Replies to This Discussion

Permalink Reply by J. A. on November 28, 2009 at 6:59

we have land near that area and I haven't heard of that well. I do pay attention to that area and I know of only two wells that are close and they ip'd between 11.3 and 13 mmcfd. I will be interested to hear of this one.
Thanks for the topic

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Permalink Reply by Checkmateking on November 28, 2009 at 7:42

Looks like they never even spudded the well.

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Permalink Reply by Ronnie Simmons on November 28, 2009 at 9:45

Ok, that's what it looked like to me also, wasn't too sure though. Thanks alot for both of your help.

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Permalink Reply by BirdDawg, plain ole' idiot on November 28, 2009 at 11:06

That permit is still good until January 7, 2010. They could spud before then.

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Permalink Reply by John Avatar on November 30, 2009 at 9:41

Petrohawk does not have leases or farmouts on enough acreage in the section to drill a well.

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Permalink Reply by Ronnie Simmons on November 30, 2009 at 12:58

Why would they file for a unit then??

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Permalink Reply by John Avatar on November 30, 2009 at 21:29

It takes less acreage to apply for a unit than it does to drill a well. There are more than 70 acres in the section that are either unleased or the leases are owned by entities that do not have a deal with Petrohawk. Companies have a hard time explaining to stockholders why they carried over 10% in a well, making interest free loans for drilling costs advanced to UMI's.

As to why Petrohawk permitted the well; they would be the only ones to answer that question.

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Permalink Reply by Ronnie Simmons on December 1, 2009 at 9:26

Thanks alot for all your great information and all your help.

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Permalink Reply by Les Bamburg on December 1, 2009 at 16:06

John, any company that has acreage under lease in the section would be subject to penalty so only the UMI's get the benefit of an interest free loan. I think Petrohawk would drill before any of their leases reach expiration.

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Permalink Reply by Missy on December 1, 2009 at 17:36

Les,
Please educate me about UMI and the interest free loan. (In simple terms, please). What if there were a lot more unleased acres in that section? Would they drill and pay the UMO the 100% royalty?

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Permalink Reply by Les Bamburg on December 2, 2009 at 18:50

Missy, an unleased mineral owner (UMO) is basically carried by the company(s) drilling a well in the section (unit). This means the operator will recoup the UMO's share of costs for drilling and operating the well from the UMO's share of any production (revenue). Once all costs are recouped, the operator will pay any remaining net revenue to the UMO. This is not really royalty but rather net revenue since operating and other costs are deducted.

The theory is that a company would not drill in a section (unit) with significant unleased mineral interest since the operator is taking on risk for those interest for no profit. It is unclear what percentage of unleased mineral interest operators are willing to carry and it probably varies by company.

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Permalink Reply by John Avatar on December 1, 2009 at 20:30

Its a little more complicated than is sounds. There is a contiguous servitude of over 2000 acres, covering portions of seven sections. The servitude has the same owners, but in different proportions on varying tracts. Section 17 has some tracts wherein Petrohawk Lessors own 40% and own 80% in others. The entire servitude is in a WMA. The only bridge crossing Loggy Bayou, that would enable Petrohawk to reach the interior sections of the servitude is not sufficient to move equipment over. Petrohawks lease expires in 2011. By amendment to the lease Petrohawk must drill one well per section and complete in the Haynesville to hold the lease. They paid $20k per acre for what they have. It will be interesting.

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