I hope someone out there can fill me in
The terms they were offering were "bottom feeding" rates, even a lawyer I contacted said so. I could not get above 1/8th royalty and they only would get to a 5yr/ 3yr time frame at around $35 acre so I didn't sign. I guess the landman was no longer interested and now nothing is happening. What do I do if they drill on neighboring rights and start pumping. I have no contract as to royalties etc. Also, does this happen to other people who do their research and "hold out"? I should mention this is in Johnson County, Wyoming.
Oil Duchess:
You can always shop around with other companies leasing in this area. I am not familiar with this area of Wyoming in regards to drilling activity, but if it is an active area, you should be able to contact other oil companies (not landmen) and see what they have to offer. I did the same thing on our mineral area in Montana and got a substantial amount more from another operator after doing some research and making some phone calls.
Charles is probably correct. However, if he is not, and drilling does occur all around you, you will likely be force pooled. So, oil would be pulled from your property, and you will be paid for it, but it is done in a different fashion. I think there is an article on here about forced pooling, or other posts about it. I think some unscrupulous landmen use the "we'll just force pool you" line to scare people into signing bad deals
Did most other people actually sign at that amount, or are you just wondering what if? If it actually hasn't happened yet, get a post going on here if you haven't already for Johnson County, and get your neighbors banded together. Groups can work miracles!
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I believe you get at least 1/8 cost free royalty in Wy if you are force pooled, the other 87.5% goes to paying your part of the well then the risk penalty. If you sign you get the signing bonus. If you don’t sign you have a possibility to recieve 100% royalty after the well is paid for plus the risk penalty. The sad thing is the risk penalty can be quite high. The risk penalty in N.D. for the rights owner ( non lessee ) is 50%. In other states it may be up to 300%. In your position I would seek a lease with someone else. If you can band together with neighbors when contacting other companies, that would be even better. How close to you is drilling happening now? This may be an attempt at pure speculative leasing. I hope you can find a better deal.
Thank you for your advice. How would I find out what other companies are leasing in that area? I no longer live in Wyoming and have no contacts in that area.
You can always shop around with other companies leasing in this area. I am not familiar with this area of Wyoming in regards to drilling activity, but if it is an active area, you should be able to contact other oil companies (not landmen) and see what they have to offer. I did the same thing on our mineral area in Montana and got a substantial amount more from another operator after doing some research and making some phone calls.
Thanks Lisa, I don't think any drilling or activity is presently taking place. No, Continental Resources did not mention "force pooling" they just simply would not negotiate on royalties or terms/clauses and stopped calling. I'm told they are no longer leasing and have closed down. Most of my relatives signed but that is only a small fraction of the land.
I tried to get a Johnson County post going but didn't understand how to navigate in answering the questions nor how to get the symbol to designate where JC, Wyoming is, as others have done for Platt County and for other states. If anyone can give me some help, I'd get it going. Thanks.
Lisa said:
Charles is probably correct. However, if he is not, and drilling does occur all around you, you will likely be force pooled. So, oil would be pulled from your property, and you will be paid for it, but it is done in a different fashion. I think there is an article on here about forced pooling, or other posts about it. I think some unscrupulous landmen use the "we'll just force pool you" line to scare people into signing bad deals
Did most other people actually sign at that amount, or are you just wondering what if? If it actually hasn't happened yet, get a post going on here if you haven't already for Johnson County, and get your neighbors banded together. Groups can work miracles!
Thanks for all the input. I’ve read the items/discussion on “forced Pooling” as you suggested and it answered my “what if’s” very nicely. It would be the path of last resort but would be possible. How would I know if the leasing is pure speculation or not? Hopefully I can get a Johnson County post going & get some information flowing. How would the mix of several oil companies leases get sorted out if a well is to be drilled and does produce? If the lease is sold to another company do they have to tell me who until any drilling begins or royalties need to be paid?
r w kennedy said:
I believe you get at least 1/8 cost free royalty in Wy if you are force pooled, the other 87.5% goes to paying your part of the well then the risk penalty. If you sign you get the signing bonus. If you don't sign you have a possibility to recieve 100% royalty after the well is paid for plus the risk penalty. The sad thing is the risk penalty can be quite high. The risk penalty in N.D. for the rights owner ( non lessee ) is 50%. In other states it may be up to 300%. In your position I would seek a lease with someone else. If you can band together with neighbors when contacting other companies, that would be even better. How close to you is drilling happening now? This may be an attempt at pure speculative leasing. I hope you can find a better deal.
Duchess, they sort out multiple owners in a well all the time, so I wouldn’t worry about it. As to your lease being sold to another company, it’s not something for you to worry about either. You will be paid by the operator of the well, not the lessee and according to the terms of the lease. You could stipulate that if the lease was sold that you have to be notified, but no matter who holds it, you get paid the same. As to whether the co trying to lease you is doing it on pure speculation? You have to research them. See if they have a web presence and what people say about them. You could ask about them right here, and see if anyone knows anything about them.
I have no idea how to start a group, but even just doing a post with the name "Johnson County, WY" in it will help, as people should search that term if they are from there. Go the Wyoming Oil and Gas Commission website. You can search for pending and approved permits, as well as existing wells. If you find activity near your land, I'd consider contacting whichever company is listed. I doubt it is, but if the Johnson County Clerk and Recorders records are online, you can search the leases, and contact those companies.
As for whether or not it is mere speculation or not, it's hard to say. Obviously permits and wells are proof that it is not speculative, but the absence of those does not mean that it is speculative. Weld County has gone gangbusters in terms of wells. Further south, there have been no wells yet, but yet I guarantee that the leases have not been speculative.
As for multiple companies having leases, I would venture to guess that 1) the companies become partners in a well or 2) the majority company buys out the leases of the minority companies. What notification you receive will depend on the lease you sign. Some leases require approval of assignment, others notification of assignment, and others probably don't mention it at all.
Oil Duchess said:
Thanks for all the input. I've read the items/discussion on "forced Pooling" as you suggested and it answered my "what if's" very nicely. It would be the path of last resort but would be possible. How would I know if the leasing is pure speculation or not? Hopefully I can get a Johnson County post going & get some information flowing. How would the mix of several oil companies leases get sorted out if a well is to be drilled and does produce? If the lease is sold to another company do they have to tell me who until any drilling begins or royalties need to be paid?
r w kennedy said:
I believe you get at least 1/8 cost free royalty in Wy if you are force pooled, the other 87.5% goes to paying your part of the well then the risk penalty. If you sign you get the signing bonus. If you don't sign you have a possibility to recieve 100% royalty after the well is paid for plus the risk penalty. The sad thing is the risk penalty can be quite high. The risk penalty in N.D. for the rights owner ( non lessee ) is 50%. In other states it may be up to 300%. In your position I would seek a lease with someone else. If you can band together with neighbors when contacting other companies, that would be even better. How close to you is drilling happening now? This may be an attempt at pure speculative leasing. I hope you can find a better deal.
WY statute requires 300% recoupment of AFE costs (budget costs of the well) prior to an force pooled mineral interest is paid. WY is a self-reporting state so the burden of proof of recoupment of costs only rests with the Operator, not the Lessor.
I’ve found that most WY operators actually report correctly to the State.
However, there are a few exceptions.
JK
You will get a chance to elect under the pooling before you are forced pooled.
Does anyone know about activity in Weston County, if any? Thanks, Jj
Why are people responding to a post created in March, 2011?
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