Say No to Forced Pooling

Forced Pooling

Say No to Forced Pooling

On March 2, 2021, the latest forced pooling bill was introduced in the West Virginia House of Delegates.  This bill, HB2853, would be disastrous for oil and gas mineral owners throughout West Virginia.  If an oil and gas owner does not agree with a company’s lease offer, the company would have the right to force a lease with a 12.5% state minimum royalty under extremely lenient terms.  The state Senate has introduced a similar forced pooling bill, SB538.  They are trying to fast track these bills into law, so it is important to act now!

What Can You Do?

CONTACT YOUR ELECTED REPRESENTATIVES TO LET THEM KNOW YOU OPPOSE HB2853 AND SB538!

Your Voice Counts!  Click on your local representative from the list, then copy and paste the letter below in an email to them.  If you have more than one representative listed, you should send to all that are listed for your area.  Don’t see your rep, click here:  House of Delegates, Senate.

House of Delegates

Senate

(copy and paste this letter in your email)

I write to voice my OPPOSITION to the forced pooling bills, HB2853 and SB 538. These bills would be disastrous for West Virginia’s oil and gas mineral owners and provide a windfall for out-of-state, multi-million and billion oil and gas companies. West Virginia’s oil and mineral owners deserve better. They deserve the right to negotiate fair and reasonable oil and gas leases without the threat of forced pooling. They deserve the right to fight for a competitive oil and gas royalty and not be threatened with the state MINIUMUM 12.5% royalty. They deserve the right to control and make their own decisions with their own property and not have those decisions made by government bureaucracy in Charleston.

The forced pooling bills are nothing more than MORE government, MORE bureaucracy, and MORE giveaways for out-of-state big money oil and gas companies. I urge you to stand up for West Virginia’s oil and gas owners and OPPOSE the HB2853 and SB538.

What Would HB 2853 Do?

It would force lease your oil and gas minerals if not already under lease.  There is no requirement that the oil and gas company negotiate in good faith with you or negotiate at all.  The only threshold that the oil and gas company would have to meet is to have 65% of a unit signed to a lease.  Remember, the oil and gas company forms the unit and draws the boundaries.  They can configure their units to include or exclude as many properties as they want.  Thus, only under the most extreme circumstances would this extremely low threshold prevent an oil and gas company from force leasing your property.

What Are the Terms of a Force Lease?

Perhaps the most important lease term is the royalty.  Under the forced pooling bill, a force lease would have a state MINIMUM 12.5% royalty.  The other lease terms would be those “provided” by the oil and gas company.  The only caveat is that the West Virginia Oil and Gas Conservation Commission would decide whether those terms are “just and reasonable to the parties based upon terms typically found in other similarly situated arm’s length leases within…the unit…within a reasonable time….” 

Personally, I do not trust government bureaucracy in Charleston to determine what is just and reasonable for my and my client’s oil and gas minerals.  Based on my experience, that means that royalty deductions for post-production expenses will be permitted.  Bonuses would be lower than we’ve ever seen, and the lease will be filled with industry-friendly operational and other terms. 

Would Oil and Gas Companies Still Negotiate? 

While I expect they would seek to obtain leases without having to force pool, I expect their offers to plummet.  Oil and gas companies would have no incentive to offer anything other than 12.5% royalty.  They have no incentive to offer competitive bonuses.  They have no incentive to negotiate lease terms.  I would expect low-ball, take-it-or-leave it offers under the threat of forced pooling. 

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