How not to get cut out in Texas?

Oil and Gas Leasing Help
1

Can someone explain Texas unitization in general? In Louisiana, if you're in the unit boundary, you either get leased or you will back in after payout for your proportionate part of revenue of the unit. In other states, you are subject to a payout penalty but you will still get something, assuming the well does good.

I don't understand Texas... they can draw these units anyway they care to, leaving you out, I do know that. So, why do they care if I lease or not? Why should they cave in and meet my provisional demands or demand for more money or more royalty? Assume I have 200 acres. That's a nice chunk, and I know they want reserves and if the geology is narrowly focused, my 200 acres might be crucial. But if it's not, why cater to me? If there is a lot of competition, I can understand why they would, but often, there is no competition.

I understand there is some kind of difference whether or not your tract is the drillsite or not but I don't know what it is.

If I feel a certain something is got-to-have-it, I don't want to lose out but I want what I want! I have been ripped off before. I know it's business but a fella needs to know what he's up against and Texas is really confusing. In fact, does anyone know of a mineral law book that covers many states general provisions?

But I wish someone could take a stab at addressing my concerns about Texas... what leverage do I have?

2

The Basics of Pooling and Unitization in Oil and Gas Leases

Check out this past post by Buddy Cotton.

3

Thanks, I read all three articles. I am still confused, probably even more so. For instance, sans competition from other lessees, I can't figure out why a lessee would ever offer more than minimum terms. Of course, he has to assemble a lease block and if his offer is too low, nobody will lease. But once he has a leaseblock...

Buddy's article proved that the lessee can benefit from cutting you out. I realize that in his example, it was a much smaller tract and not 200 acres. It's just really confusing about how far a lessor can push for his requests.

4

Dear Mr. Neverbilly,

Since 99.99% of the unites in Texas are voluntary pooled units, the first step is to lease to the operator. That improves the odds that you will be pooled.

however if you have 200 gross/net mineral acres, all you need is 40 acres to drill a well and the oil company would not be willing to give some other company even a corner shot on your reserves.

This can be a very intricate business with a lot of decisions made with inferior business intelligence on what the other side is up to.

Like spy vs spy, each situation is unique.