A legal issue

Our leased will run out on the 10th of this month for one section. We hold leases in three sections. The COMPANY madeLease an offer to extend the lease for a year. They were willing to pay an amount per acre that we thought was fair but they would only give us 22.5%. The original lease was for $100 per acre and 20%. The company refused to go to 25% and withdrew their offer. Last Tuesday, they moved their rig to another section 10 across from the one the lease will run out, section 3. They had started drilling with a legal permit on section 10 last Oct. then pulled out. Now they want to use that hole to drill into three. They do NOT have a permit to drill into 3 yet. My question is: Legally can this be done?

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Permalink Reply by Ron Jon on May 5, 2010 at 14:43
They'll need a permit, but sure they can drill 3 from 10. Why are you questioning there ability to do so?
Permalink Reply by Skip Peel - Mineral Consultant on May 5, 2010 at 14:49
Linda, if you give the township and range to go with the sections you mention it will make it easier for members to give you accurate comments. Your description above is not clear. It seems that you are asking if there is a valid permit for the company to drill into Section 3 from a surface location in Section 10. It is quite normal for horizontal Haynesville wells to do just that but they must be permitted with the clear intent to do so. If that is what you asking, the section-township-range will allow us to answer.
Permalink Reply by Linda Blunt on May 5, 2010 at 16:02
Skip,
I am sorry the question was not clear. I know that the company has the right to to drill from 10 into three. They have a permit to drill 10 as of Oct 6, 2009. They drilled vertically to 10650 as sighted in the last entry of Jan. 22, 2010. Then they pulled their rig. The question I should have asked is, can the permit for section 10 be changed to section 3 with out a permit to drill section 3 being issued? They applied for a permit to drill section 3 in April of 2009. That permit has not been issued as of 5/5/2010.

Thanks
Permalink Reply by Skip Peel - Mineral Consultant on May 5, 2010 at 16:25
Without the township and range, I can not give you an accurate answer. And I don't know which company "they" is. Rigs getting pulled off pads is a common occurrence as oft times one rig drills the vertical and another is brought in to drill the lateral. A permit does not require a company to drill a well. Permits expire without the well being drilled practically every week. And as far as I know a permit would not be amended from a bottom hole in one section to another. A new permit application would be submitted. How do you know that they have applied for a permit to drill a well for section 3 that has not been issued?
Permalink Reply by Les Bamburg on May 5, 2010 at 16:27
Linda, the operator would have to apply for an amendment of the permit for the original well drilled in Section 10. The amendment would have to identify the well lateral is now being drilled north into Section 3 rather than the originally permitted lateral to the south.
Permalink Reply by HBP on May 6, 2010 at 1:31
Unless you're Encana. Then just try whatever you can to hold acreage and figure out whether it was legal later.
Permalink Reply by Linda Blunt on May 6, 2010 at 4:30
Thank you Les,
Do you know if this can be done quickly? I have been checking sonlite but I do not know what to look for. I've checked for permits and well production. Would there be something else that I need to check?

Thanks again!!!
Permalink Reply by P.G. on May 6, 2010 at 4:41
I'll bet if the ones trying to answer your questions knew the township and range they could look it up tell you all about what is going on there...
Permalink Reply by Linda Blunt on May 6, 2010 at 4:44
Thank you.
Permalink Reply by Les Bamburg on May 6, 2010 at 8:20
Linda, I think you just have to keep checking the well under Sonris and see if the permit has been amended. The amended information will not be posted until approved.

Bridas, LC Blunt Jr 10 #3 Well, Serial #240300, S10-T12N-R15W
Permalink Reply by Linda Blunt on May 6, 2010 at 10:10
Thank you Les,
As of thirty min. ago there was no change in the down hole.

Thanks again! :)
Permalink Reply by Mac Davis on May 6, 2010 at 10:14
I think some of the SONRIS data on the web site is a week or two behind the actual filings. I've noticed cases where the date stamp is considerably before the date when the data appears on the web site.

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