Bore hole servitude agreement

I have had a request from Swepi LP represented by Audobon Oil and Gas to pass a part of the well bore on a new well onto my property.  They put the well site 330 ft from my section line and drill a "bowed" well bore that goes some 100-200 ft. into the next section and then back onto the section the rig is located on until they reach the desired production depth.  The "bow" in the well bore will be at approx. 6k on my land.  They have offered me $500.00 for the priviledge of their intrusion into my land with this well bore.  The reason for this is that they can maximize their production zone.  Anybody got any advice on this?  Thanks

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Permalink Reply by Henry on November 25, 2010 at 1:50
Ray, I agree with FXEF. However, if you are uncertain, and want to sleep well, then ask SWEPI to pay for one hour of time with an attorney to take the contract in and go over it. That should help.
Permalink Reply by Henry on November 24, 2010 at 13:13
One issue is this: How close is SWEPI to drilling? For example, if the pad is built, then there isn't much choice but for them to execute the plan shown. In that case, you could get more than $500. On the other hand, if the well is not yet permitted, then if you decline or demand too much money, they could possibly change the location of the well, and drill under someone else's land.
Permalink Reply by Jack Blake on November 25, 2010 at 1:49
good advice Henry.........................
Permalink Reply by Ray Dyess on November 25, 2010 at 2:12
I got them up to $1,000. without any trouble at all....I just wonder how much higher they will go. I don't want to stymie someone else's opportunity to get a producer, but I don't want to roll over and play dead either....thanks to all of you for your help....


Ray
Permalink Reply by Robert Griffin R on November 25, 2010 at 5:01
"I don't want to stymie someone else's opportunity to get a producer..."

Rather than concerning yourself about depriving others you might want to focus on how much added income each mineral owner including the operator will receive for many years as a result of maximizing their lateral length via access through your property. One way or another the well will be drilled. I would strongly suggest you obtain legal advice and attempt to get some amount of annual compensation. Best of luck and Happy Thanksgiving.
Permalink Reply by Jack Blake on November 25, 2010 at 5:19
Don't listen to their BS about how you will hurt the bordering landowners and that you should be neighborly. That's all bs. Your deal will not make or break what they do.
Check your Go Haynesville Shale messages at the My Page tab.
Permalink Reply by Ray Dyess on November 25, 2010 at 13:09
Hey Jack: I did check my messages and I appreciate your input. thanks a lot. I recognized the BS by the smell of the stuff. My neighbors for the most part are already millionaires and without my help...now they want to make another million, but they need my help. Again, thanks
Permalink Reply by Ray Dyess on November 25, 2010 at 2:06
Pad is not built....thanks
Permalink Reply by Mac Davis on December 6, 2010 at 12:36
Figure out what you have to lose or gain. Figure out what they have to lose or gain. In particular, are they offering enough money that if you tell them to get lost and they walk away, how badly do you end up regretting the lost money? Do you have them over a barrel, or can they use some alternative well configuration and avoid your land? How much of the 1 mile section border do you own? Are you at the corner of the section? How many acres? If you tell them "no," can they just route the well bore a little differently and still get all of the section drained? What's it cost them to go around you?

Why would you take the risk that this somehow causes some sort of legal problems for you or your heirs in the future, even decades down the road? Why go to the trouble of checking out the agreement for legal booby traps? Unless you get significant money out of the well, why bother? Is this land you live on?

Laugh at them for $1000. They're probably spending millions on the well, expecting to get millions back on the well. Bowing into your property probably gives them hundreds of thousands of dollars more production during the life of the well. If they're going 200 feet into your section, presumably, this makes their lateral 200 feet longer, which is 4% of the total production zone of 4600 feet in the lateral. Curving into your section should give them something like 4% more production out of the well.

Laugh at the idea of hurting someone else from getting their money. If you help them get more money, get them to give you a cut.

Be sure you're not granting the right to do more than one well bore, unless they pay for each one. Be sure there's a time limit on them drilling the well. Be sure you don't grant them any other rights. Be sure you don't agree to "defend the lease" or incur any other legal liabilities.

Remember this is different from a gas lease where you get a bonus and then get royalties.

In theory, you could get a percentage of the minerals produced. It wouldn't be "royalties," but I don't think there's anything that would preclude them from paying you based on a percentage of the production of the well. I don't know if anyone's ever been successful in getting this kind of payment for a well bore. I like the idea of a yearly lease payment, too.
Permalink Reply by Ray Dyess on December 11, 2010 at 13:23

Hey Guys:  Looks like the negotiations are over, for now.  They only offered $1,000. for using my land (although at 6K).  I asked for a lot more than that, but they said the well was only a "projected" well and not a "for sure" one,they did not feel comfortable giving any more than $1,000.  I do know of one person who got 5K for the same proceedure.  I asked for more than that, but I would have been somewhat negotiable.  So...until they play for keeps in sect. 26, that will be that....thanks to all for your help and advice....Merry Christmas & happy new year!

Permalink Reply by Jack Blake on December 11, 2010 at 15:56

Ray,

They'll be back to pay you your price.  They may wait until the pad is built, but if a well will be drilled (and it will  be in due time) they will call you back to pay you  your price.

Jack

Permalink Reply by Henry on December 12, 2010 at 1:10

I have no idea what the bore hole servitude is worth, but you can at least respond to a $500 offer with the response that it would cost almost that much to have your attorney review it. At the least, ask them to kick in a few hundred dollars for your attorney's fees.

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