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Permalink Reply by jffree1 on February 18, 2010 at 14:32

Texas or Louisiana?

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Permalink Reply by jffree1 on February 18, 2010 at 16:48

Below is an excerpt from a discussion about rule change proposals submitted by Devon Energy to the Railroad Commission. You can read what the Railroad Commission had to say about it.

Could you post the letter so we can see what it says?

http://www.gohaynesvilleshale.com/forum/topics/texas-railroad-commi...

"The examiners also rejected Devon's proposal for an allocation rule to govern wells drilled across unit lines. The examiners opined that the RRC had no authority to adopt such a rule. Quoting the Texas Supreme Court, the examiners said that "the orders of the Commission cannot compel pooling agreements that the parties themselves do not agree upon." Devon submitted an opinion from Ernest Smith, former Dean of the UT School of Law and professor of Oil and Gas Law at UT in support of its argument. The examiners said that Professor Smith's opinion did not support Devon's proposal."

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Permalink Reply by TheCommish on February 19, 2010 at 3:41

The RRC did approve Devon's application for the Bossier-Haynesville for most of East Texas, with the exception of the production sharing provision.

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Permalink Reply by jffree1 on February 19, 2010 at 16:07

So, what will happen when they get a number of owners to agree to this cross unit "sharing" but there are still others who don't like the idea. How would that be reconciled? I'd like to hear your opinion.

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Permalink Reply by Neeky on February 20, 2010 at 7:08

The RRC has ruled at a hearing that "wells that are permitted based on a
production sharing agreement should be approved when the usual criteria are met
and the operator certifies that at least 65% of the working and royalty interest owners
in each component tract have signed the production sharing agreement." So it sounds to me like as long as they get 65%, they are good to go and the non-signing owners would be treated the same as signing owners.

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Permalink Reply by Neeky on May 14, 2010 at 5:25

Interesting development, RRC just approved permit for the Taylor-Abney-Obanion well in Harrison, apparently without the 65% approval from owners. This is a 1500+ ac. unit. It sounds to me that if previous production on the individual units were to stop, 1500+ acres could be held by production from one horizontal well, despite RRC rules.

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Permalink Reply by Neeky on February 19, 2010 at 5:08

Yes, I'm aware of the RRC opinion. They did not reject the use of the allocation formula, only that they did not have authority to "compel...agreements" between lessor and lessee. Which is why I am sure these PSAs are now being sent out, to have interest owners themselves agree to it.

Sorry, I don't feel comfortable posting the letter up here, but I had heard that the PSA is being sent out to interest owners in multiple counties, so I was curious how widespread it was given that no one has mentioned receiving one on here.

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