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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I suspect these are Tuscaloosa Marine Shale (TMS) wells, not Austin Chalk wells. Goodrich Petroleum (I believe the company is either defunct or has been revitalized) kind of pioneered the long lateral shale wells in Mississippi just above the Feliciana's. Those are a different kind of cat so to speak. They have very long laterals and many stages of fracking. 2000 acres sounds right, the plots are not squares but rectangles with very long sides and narrow tops and bottoms, long strips of land to accommodate the long laterals. The TMS is below the Austin Chalk and generally caps the Tuscaloosa Trend where the deep gas was found in Pointe Coupee Parish. TMS wells produce both gas and oil and are generally referred to as producing "barrels of oil equivalent" or BOEs. That means a healthy amount of gas is also produced.

To be clear, these are not wells.  They are applications to create drilling units.  As the unit name clearly states, it is for the Austin Chalk (AUS C) and the plat supplied by Jay is for the first AUS C drilling and production unit (RA SUA, Reservoir A, Sand Unit A) in the Northwest Jackson Field.  A drilling unit is a first step and once approved by the state is effective indefinitely unless a later application to dissolve is filed and approved.  An operator would still be required to get a permit to drill which has an effective term for either six or twelve months.  After a unit well (first well in the unit) is drilled, an operator must make subsequent applications for spacing in order to drill alternate unit (infill) wells.  There will be a minimum distance between laterals in the unit and a 330' no perf zone around the perimeter in an attempt to prevent drainage outside the unit boundary.  No perforation in a lateral wellbore may be any closer than 330' from any unit boundary line.  If an operator wishes to drill longer laterals than allowed in a unit in the future, they may apply to the state to drill HC wells (Horizontal Cross) which produce from multiple units but must still conform to the no perf zone requirements except where a perforated lateral crosses the common units boundary.

Thanks for explaining the horizontal cross wells. I saw it referred to in another post and hated to ask someone to explain it. 

David, please feel free to ask for explanations.  They benefit all the members.  This is an arcane business with unique rules.  None of the industry members expects that laymen will take all this in and understand it all.  Managing private mineral rights requires knowing some basics and knowing where to go find the answers when you don't.

Do you have an order number for the horizontal cross rules?

RS 30:9.2

Boy Skip-it's that the truth. I have been a Landman for 15 years and practiced law for 20 years before that and still learn something new everyday about this business. I can well imagine what it is like for a laymen that is trying to get an understanding of there rights and the tech involved. To tell you the truth, that is why I follow this site, to learn and understand from people like you and the other fine, knowledgeable folks here ! Keep up the good work.

Don't know what's going on but stock reports say that Conoco Phillips is thinking about selling leases in North Sea to focus on the Austin Chalk.

ConocoPhillips, and other oil majors, have been signaling a move to "shorter cycle" investments for some time now. This is industry speak for shifting investment focus from long cycle projects like offshore, deep water exploration and production that takes many years and billions of dollars before resulting in any return on investment to short cycle projects mainly onshore unconventional reserves such as shale.

As time goes on this trend may accelerate if companies see a need to transform their business model to competitive in a new energy reality. This helps explain COP's move away from North Sea operations to new investments in onshore plays only one of which is the Central LA AC prospect.

Nobody in their right mind wants to drill offshore after the BP disaster in the Gulf of Mexico.


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