Part of my family owns minerals and have signed leases. Some of us did not sign leases because of the low offers. Now I've been notified that the land is being considered for a 1,280 Acre drilling & spacing unit. If it is approved, what happens if & when they start to drill and percentages are not determined by signed leases? This is in Johnson County, Township 46 N Range 80 west?
If anyone has experience with this sort of situation, I would love to hear how it works. Thanks for help.
Duchess, at least you were notified- if you had leased your rights only the company you leased to would have to be notified. We are just east of the drilling and spacing units proposed by Black Hill E&P. Their plans are huge: they have filed for 13 D&S units together, each one 1,280 acres. You would be bound by a WOGCC order creating the unit, and if someone drills in it you would share equally per acre in the production. As far as whether you would have to pay a share of development costs, someone else should answer as I have no experience with that.
Dutchess, your unleased family members would be force pooled and have a large risk penalty imposed just as if you were uncooperative oil companies. Look up the statutes on forced pooling for Wyoming I believe that I glanced at them once and they were the grim nightmare that landmen have tried to scare me with elsewhere.
Ok I just looked it up again 30-5-109. Rules and regulations governing drilling units. 100% of costs plus 200% to 300% penalty, earlier in the regulations it says the operating company is entitled to all the oil except that which they must pay royalty on and there is no later mention of a royalty paid until the well and penalty is paid off, so I believe there isn't any. This would gibe with what landmen have [ incorrectly ] told me happens in other states. Like all good horror stories there has to be some slim basis in truth, Wyoming forced pooling is it. Not a good deal.
On the other hand, they may drill some pretty cheap wells in Wyoming so participation may not be out of the question but we are talking between $2,400 and $4,000 per acre. Don't bet more than you can afford to lose and I would recommend if you did participate, did get a good well proving your acres, that you consider marketing them to get the best price, equivalent to decades of royalty but you get it up front because you probably would not be able to watch the operator to keep them from overcharging you. This all dependent on getting professional help to determine the likely productive capacity of your acres. If you are to be force pooled, you should receive notice. I hope this helps.
Thank you for your replies. This is not really good news. This is a continuation of my former post.
I have now received a letter (dated 6/4/2014) from Black Hills Exploration and Production, Inc. that they have filed application with the Commission requesting approval for a horizontal well for designated wellbores. If this is a worst case scenario, I need to know if I should get a local (Johnson County) attorney or find a landsman or just sit and see what develops?
With so many companies working in that area of Wyoming, I would have thought that I would have been contacted to sign a lease with any number of them, not just the one Company that the others did sign with. They got very low ( bottom feeding type fees etc.) and I was not ready to agree but was not offered much else.
Thanks for the insights on the Wyoming Commission and The Black Hills E&P plans. Perhaps there is more news out there. I appreciate any help.
My brother and I have a direct line inheritance on the very same acres so please contact me [email protected]