I own two NMA’s of mineral rights in Proctor District that were taken under a WVOGCC Force Pool order for EQT after I could not come to terms with EQT about a lease. Under the order my royalty rate is 20% for the Utica formation only. Now EQT has contacted me about signing a lease for the same parcel of land which reads “…in all formations or strata…” at 14% NET. If I were to sign this lease, would the 14% NET rate supersede the 20% rate for the Utica or would it only apply to the other formations underlying the parcel such as the Marcellus, but not the Utica? Also, if I was instead subjected to a “Standard Lease” under Cotenacy on this parcel, would the royalty rate in that lease supersede the Force Pool royalty rate? What takes precedence, a Force Pool order or a lease?
I think a forced pooling lease is considered a lease. The royalty % is determined for each well by comparing the royalty percentages in each of the leases already signed that are involved in that well area, and somehow getting a number (not an average but maybe a weighted average) of the %. Similar thing for bonus money. Your royalty % seems set at the 20% and a lease as you described might be considered void, at least for that Utica well. A different depth well is a different well. You might benefit by consulting an attorney about this situation. You could wait and be force pooled for the Marcellus depth well. I am not an attorney just making an educated guess about your situation.
Consulting a qualified oil and gas title attorney in your state and locality is the best way to obtain a reliable answer.
That being said, I would not want to execute anything that could create unnecessary ambiguity of record, especially with a lower royalty lease covering the same parcel. If the new lease you are being presented fails to except the Utica Formation which is under a pooling order, you could request or negotiate that the lease except the Utica formation. You could try to negotiate up to 18% royalty or higher.
If the pooling Order is still in effect, there is little way around the 20% royalty prevailing. However, If the Order has lapsed or expired or expires in a few years and you executed a new 14% royalty lease that expires even later, all you have of record in the courthouse is a 14% royalty lease that looks like it covers all depths, and depending on primary term, that 14% lease could get drilled and held.
Hope this helps or spurs more interaction…
Once you are force pooled, you are considered leased and will receive the royalty and lease bonus as outlined in the well final docket. If you subsequently sign a lease, you will override the force pooling terms. You would not want to sign an all-formations lease when you already have a 20% gross royalty free of post-production costs. You are only considered leased for the strata in this well, that being the Utica. All other formations will be considered unleased and free to negotiate, or potentially force pooled again in the future. Use your current situation to your advantage in negotiations. All force-pooled leases are free of any post-production expenses. That and a 20% rate is as good as it gets in WV.