Class Action Suit May Affect 50,000 Haynesville Shale Landowners
On April 10, 2010 a class action suit was filed affecting Haynesville Shale property owners in all of the Haynesville Fields of north Louisiana. The suit is filed against the Commissioner of Conservation and operators in the Haynesville Fields. The basis of the suit is that the Commissioner of Conservation is authorized by statute to establish a production unit that can be drained by one well. Members within one of the proposed classes are being denied their pro-rata share of production and the other class members are being denied their market value of their leasehold interest ownership. This may affect some 50,000 property owners in northwest Louisiana!
We have met with some of the attorneys and are pleased with the representation. The attorneys are class action attorneys Fayard & Honeycutt of Denham Springs; Simon, Peragine, Smith & Redfearn, LLP of New Orleans; Law Offices of Rudolph Estess, Jr. of Baton Rouge (in that office as special counsel is Jack C. Caldwell), Charles Tutt of Shreveport, Cave Law Firm of Baton Rouge, and Ryan Gatti an attorney from Bossier City. Through our own independent research we have learned that Mr. Caldwell was a contributing author to the Louisiana Mineral Code and also served as Secretary of the Department of Natural Resources.
If successful this would create a tremendous economic boom to this area by creation of many more jobs, not to mention a substantial increase to severance taxes to the state of Louisiana. We have received per request a filed copy of the pleadings filed in East Baton Rouge Parish. The suit explains the law and the resulting violation. Should you desire a copy of the suit please email your request to us at: www.fairdrilling.com. You may also wish to contact your attorney or local attorney for the group, Mr Gatti.
Andrew
Views: 6054
Replies to This Discussion
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Permalink Reply by Linda Whatley on
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I agree .... change the law and make it legal........ NOW!
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Permalink Reply by Andrew Walker on
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Baron: To answer your question, wells in Louisiana can be drilled on a lease basis...or on a "declared unit"....or on a "voluntary unit"....or on a "compulsory unit." The provision you have copied allows this lease to be pooled into a voluntary unit. This is not the same as a compulsory unit. There are very specific state laws that govern how compulsory units are to be established. These laws are being violated.
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Permalink Reply by E & E on -
Ok, here's my 2 cents...
I have always been proud to be a Louisiana Girl. In my experience with o&g especially lately, this statement has become a larger one for me. In my situation, I would have been royally screwed if I didn't have the protection of the 640 units. Even tho I do hold a pretty piece of the 640, they would have just "cut" me out of the unit for not signing a horrible lease and not to mention the bonus and royalty percentage. All you have to do is look @ Texas to see examples of how the o&g's handle a mineral owner that wants all her donuts and delivered too.
Having the 640 unit gave me standing ground.
Having the 640 unit protected me.
Having the 640 insured that I wasn't just cut out.
Having the 640 unit made them have to deal with me.
Also for a note, I have a well that is 330' from my property line in another unit and the data on how far the drainage a HA well is still unanswered. Let's say I wouldn't lease and then these "new" rules where put in to effect. The well to the left of me I wouldn't get "fair and equal" treatment and the well to the right of me the same thing. I would be in what is called a "window" and I am grateful the DNR doesn't not let "windows" open just flapping in the wind. This is one way the DNR protects us mineral owners!!!
Earlene who's been MIA
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Permalink Reply by The_Baron on
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Good to see you Earlene... For once we seem to agree wholeheartedly....
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Permalink Reply by essay on
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excellent post. i think most of us agree that if the 640 units are illegal then the wording of the law should be changed to suit.
i suppose dragging it through the courts is how we have to fix it? where is the state congress on this issue?
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Permalink Reply by Mac Davis on
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The legislature is waiting for someone to bribe them to do the right thing.
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Permalink Reply by Kat Bloomfield on
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astute points, Earlene . . . You always show just how wise you are.
Esoterically, you know I love a topic worthy of good debate and I think the issues and questions raised by this one are fun.
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Permalink Reply by Steve P on
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Like blogs in general, there are no fact checks or accountability for what is said. For this string, the terms fraud and illegal are thrown about recklessly. Maybe the 640 acre units are illegal, but if I was betting, I'd give pretty good odds on the courts of Louisiana (or the Federal Courts) upholding them.
Everyone who would love to have a low but long producing HS straighthold well on their property, raise your hand. That's what I thought. Why do you think any company, and several have, spent the money to drill a straight hole HS that produces no more than, and usually less than, a good Hosston? To hold the lease.
Compulsory unitization was made law for a number of reasons, one of which was to have an orderly system for drilling and producing gas. I suppose that DNR could lay out 80 acre grids, but in what form? There is no exact science to support the 80 unit concept. At least not yet. It would be interesting and fun to watch a bunch of hired-gun reservior engineers try and prove that they are right and others are wrong on unit shapes and sizes. The DNR has operated for years on the basis that the deeper the well, the bigger the unit. One only has to look at some of the Hosston and CV units with 5 or 10 alternate wells to understand the unit size is a SWAG. That's not new. Perhaps there just hasn't been a clever enough lawyer to take the Department on yet. That's doubtful. For horizonal wells, will the 80 acres be a mile long? So for every section, one of the section lines is going to look like a fence row with wells strung out all across the section? Is that an economical, efficient, and even rational approach to producing this fabulous bounty we have been given? And don't forget, there's the Bossier formation out there also. So, under the rationale of this "class action" suit, I suppose we will have more wells drilled - 2 for every long, narrow 80 acre unit. Makes me want to check and make sure my land is on the interior of the section, not along a section line.
My information is very dated, but I seem to recall, at least 25 years ago, the the Commissioner had never lost a legal challenge to a compulsory unit. Never. Is that still good data?
This suit, like most class actions, is all about lawyers (and, yes, Jack Caldwell is a formidable name) making their fees (and I am one but I earn a salary as opposed to a fee) and angry people who feel they have been cheated by "the man" that allow those same lawyers to keep stoking the fires and promising riches. But the riches always end up being just for the lawyers. Did you go cash in your Blockbuster settlement coupon for a free movie, or redeem your Microsoft settlement coupon towards 10% of the cost of an upgraded version of Windows?
I'm with Earlene (don't know you but I already like you): I'll be happy (actually, thrilled and blessed) to have 8 horizonal wells drilled in the section where my land is located over the next 20 or 30 years as opposed to the companies drilling a bunch of straight-holes in the next 4 or 5 years and holding my lease while producing marginal amounts of gas. Which is the logical outcome from this suit if it were to be successful.
Other than people trying to bust leases, I don't understand the end game here. Oh, I forgot. It's for the legal principle of drainage.
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Permalink Reply by sesport on
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Mr. Porter - First, thanks for your thoughts. Question ... would it be possible for a mineral owner with a more-than-majority share in a unit to control, and possibly delay, development & production thus preventing smaller stakeholders in the unit from being produced & receiving their revenues/royalties?
thanks sincerely 80)
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Permalink Reply by Steve P on
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I don't know the rules well enough to answer your question. If there is a mineral owner with half of the 640 and that owner is unleased, then it would be unlikely that any operator would drill a well at its own expense and "carry" that mineral owner. Of course, if there isn't other production on the servitude that is interrupting the running of the 10 year period, then that mineral owner will want drilling to occur so that their mineral rights continue.
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Permalink Reply by Bobi Carr ("parker") on
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I have had a difficult time seeing the merit in the argument for this suit. After discussing it with a friend, I finally see what I have a problem with.
In my opinion, the present system is orderly, easily understandable and is equitable.
I can't see how you could ever draw up a system that would fit these items any better.
You couldn't arbitrarily say 80 acre spacing, because some areas of the play have better characteristics. Some areas aren't fully know yet.
Would you have to redraw the units every time a new variable was discovered?
As technology improves will the units have to be redrawn yet again?
Would some units have to be larger because the operator isn't as efficient as another operator?
One final thought that I have about this suit, since it is against the state, per se, we all end up paying for the costs.
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