Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2009 at 5:24

Even with an emphasis on drilling to hold acreage, there may be a considerable number of lessors who will be approached about an extension to their existing O&G lease. The pace of efforts to maintain leasehold will slowly increase over the remainder of this year and into 2010. It's a good time for lessors to consider whether they would grant an extension and if so what consideration they would require.

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Permalink Reply by Mac Davis on July 21, 2009 at 7:05

How would a property owner go about trying to block the waiver if it would put let their lease expire? Would delaying the issuance of pooling order and/or drilling permits make the difference in leases expiring?

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Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2009 at 7:15

Mac. I am not qualified to answer your questions. That would take an experienced O&G attorney. One with experience in Rule 8 applications.

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Permalink Reply by Catfish on July 21, 2009 at 7:18

Skip, In my lease it states if they opp for the extension they pay me the original 15k. Speaking in general, do you see them letting the original lease expire and try to negotiate a new lease? I understand not all situations will be the same but if prices don't improve they may not want to pay big money again. My section has been unitized already and chk has permitted 2 sections to the west so I probably want have to worry about it.

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Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2009 at 7:24

Catfish. I don't have sufficient information to answer your questions. It would take some research to determine the situation in your section. Some may be worth the 15k. Some not. It could go either way.

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Permalink Reply by Catfish on July 21, 2009 at 7:46

I was not asking about myself, just thought this will probally happen in many places. I heard so many people say " so what if they don't drill in 3 years I'll just get the bonus money again".

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Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2009 at 7:53

Catfish. My guess is that the higher the extension price per acre in an existing lease, the greater the chances it will not be optioned. However, some lease extension decisions will be made based upon production data from nearby wells. With good production potential, who knows? It might be worth 10 -15K/acre.

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Permalink Reply by Catfish on July 21, 2009 at 7:57

Thanks, sorry i got a little off topic.

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Permalink Reply by The_Baron on July 21, 2009 at 8:51

Maybe this would be a good discusion on its own.

But to answer your question, if the market does not improve, can anyone justify sinking another 15k/acre into a lease? I would say it will all depend on the price and future outlook for natural gas.

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Permalink Reply by Bobi Carr ("parker") on July 21, 2009 at 8:57

Baron,

If they have to re-lease the whole section, it would be cheaper to drill.

Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2009 at 9:04

Baron. I agree. Please consider starting a separate discussion topic.

Permalink Reply by The_Baron on July 22, 2009 at 7:14

Parker, you assume that the leasing situation is going to improve. If gas prices do not improve, I just can't see anyone paying another 15k/acre. CHK has more than they can drill anyway. I bet they will let some areas lapse, especially on the less valuable fringe areas, and start developing their leaseholds than pay 15k/ acre.

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