Only thinking of doing this because companies are lowballing offers on leases and then force-pooling mineral owners who don't like their terms, sometimes so quickly that they apply to pool 25+ sections in the SAME township at ONCE (same hearing date). Why would they do that unless they plan to "flip" the leases to other companies? Is applying to force-pool 25 sections at once (in the same township) "normal" now?
Figured maybe if I leased to myself (or threatened to) that would give me some leverage against these lowball offers and drive-by poolings. So what are the possible outcomes after leasing to myself? Could they just force-pool my lease instead of my mineral rights? Why would I want to (or not want to) lease to myself? Is it a good option assuming I don't have plans to participate in any wells that are drilled and don't really need any bonus money?
This is a great question that I have also asked. They can still pool the new lessee, but the obvious benefits would be that your lease terms would be honored.
The problem I heard brought up was the necessity for an arms length transaction. It is hard to hammer down the validity of this necessity. When asked this usually sparks a curious legal debate which indicates to me that this is not defined sufficiently by either legal statue or case precedence. I do not know how well such a scheme would hold in court if contested.
It seemed to me the best way around that was to lease to a third party then have your company purchase the lease from that 3rd party post pooling and after elections are made.
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Mick, I believe I encountered you in the past and you were billing yourself as an industry expert. Why would you be asking these questions?
Part of being an expert, Michael, is knowing when to seek out others who may have expertise in areas you are not familiar with in order to learn something new.
Thanks for your input on this R. Story!
I've worked with Mick before in the past. He knows more than most and I would consider him a professional. The AAPL and NARO also felt enough of the same to credit him with his certifications.
Some areas are simply unexplored. I think this is one of them.
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Mick,
I've been a landman for 36 years now (just to let you know my experience) and I don't think it would be helpful to you per say. A lot of negotiations go on behind closed doors in the industry between companies with AMI's designed to "price fix" if you will and I believe their attempt to pool large areas like this is just a way of trying to lock in lease bonus' and terms prior to any new discoveries that could cause prices and terms to change in favor of the mineral owner. I've seen mineral owners do this in the past (those that have large interest expanding over large areas) but seldom do they have the knowledge or expertise to engage in effective negotiations with those attempting these pooling's. It's important to note, that other companies with interests in a proposed unit that is being "forced" pooled are also subject to the pooling and have the same options as a mineral owner. Hope that helps.
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