APPELLATE COURT REVERSES RULING IN HAYNESVILLE SHALE LAWSUIT - shreveporttimes.com - GoHaynesvilleShale.com2024-03-29T11:46:09Zhttps://gohaynesvilleshale.com/forum/topics/appellate-court-reverses?feed=yes&xn_auth=noI agree with Henry and Skip,…tag:gohaynesvilleshale.com,2011-07-06:2117179:Comment:19776272011-07-06T20:34:04.408ZThe_Baronhttps://gohaynesvilleshale.com/profile/The_Baron
<p>I agree with Henry and Skip,</p>
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<p>It is important to note that the agressive drilling is taking place in the HA sweet spots. Also, I believe that Encana and Exco are looking to drive up their daily production numbers, they also have smaller leaseholds than CHK or even HK.</p>
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<p>Exco in particular is testing the thoery that by completing anentire 8 well unit at the same time will lead to higher EUR's. I have also heard of instances where interference in HA wells has…</p>
<p>I agree with Henry and Skip,</p>
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<p>It is important to note that the agressive drilling is taking place in the HA sweet spots. Also, I believe that Encana and Exco are looking to drive up their daily production numbers, they also have smaller leaseholds than CHK or even HK.</p>
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<p>Exco in particular is testing the thoery that by completing anentire 8 well unit at the same time will lead to higher EUR's. I have also heard of instances where interference in HA wells has caused declines or enve caused a cease in production. They may believe that their stratagy is the best way to deal with this. Also, they may just be more bullish on prices going up, or have lower drilling costs (Encana claims that its costs continue to fall).</p> Even with depth clauses, Less…tag:gohaynesvilleshale.com,2011-07-06:2117179:Comment:19764302011-07-06T15:35:03.792ZP.G.https://gohaynesvilleshale.com/profile/PG
<p>Even with depth clauses, Lessors are still stuck with lessees sitting on their minerals if just one well is drilled at those depths...I'm sure many lessees would bulk at a lease that would require them to further or fully develop a unit...but if enough Lessors insisted..maybe this stuck forever with one well stuff would go away..</p>
<p>How many lessors are there that has thought, "boy if only I had this to do over again, I'd change a few things"..?</p>
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<p>Perhaps a vertical depth…</p>
<p>Even with depth clauses, Lessors are still stuck with lessees sitting on their minerals if just one well is drilled at those depths...I'm sure many lessees would bulk at a lease that would require them to further or fully develop a unit...but if enough Lessors insisted..maybe this stuck forever with one well stuff would go away..</p>
<p>How many lessors are there that has thought, "boy if only I had this to do over again, I'd change a few things"..?</p>
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<p>Perhaps a vertical depth clause that will only bind the lease to wells at a given depth that are drilled within a certain time frame..</p> A Demand letter is required a…tag:gohaynesvilleshale.com,2011-07-06:2117179:Comment:19764162011-07-06T15:14:51.350ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
A Demand letter is required as part of the process to seek relief through the courts under the state statutes requiring lessees to develop all formations deemed to be economically productive. The letter establishes the date of the demand and starts the clock on a response from the lessee. If the lessee does not respond or does not agree to develop the specific formation or zone within 90 days, the lessor may seek relief in court. Operators generally aren't too impressed unless the letter…
A Demand letter is required as part of the process to seek relief through the courts under the state statutes requiring lessees to develop all formations deemed to be economically productive. The letter establishes the date of the demand and starts the clock on a response from the lessee. If the lessee does not respond or does not agree to develop the specific formation or zone within 90 days, the lessor may seek relief in court. Operators generally aren't too impressed unless the letter comes from an O&G attorney they regard as competent and who has a record of following through with litigation if the Demand is ignored or denied for less than compelling reasons. I know experienced O&G attorneys who decline to write Demand letters unless the client is intent on filing suite if the lessee does not agree to develop. Unfortunately there are plenty of lawyers out there who will compose and send a letter for a mineral owner for a fee with know ability or intent to go beyond that step. IANAL! Skip, What happens when you "…tag:gohaynesvilleshale.com,2011-07-06:2117179:Comment:19763342011-07-06T15:00:14.932ZBaconhttps://gohaynesvilleshale.com/profile/Bacon
Skip, What happens when you "issue a demand to develop" to the opperator? Is it just a step to a lawsuit? Are you putting them "on notice"? Any negatives for the Landowner? Thanks.
Skip, What happens when you "issue a demand to develop" to the opperator? Is it just a step to a lawsuit? Are you putting them "on notice"? Any negatives for the Landowner? Thanks. Vertical Pugh clauses that li…tag:gohaynesvilleshale.com,2011-07-06:2117179:Comment:19761862011-07-06T13:41:04.745ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p>Vertical Pugh clauses that limit drilling rights to depths produced prior to the end of the primary term of the lease can successfully address this particular situation. And a standard depth clause should be a part of every mineral lease. Many modern lease forms contain that language but the actual wording, and therefore the level of protection, can vary. For those with leases that do not have a depth clause, the Demand To Develop statute is their only avenue of redress. Considering the…</p>
<p>Vertical Pugh clauses that limit drilling rights to depths produced prior to the end of the primary term of the lease can successfully address this particular situation. And a standard depth clause should be a part of every mineral lease. Many modern lease forms contain that language but the actual wording, and therefore the level of protection, can vary. For those with leases that do not have a depth clause, the Demand To Develop statute is their only avenue of redress. Considering the magnitude of historical exploration and production in NW. LA., there are a lot of lessors bound by older leases without depth limitations who have not benefited from the Haynesville Play. Nor will they from the Bossier Shale. This is an issue of state-wide importance as those in Central Louisiana will find themselves in the same situation if the Tuscaloosa Marine Shale and the Austin Chalk Play turns out to be economic. </p>
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<p>There are two avenues to approach reform of the state mineral statutes; incrementally through court rulings or through legislative action to amend and modernize the code. There would need to be a ground swell of public interest and political action as the O&G industry will use any and everything at their disposal to defeat those attempts.</p> Should there be a new law to…tag:gohaynesvilleshale.com,2011-07-06:2117179:Comment:19761472011-07-06T13:19:50.006ZP.G.https://gohaynesvilleshale.com/profile/PG
Should there be a new law to prevent this or should Lessors stop agreeing to sign leases that allow such behavior..?
Should there be a new law to prevent this or should Lessors stop agreeing to sign leases that allow such behavior..? Thank you for a thoughtful, a…tag:gohaynesvilleshale.com,2011-07-06:2117179:Comment:19760402011-07-06T09:51:47.794Zcocodrie manhttps://gohaynesvilleshale.com/profile/charlesjenkins
Thank you for a thoughtful, albeit brief, reply. Let us see what might be done about this.
Thank you for a thoughtful, albeit brief, reply. Let us see what might be done about this. The salient fact in the Ferra…tag:gohaynesvilleshale.com,2011-07-05:2117179:Comment:19757052011-07-05T23:41:29.133ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
The salient fact in the Ferrara case is that Questar is a minority lessee in the section. J-W owns the majority of the leases. Questar could have replied to the Demand that they were actively seeking an operator to partner with in the development of the HS in that section. They chose not to do so. As mentioned above, they desired to delay their participation until they could gain a favorable operating agreement with J-W or another interested operator. They were willing to hold the…
The salient fact in the Ferrara case is that Questar is a minority lessee in the section. J-W owns the majority of the leases. Questar could have replied to the Demand that they were actively seeking an operator to partner with in the development of the HS in that section. They chose not to do so. As mentioned above, they desired to delay their participation until they could gain a favorable operating agreement with J-W or another interested operator. They were willing to hold the development rights indefinitely based on their old lease and their willingness to litigate a reasonable Demand suit until they got the deal they were looking for. That is not consistent with the letter nor the spirit of the Demand To Develop statute contained in the LA. Mineral Code. It is not acting in the "mutual interest" of lessor and lessee. It is harming the lessor in pursuit of a favorable benefit for the lessee. Skip,
I think we agree. They…tag:gohaynesvilleshale.com,2011-07-05:2117179:Comment:19756962011-07-05T23:31:49.711ZHenryhttps://gohaynesvilleshale.com/profile/Henry48
<p>Skip,</p>
<p>I think we agree. They drill the wells because they will make money. I was responding to Baron's possible legal argument that the companies will not develop the sections because it is not prudent to develop the wells at this time. And maybe it could be argued that while the companies are making money, a prudent operator might make more money by waiting. (I, personally, would not issue a "demand to develop" at these low prices. But someone might try.)</p>
<p>Skip,</p>
<p>I think we agree. They drill the wells because they will make money. I was responding to Baron's possible legal argument that the companies will not develop the sections because it is not prudent to develop the wells at this time. And maybe it could be argued that while the companies are making money, a prudent operator might make more money by waiting. (I, personally, would not issue a "demand to develop" at these low prices. But someone might try.)</p> Henry, do you think those sec…tag:gohaynesvilleshale.com,2011-07-05:2117179:Comment:19756702011-07-05T23:23:11.833ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
Henry, do you think those sections where the companies you mention are drilling alternate unit wells are the result of Demand to Develop litigation? I doubt it. My point is that it is a rational and reasonable business decision to expend the capital to build the infrastructure and drill the first well even if doing so does not generate an immediate profit. The long term benefits of the existing infrastructure and the production from alternate unit wells for HS energy companies will prove…
Henry, do you think those sections where the companies you mention are drilling alternate unit wells are the result of Demand to Develop litigation? I doubt it. My point is that it is a rational and reasonable business decision to expend the capital to build the infrastructure and drill the first well even if doing so does not generate an immediate profit. The long term benefits of the existing infrastructure and the production from alternate unit wells for HS energy companies will prove those initial investments to be well spent. It would be a mistake to base a determination of profitability on the first well. The true value is in the drilling of multiple alternate unit wells over time. I think it a more than reasonable assumption that the majority of production from those alternate wells will be at natural gas prices significantly higher than current prices.