Limit Lease only to Haynesville Zone?
My section (17N-13W-Sec 23) is being unitized with the following definition:
"The Haynesville Zone, Reservoir A, in the Cedar Grove Field, Caddo and Bossier Parishes, Louisiana, is defined as being the stratigraphic equivalent of that gas and condensate bearing interval encountered between the depths of 10,910 feet and 11,487 feet (electronic log measurements) in the Chesapeake Operating, Inc. - SRLT 29 No. 1 Well located in Section 29, Township 16 North, Range 15 West, Caddo Parish, Louisiana."
"The proposed definition for the Haynesville Zone, Reservoir A, in the Cedar Grove Field is the stratigraphic equivalent of Haynesville Zone, Reservoir A, as defined in the Johnson Branch Field pursuant to Office of Conservation Order No. 994-D, effective July 10, 2007."
To me, that defines the drilling depths in a detailed way based on other wells, orders, etc. I have a vertical Pugh clause that defines the deepest depths of the lease. (See example below)
A example of a vertical Pugh clause:
"It is understood and agreed that one (1) year after the expiration of the primary term of this lease, upon the expiration of any extension or renewal, or after cessation of operations as provided herein, whichever occurs last, Lessee shall release all rights lying below the stratigraphic equivalent of one hundred feet (100') below the base of the deepest producing formation in any well drilled on the leased premises or on lands with which the leased premises has been pooled or unitized."
My questions to my lawyer (and currently to the forum) are, shouldn't I put the unitization definition in the lease so that the lease only applies to the wells that target the Haynesville Zone? If they discover gas at a shallower depth in the next 20-40 years, I would be HBP with only a vertical Pugh clause, right?
"The Haynesville Zone, Reservoir A, in the Cedar Grove Field, Caddo and Bossier Parishes, Louisiana, is defined as being the stratigraphic equivalent of that gas and condensate bearing interval encountered between the depths of 10,910 feet and 11,487 feet (electronic log measurements) in the Chesapeake Operating, Inc. - SRLT 29 No. 1 Well located in Section 29, Township 16 North, Range 15 West, Caddo Parish, Louisiana."
"The proposed definition for the Haynesville Zone, Reservoir A, in the Cedar Grove Field is the stratigraphic equivalent of Haynesville Zone, Reservoir A, as defined in the Johnson Branch Field pursuant to Office of Conservation Order No. 994-D, effective July 10, 2007."
To me, that defines the drilling depths in a detailed way based on other wells, orders, etc. I have a vertical Pugh clause that defines the deepest depths of the lease. (See example below)
A example of a vertical Pugh clause:
"It is understood and agreed that one (1) year after the expiration of the primary term of this lease, upon the expiration of any extension or renewal, or after cessation of operations as provided herein, whichever occurs last, Lessee shall release all rights lying below the stratigraphic equivalent of one hundred feet (100') below the base of the deepest producing formation in any well drilled on the leased premises or on lands with which the leased premises has been pooled or unitized."
My questions to my lawyer (and currently to the forum) are, shouldn't I put the unitization definition in the lease so that the lease only applies to the wells that target the Haynesville Zone? If they discover gas at a shallower depth in the next 20-40 years, I would be HBP with only a vertical Pugh clause, right?
Views: 44
Replies to This Discussion
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Permalink Reply by Bobi Carr ("parker") on -
I have seen a memorandum of lease affecting 1500 acres where the owner specifically stated that drilling would only occur between 9702' and 11,334'.
I doubt that this is something most of us can negotiate. I for one don't own 1500 acres.
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Permalink Reply by SBossierGuy on
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I don't own much land, but I don't see why the O&G companies wouldn't accept this type of clause. If they are unitizing a certain depth, that is where the profits are. I am just trying to lease what they are unitizing which seems fair to me.
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Permalink Reply by Pam on
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I've seen clauses that state "from the surface to the top of the Haynesville". A group may be able to demand such.
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Permalink Reply by Bobi Carr ("parker") on
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The lease that I am talking about limits it to HS only. Top and bottom rights are reserved.
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Permalink Reply by insomniacnla on
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Even though Chesapeake may consider it their policy that they will not lease "just the Haynesville", I believe that several homeowner associations in Texas negotiated and got just that.
Chesapeake states that if they drill for the Haynesville and find other favorable production zones along the way, that Chesapeake will produce those zones also but I don't believe it. I personally think that Chesapeake will drill their Haynesville wells and sell off the shallower zones for other o/g companies to develop and therefore lower the total cost to Chesapeake of obtaining the leases in the first place. The landowners may receive royalty from production of the other zones but there would be no bonus money and no new renegotiation of additional favorable terms in the future. We will be held by production from the ground all the way to the bottom of the Haynesville for many years to come and I don't care for that.
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Permalink Reply by drillbit on
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Can't you also put in your lease that lessee will release at the end of the primary term all depths 100 feet below the deepest producing "perforation" instead of below the deepest producing "formation"?
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Permalink Reply by Aubrey C. Sanders, Jr. on
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I do not know of any company that would accept that. Certainly some of the production will come from below perforations. All leases I have ever seen with depth Pugh clauses refore to 100 feet below base of the Formation.
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