Received proposal to drill in a 640 acre tract...Is it legally binding? Should we wait for forced pooling?

Oil and Gas Leasing Help
#1

Received proposal to drill "a well to a depth sufficient to test the Arbuckle formation...spacing unit will be a 640 acre tract...you are the owner of an oil and gas interest in this unit...elect one of the following options:

1. lease for a cash bonus of $300/net mineral acre, 1/8th royalty, 3 year term

2. lease for a cash bonus of $200/net mineral acre, 3/16 royalty, 3 year term

3. Participate in well... (We are not considering this)

The undersigned hereby elects Option No. ______.

Signed_______________

Name________________

Date________________

Phone No.______________

(We don't own surface rites, just the mineral interest.)

If we sign this are we legally bound to sign a lease only with them?

How long before "Forced Pooling" would occur?

I read that for "Forced Pooling" we would get the best deal that anyone received.

Does that include the cash bonus, royalty and the terms and clauses in the lease?

#2

That doesn’t look like much of a lease offer. It looks like they could drill and not pay you the agreed bonus unless they hit and then you would be bound by this very vague document. It doesn’t mention payment in advance of the cash bonus. I realize this isn’t the whole document, I’m just saying it doesn’t belong in any lease I would sign. I would also consider if this is from a flipper, wanting to sign as many as possible on the broadest possible terms for the least amount.

#3

Mary, I got one exactly like this. They will send you a lease to sign if you check off one of these. If you don't respond, they will force pool you and you will get a small bonus set by the state and 1/8th royalty. Forced pooling is not the best deal you can get. Call the company and see if you can negotiate better terms. Try to get a 20 or 25% bonus. There is a lot going on in certain parts of OK. If you have a substantial interest, it would be worth your while to pay for some good advice from and oil and gas attorney. I always talk to the landman and ask him or her lots of questions.

#4

Dear Mary,

I don't know your circumstances so all I can do is try to see what you're talking about. Forced pooling is, in many people's opinion a bad way to go. You are totally in their control if you sign up for that.

Question; Do you know anyone else in this spacing that you can talk to, find out if they have negotiated a better deal? Sometimes a number of ppl can get together and have more bargaining power. Talk to your neighbors about everything, being open and candid. There is nothing secret about these things. They are public record. It's not like giving family recipes away. The more you talk to ppl and ask questions the more you will know and will become a much better negotiator. Just my thoughts.

Question; How many acres do you have in minerals in this spacing? If you have a lot of mineral acres, you have a lot better bargaining power than someone with 5 acres. You're in the right place to get answers if you ask the right ppl. Most ppl in this forum are honest and want to help. The ones who aren't you should be able to pick them out after a couple of messages. If there is anything I can help you with, please send me a private message for honest answers. One more thing, the more acres you have, in my opinion, the more you need a Mineral Manager. They will pay for their fees many times over if you get a good one.

Yours,

Wes

#5

Post up the County township and range and I will see if we can get you some better answers as to what’s going on…Lauren your not really right about your answer…Force pooling is sometimes a good thing in you get the highest paid royalty That was offered…YOur money is in the ground and the higher the royalty the better …I really don’t know your financial situation so if the bonus money is what you are really aftet, this may play a factor on what terms you elect to choose…IF you can hold out for a bit the royalty will pay off far better and for way longer if the well drilled in the section produces paying quanaties of Hydrocarbons,feel free to email me as well if you would like help briandstamps@yahoo.com Good luck and god bless

#6

Kay County, Oklahoma: Cales 1-22 well Section 20-T27N-R4E. We own 10 or 20 acres (no surface).

Don't need the bonus but have never negotiated a lease, so I am hoping that the forced pooling lease would have the best clauses in the lease as well as best bonus and best royalty offered.

So on forced pooling do you get the best bonus and the best royalty but you have to settle for their clauses?


Brian Stamps said:

Post up the County township and range and I will see if we can get you some better answers as to what's going on.......Lauren your not really right about your answer...Force pooling is sometimes a good thing in you get the highest paid royalty That was offered...YOur money is in the ground and the higher the royalty the better ...I really don't know your financial situation so if the bonus money is what you are really aftet, this may play a factor on what terms you elect to choose..IF you can hold out for a bit the royalty will pay off far better and for way longer if the well drilled in the section produces paying quanaties of Hydrocarbons,,,feel free to email me as well if you would like help briandstamps@yahoo.com
Good luck and god bless
#7

http://www.occ.state.ok.us/ap/pooling.html

#8

Ms. Web, I would object to that form. It looks like something cooked up to say you refused a lease. There is no negotiation, just an either or selection, both of which look very favorable to the lessee. I think many states require that a good faith attempt be made to lease you before they can force pool you. You might consider adding your own selection of 1/4 royalty and $500 per acre bonus. If you go that route, be sure to have it notorized and keep a copy, just in case they happen to "lose" their copy. I also recommend that you market your acres to get the best lease. Good luck.

#9

Ms. Web,

It seems just like Mr. Kennedy said to me. From my observations forced pooling is not usually the best scenario.
Just the word "forced" kinda puts me off. If it were desirable it would not have to be forced. Mr. Kennedy said to market your minerals. I think he means to make an all out effort to find someone else who will offer better terms than the company that sent you those choices. Marketing is not everyone's baliwick. You might consider a mineral manager to handle your minerals for you. A good mineral manager will pay for themselves many times over, and you wouldn't have to do anything but sign the lease they design just for you. To me, that is the most desirable way to go, stress free and a better lease than you could ever come up with on your own. I wish you good luck with whatever you decide to do, although luck shouldn't enter into it.

Yours,

Wes Luke

#10

What kind of questions do you ask? How many times do you ask him to change or add clauses in the lease?
Was the one you got from GT & L Operating or a F Mark Roberts?


Laura Reagan said:

Mary, I got one exactly like this. They will send you a lease to sign if you check off one of these. If you don't respond, they will force pool you and you will get a small bonus set by the state and 1/8th royalty. Forced pooling is not the best deal you can get. Call the company and see if you can negotiate better terms. Try to get a 20 or 25% bonus. There is a lot going on in certain parts of OK. If you have a substantial interest, it would be worth your while to pay for some good advice from and oil and gas attorney. I always talk to the landman and ask him or her lots of questions.

#11

FYI on Okla. Force Pooling.

Pooling is not leasing

If one is listed in a pooling action you have a short open window to still negoiate a lease. Afterwards, a pooling election (terms) is offered to the respondent that usually consists of ...example... a 1/8 r.i. and a $200 pr. nma bonus, a 3/16 $175 pr.nma, a 1/4 and no bonus or participation. At this stage, if one doesn't respond and inform the Comm. of their choice, the Comm. will choose on their behalf. This will normaly be for the lower royalty with the highest bonus. The pooling time frame maybe for six months or one year. Absent drilling,the pooling expires ,you keep your bonus and your interest is open. In addition, only listed formations maybe drilled under the pooling. As with any mineral transaction stay informed and involved.

Good luck to you.

#12