Question:

All of the large acreage landowners surrounding a small (150 acre) local subdivision in north central West Feliciana Parish have been leased since before Christmas to as recently as week before last. A few small acreage landowners in the 150 acre subdivision also recently leased with EOG ( within last 3 weeks) and several had appointments to sign leases. Suddenly about 2 weeks ago the subdivision acreage holders whose lease signing appointments were pending were called by the leasing agent who cancelled these lease signing appointments and no one has heard from them since. The reason given was that EOG was reassessing the boundaries? Surely, the geology hasn't changed and at least 2 pending leases of large acreage owners in the vicinity of the subdivision were finalized after the smaller acreage appointments were cancelled.

The landowners who did execute lease are now wondering whether their bonus checks are going to arrive.

Why cancel pending lease signings on acreage in the dead center of an already large leased acreage block with the excuse of boundary reevaluation? I could understand if the subdivision was located on the edge of the previously leased acreage block, but not in the middle of it. All the surrounding acreage is either leased by EOG or Conoco Phillips at rates from $600 to $1300 per acre bonus and 20% royalty. Most recently(in the past 2 weeks) $900 per acre - both small and large landowners getting the same deal. The subdivision appears located in the proximity of the boundary between acreage leased by Conoco Phillips on the south side and EOG on the north side.

Anyone care to speculate on what's going on?

Tags: Austin, Chalk, leasing

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Skip,

Thanks for the response . . . I will need ask the landowner who signed who signed his lease and on whose behalf that signature was made.  

I guess the Haynesville was a bit of the wild west when it came to leasing standards.  I am still cleaning up issues after all these years. 

Not to get in the middle of this but I have had both checks and bank drafts for leases, most recently it was a check drawn on the Washington State Bank, Washington, LA.  I have been to Washington and the bank is a stand alone bank.  No matter, the check was good.  I once had a credit union clear the draft, they did not know how to do it.  We got it done eventually though I rather deal with a check.   We are leased by EOG over in Pointe Coupee, just west of East Baton Rouge Parish.  Others that I have corresponded with in Pointe Coupee are not leased and have not been made offers either.  But that is the way it happens some times.

Mineral owners should never turn over a signed lease without receiving full payment at that time. By full payment I mean a check for small amounts, and certified funds or a wire for larger amounts. If the company insists on using a bank draft you should give the lease to the bank where you deposit the draft with instructions not to release the lease to the company until the draft is cleared. 

I smell rat, and rat means the Eagles Ranch 14 H is starting to look like another loser well in the Austin Chalk. Just like Rock Man described, high pressure, high volume production, then a rapid decline in a fracture-dominated formation that is both low in porosity with low permeability. We don't know if the operator actually fracked the lateral or not. That might tell another tale about the Eagles Ranch well.

Bob, don't get your nose out of joint.  The well cost statement filed by EOG indicates that they spent $11,941,039.  $2,689,592 was spent on completion operations with the largest expenditure being $1,222,093 for Sand & Stimulation Control.  So, yes, the well has been fracked.  The Well Cost statement was dated Nov. 20, 2017.

Bob, Again as I stated earlier (a couple of weeks ago) they used 9.5 million gallons of water to frack the formation. That is an absurd amount of water. Especially in AC. You want to use as small amount of water to carry as much poppant as you can to simply hold the formation open. Again, the chalk is a mobile formation. If the formation is not held open with poppant then it will collapse on itself or on the well bore during production. That supposedly happened on one of the Anadarko wells that was brought in at 2,000+ bbls per day. Unless this bunch figures something out soon the second round is going to be short lived.

Skip,

Fracked, and the production figures on SONRIS are what there is to show for it? Well, this does not bode well, no pun intended.

The next thing they will find out the hard way about Louisiana is you don't shut a chalk well in here or it fills in ASAP. 

Bob, no offense but..... this is the initial exploration well that you are basing your opinion on.  To judge the potential of the central LA AC frack play off this well, especially by a layman, is a reach beyond rational expectations.  We have not seen AC exploration wells by the other players.  What do you think of ConocoPhillips?  They are a Seven Sister Major.  You think we might wait to see how they proceed? 

Do you think that EOG should hit a home run at their first at bat?  EOG continues to lease acreage.  As do others.  I know that for a fact as I sometimes provide a little assistance, directly or indirectly.  Doesn't sound to me that they have given up and gone home.  The longer I make following the O&G activity in my AOI a focus, the more patience I get for companies working on complex formations.  Even the best often have to work through multiple completion designs to get things right.  I respectfully suggest to all our members following the AC to have patience and share their local information to the potential benefit of others.  Personally, I'm following Rock Man and Jay on this one as I respect their credentials and willingness to share their opinions.  They are geologists and I am but a landman.

Skip,

No offense taken. The Eagles Ranch well was  fracked last August for 4275 feet and to date it is reported by Conservation five months of production totaling . BBLs oil are down 67%  to 8801 BBLs from a one-month high of 28,896 BBLs with a corresponding like reduction in produced gas. I'm thinking what RockMan and Jay are, namely this is a rapid decline in a highly pressured, poor naturally fractured formation in a matrix with very poor porosity and permeability. I'm sure EOG was anticipating something a bit more substantial. And so were the leasehounds.

 

Bob, you and I don't know what the natural fracture of the formation was. That would be determined by the amount of mud loss and the drilling characteristics of the formation. We are not going to get those numbers.so we don't know whether the formation was naturally fractured or not and to what degree. My problem is they came in here with an esoteric drilling, completion and stimulation program and it did not matter what the characteristics of the formation are. "We are going to do it our way. We know best, we know it all".They did not even acidize the formation. They pumped 9.5 million gallons of water into a chalk well. That much water will go back into the formation and form a capillary block. And Skip I don't have a problem with EOG. I have a problem with arrogance and stupidity. That is the same problem that we had with Anadarko. They had an attitude. You can see where that got them and the play. It killed it. 

< They had an attitude. You can see where that got them and the play. It killed it>>>

Are you implying that the AC play of the late 1990's was potentially good, given the right operator?

It is timely to add that the companies back then did appear to be primarily interested in new wells making it to payout before they reached the state of rapid decline. Some did, and some didn't.

Their in a hurry attitude resulted in this:

https://www.csb.gov/sonat-exploration-co-catastrophic-vessel-overpr...

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