Replies to This Discussion

Permalink Reply by Bobi Carr ("parker") on May 8, 2010 at 17:52

Andrew,

As to force pooling and protecting mineral owners, wouldn't smaller units that required development too quickly (to hold leases that were predicated on 640 units), cause prices to drop because of excess supply?

If this is the case, mineral owners would not be treated fairly because their mineral asset would be reduced significantly by the drop in prices.

Permalink Reply by sesport on May 8, 2010 at 18:31

Actually, I can see where sustained lower ng prices MIGHT be favorable to ng in the long term. Of course, those invested for the short term might not be happy.

With sustained low prices, ng MIGHT actually get that much needed edge over other energy supplies, such as petroleum & coal, and MIGHT preclude the need for cap & trade as the power gen & industrial sectors make moves toward using more of it (ng). Sustained lower prices MIGHT also make it more attractive as vehicle fuel, thus convincing manufacturers to give NGVs more than or as much attention as electric hybrids.

Also, it seems to me that the leases that MIGHT be allowed to lapse would be the ones acquired before word got out, the ones that didn't cost the companies much to begin with.

80)

Permalink Reply by Andrew Walker on May 10, 2010 at 5:59

Bobi:

The statewide policy I mentioned is attached.

For some reason I am not being given the option "reply to this" on your more recent posts, so I'll reply here:

Yes, under the guidelines I talked about, an operator would be forced to develop units with 25% royalty at the same rate as they develop units with a 1/6 royalty burden. Your suggestion that this would be an unreasonable burden on operators demonstrates how industry-biased you are! No offense, but can you imagine landman approaching a landowner and saying, "if you lease for 1/6 royalty we will drill eight horizontal wells in your unit, but if you lease for 1/4 royalty, we will only drill one vertical well and hold the unit indefinitely with just that one." How unfair to the other tracts within these units!

To answer your question about HBP property, please see those guidelines I posted.

I think you are correct that this should be a "win/win" situation, and I see you believe we "shouldn't fix something that ain't broken. " Let me just say that your opinion is outnumbered bigtime by those who feel the system is broke. I get dozens of emails every month thru my fairdrilling.com site from people who are being taken advantage of. There are people sitting in undeveloped units watching their neighbors units being drilled with multiple horizontal wells right now. There are people in irregular sections who are being "boxed out" by this unitization. They are stuck in 40 to 60 acre blocks and, most probably, will never get to see their valuable Haynesville minerals developed. It is downright unAmerican to leave these property owners behind. The system is broke.

Attachments:

• alt wells - statewide policy.jpg, 711 KB

Permalink Reply by Andrew Walker on May 10, 2010 at 7:52

GoshDarn:

Soooo....you are suggesting you know me? This is so much fun! Is it proper for me to ask your identity, or does the site prefer these nicknames?

Regardless, your points are well taken. If you know me you know our company operates wells in north Louisiana. We are certainly small time, but we don't believe this fight is just serving our self-interest as you say. We believe it is for the good of the majority. I disagree with your prediction that rigs will be "pulled to TX and the Eagle Ford." The Haynesville is a valuable, proven resource and the profit margin is certainly great enough that drilling will continue if the law is enforced...or if new laws are enacted (as I have suggested). In fact many predict the result will be a boom in drilling.

Permalink Reply by Linda Whatley on May 8, 2010 at 17:45

Bobbie,

Atta girl!!!!

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Permalink Reply by Bobi Carr ("parker") on May 8, 2010 at 18:50

sesport,

I agree. I've said multiple times that low prices may be the best advertisement for natural gas.

I'm held by one of those leases, but I don't see where it is fair for the companies to have to start playing by new rules when they took leases based on the 640 +/- unit size.

Permalink Reply by Andrew Walker on May 10, 2010 at 11:47

I love it! May the force be with you GoshDarn. You are too cool...

Permalink Reply by sesport on May 8, 2010 at 0:12

Andrew - Question ... are we not now confusing two seperate issues here? Mr. Gatti's petition seems to be (to me anyway) about unit size. And your suggestions/thoughts about fair drilling are about equitible development of the acreage/units. Or are the two one in the same?

Also, I've seen a document from an out-of-state energy company that mentions selling minerals to one of the operators" as well as the "net royalty acres" they own(ed). This company's acreage is/was significant (approx. 30%) in a core section of the play. Now, I know there's nothing illegal or unethical about such companies buying/owning minerals and/or royalties, but it seems to me that it's possible they could produce & reap the rewards, then choose to move on to other developmet(s) leaving the remainder unproduced. Doesn't seem to me that this would much benefit the local coffers.

thanks for your thoughts 80)

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Permalink Reply by Andrew Walker on May 8, 2010 at 1:21

Sesport: Yes there are two separate issues here. One is unit size - Gatti is looking to enforce the existing law. The other issue is one thrown out by several folks here - legalizing 640 acre units with a new law that would require equitable development.

You are so correct in your second paragraph. That company could reap the rewards and move on leaving the bulk unproduced...forever. This is just the tip of the iceberg. There are many unethical business transactions surrounding this.

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Permalink Reply by The_Baron on May 10, 2010 at 7:52

The problem wouldn't be with the unit size, but with where the perferations are. However, I have just heard reports of this, and have seen so concrete datat. It will take some time before the truth is known.

Permalink Reply by Mac Davis on May 8, 2010 at 0:38

I am hearing reports now of wells over 2000' apart that could be showing signs of communication....this would mean that your little 80 acre units would be to small as they could be draining an area from outside the unit

If that's so, the current units are illegal because the wells in one unit are draining gas from adjacent units. The 640 acres unit orders allow the perforations to be 330' from the edge of the unit.

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Permalink Reply by Cheerleader on May 3, 2010 at 8:22

Can someone please post the specific jurisdiction [i.e. courthouse; etc. where this lawsuit is filed so a copy can be obtained. Or...Can someone scan and post the pleading so we can read the exact language of the document without disclosing indentity to www.fairdrlling.com.
Thanks

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