Replies to This Discussion

Permalink Reply by Ben Elmore on January 7, 2011 at 4:07

Mike R,

CHK still has a duty to protect you from drainage by the unit, unless your lease expressly states otherwise. 

 

Adubu, it is true operators can add contiguous acreage to existing units, but just because with the added acreage the unit remains within RRC permitted unit size does not automatically make it okay.  Yes it is evidence it is okay,  but that does not end the discussion.  Nor does a JV with another operator make it okay.  In the case you describe, it seems to me it is not a timing of the increase in unit size that is the issue (i.e., they did not add it a year or two after continuous production), the issue your situation raises in my mind is will the one well adequately develop the larger unit?  If not, they have a duty to drill additional wells on the unit to develop it.  By your description, they have substantially diluted the royalty of the original unit owners.  Going from 40 to 480 is a substantial dilution.  The fact that they originally permitted it as a 40 acre unit tends to indicate that they believed the well would only drain those 40 acres.  I would want to know their plans forfully developing the 480 acre unit.

 

 

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Permalink Reply by adubu on January 7, 2011 at 6:51

Ben---they verbally tell me they will drill additional wells as price of NG dictates to develop the unit. They did pick up a few more of my acres I had (100% of what I had leased) but it did dilute me from mineral decimal of .0666 to .02100 in unit. Now I need 4 wells to make what the one well produced for me.

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Permalink Reply by Ben Elmore on January 7, 2011 at 7:38

My suspicion is they did that solely to hold acreage. 

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Permalink Reply by adubu on January 7, 2011 at 9:31

Ben--of course they did they wanted  all they had leased contiguous for to HBP

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Permalink Reply by DJG on January 7, 2011 at 5:28

Mike,

 

How much time do you have left ticking with that CHK lease?     Seems resonable to contact the operator once again after the CHK lease expires and then negotiate getting pooled into that producing unit.    If they do eventually agree to that, then make sure that you have your royalty interest back-calculated based upon the pools date of 1st production and not from your date of signing.

 

DJG

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Permalink Reply by adubu on January 7, 2011 at 9:43

Mike R-- if the operator can not drill a deeper H well I think I would be happy they left you out of the  pool and your deep rights are not HBP with Goodrich SW Henderson well within 5 miles for some one will buy the deep rights from operator and later years when prices are right they will drill deep H well. . I assume you did not have a pugh depth clause in your lease with CHK. If the CHK expires and operator then wants to lease and put you in the unit just make sure you have depth clause in your lease so you can lease the deep right otherwise to another who can drill it.

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