We’ve
had some questions lately about pooling units and the issue of forced
pooling specifically with regard to any homeowner who has chosen not to
sign a mineral lease. We feel that this is an area that homeowners in
general don’t understand and one that needs to be explained to
everyone.
First of all, a pooling unit is an area of contiguous tracts of mineral leases set forth by a gas company as the designated area that they plan to drill. These pooling units are formed in such a way as to extract the most natural gas possible at the least expense possible with regard to laying the horizontal underground pipe to access the gas.
This means that if you live in an area, such as a street, with only scattered signers, whether you have signed or not, your lot will likely NOT be included in the final pooling unit, because it would be too costly to include. Those who have already signed would be able to keep their signing bonus, but would not get royalty payments. Those who have not signed would get nothing.
An exception to this would be if a homeowner’s unsigned lot were absolutely crucial and the company had to include it. This does not exist in any Cherokee Horn units because we already have established drill sites and bore paths as of July 2009.
We know of only one scenario in another county where the gas company could only access the rest of their mineral pool by going through a particular unleased interest. In that particular case, the gas company was able to appeal to the Texas Railroad Commission to have the needed parcel included in their pooling unit. This is called forced pooling. In this ONE instance in the Barnett Shale, once production was established, the owner(s) that were “forced pooled” received a 20% royalty payment, but no bonus. Once the gas company had recouped 100% of their well costs, then the mineral owner(s) came in for their full interest.
Otherwise, if an unsigned homeowner has been left out of a gas company’s pool unit, they are just out, which would typically be the case in our Denton County units--for all of the unsigned properties. They can hire a lawyer and file a case with the Texas Railroad Commission. But, if they have had sufficient opportunities to sign and have simply chosen not to, the Commission will not look favorably upon their appeal to be included after the fact.
Holding out on the chance that forced pooling will allow you to earn greater royalties down the road doesn’t add up. Why? Because there has only been one incidence of this type of forced pooling by a gas company in the Barnett Shale.
Gas companies form their final pooling units in such a way as to avoid the need to “force pool” any lots. This is possible 99.9% of the time, so owners who have not signed are left out. It is simply a matter of being too late and missing the party.
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