission for 500' or 300' with a variance.

"An exception to this would be if a homeowner’s unsigned lot were absolutely crucial and the company had to include it. A scenario such as this would exist if the company could only access the rest of their mineral pool by going through a particular unleased interest. In that particular case, the gas company could appeal to the Texas Railroad Commission to have the needed parcel included in their pooling unit. This is called forced pooling.
In such instances, once production is established the owner(s) that were “forced pooled” would receive a 20% royalty payment, but no bonus. Once the gas company has recouped 100% of their well costs, then the mineral owner(s) would come in for their full interest. This means the royalty goes from 20% to 100%. "


Anonymous said...

Why the false hope? Only once has your example ever occured and it was over 60 acres not a 1/4 acre home trac. Here's what happens 99.9% of the time. If Titan/CH remains 330 ft from an unleased property, those unleased properties will get nothing - no bonus, no royalties. They would only get something if they offered to lease and CH/Titan was willing to let them in. If Titan/Ch got closer than 330 ft, then they would file a rule 37 exception, and when granted, the homeowner tract will get No bonus or royalties Ever, unless the gas companies were willing to let them in. In your example, the driller would be able to recoup all of their costs, the tract owner would be waiting up to 10-15 years, encur all legal costs, and get royalties based on what's left. Good luck!...and shame on you for building false hopes.

Anonymous said...

According to the FM O & G ordinance, they have to stay away 1000'from any unleased property unless they get a variance for 500', so those preperty owners who border the proposed drill site are very important. Those are the ones who have been asking about Forced Pooling and it is not me building false hopes but CH since this info came directly from their website.

Anonymous said...

If they're asking then send them to the driller and find out if that's an option. If they think holding out will pay them 100% royalties, then they're dreaming and you're helping build their false hopes that it will happen.

Anonymous said...

That is why they posted Cherokee Horns link. So people can read it for themselves. If this was false information, they would not put the link there.