Say you own a small tract of mineral rights, say, 5 acres. If they drill and develop the area around your land, will they eventually lease you and put you into a unit or can they just forget about you and you never get anything?
The answer to this depends on your state laws. An operator in PA has no obligation to lease anyone other than those tracts a Marcellus wellbore is directly under. I think WV is similar, but not sure. There is a relatively restrictive forced pooling bill in the WV right now. Again, not sure about Ohio, but they have forced pooling.
If the area around your land is developed already, it's unlikely that things would change in the future. If you're not included, you're not included.
If a well bore is being drilled next to to you right now, you need to get leased very soon. As in reduce your expectations on any signing bonus and just get signed up. My family leased a larger Washington County, PA tract a couple of months before a wellbore was drilled within ~50' of us. I felt lucky to receive a relatively standard bonus (for the area) of $3500/ac and 18% royalty.
So, in PA, they can just leave you out? Wow, how inequitable. So much for fair development of resources. Very curious, if anyone knows more about how it works in PA, WV and OH, please post. And if anyone replies about 'it's forced pooling in that state,' if you have the knowledge, please expand on your idea of how it works. Will they 'make' you lease or what?
You're better off to look up "rule of capture" and search on "forced pooling WV" than wait for some random person's explanation here. Lots of law firms have good primers on the subject. Steptoe-Johnson has numerous presentations -- they're active in both PA and WV.
Fair is in the eye of the beholder. :) Put the shoe on the other foot. If you owned a small O&G operator, why should you pay people a bonus for the privilege of having their gas extracted? You're already paying them a portion of the proceeds (royalty).
Ruby, they pretty much have to pay that up front bonus or they can no longer say they are taking all the risk and justify the size of their net revenue interest. They pay the up front bonus usually less than 1% of the value of the minerals in exchange for 75% to 88%. They get alot of milage out of that 1% or less.
An excellent reason for them to pay a bonus would be a tangible, easy to point to consideration to make the lease binding.
ruby_99 said:
You're better off to look up "rule of capture" and search on "forced pooling WV" than wait for some random person's explanation here. Lots of law firms have good primers on the subject. Steptoe-Johnson has numerous presentations -- they're active in both PA and WV.
Fair is in the eye of the beholder. :) Put the shoe on the other foot. If you owned a small O&G operator, why should you pay people a bonus for the privilege of having their gas extracted? You're already paying them a portion of the proceeds (royalty).