Class Action Suit May Affect 50,000 Haynesville Shale Landowners

On April 10, 2010 a class action suit was filed affecting Haynesville Shale property owners in all of the Haynesville Fields of north Louisiana.  The suit is filed against the Commissioner of Conservation and operators in the Haynesville Fields.  The basis of the suit is that the Commissioner of Conservation is authorized by statute to establish a production unit that can be drained by one well.  Members within one of the proposed classes are being denied their pro-rata share of production and the other class members are being denied their market value of their leasehold interest ownership.  This may affect some 50,000 property owners in northwest Louisiana!

 

We have met with some of the attorneys and are pleased with the representation.  The attorneys are class action attorneys Fayard & Honeycutt of Denham Springs; Simon, Peragine, Smith & Redfearn, LLP of New Orleans; Law Offices of Rudolph Estess, Jr. of Baton Rouge (in that office as special counsel is Jack C. Caldwell), Charles Tutt of Shreveport, Cave Law Firm of Baton Rouge, and Ryan Gatti an attorney from Bossier City.  Through our own independent research we have learned that Mr. Caldwell was a contributing author to the Louisiana Mineral Code and also served as Secretary of the Department of Natural Resources.

 

If successful this would create a tremendous economic boom to this area by creation of many more jobs, not to mention a substantial increase to severance taxes to the state of Louisiana.  We have received per request a filed copy of the pleadings filed in East Baton Rouge Parish.  The suit explains the law and the resulting violation.   Should you desire a copy of the suit please email your request to us at:  www.fairdrilling.com.  You may also wish to contact your attorney or local attorney for the group, Mr Gatti.

 

Andrew

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lawsuit is filed in East Baton Rouge Parish. A copy could be obtained from the clerk of court.
Thanks Baron,
Is the court online so we can download a copy?? Do you know the case number??
As I've read this discussion for almost a month now, I keep having one thought.... Maybe this lawsuit can get DNR to revise sonris to reflect the actual world, where there is more than one well per unit, rather than the notional world, of one well per unit. This has been discussed on this site before. Maybe this lawsuit is a way to force it, albeit via overkill. The UMO needs a way to know what each individual well is producing, and sonris won't help, except for the first well. Sonris needs to change, to address production from each individual well.

(And while DNR is at it, maybe they can severely stiffen penalties for non- and late-reporting??? It's downright wrong, when someone on this site posts that he's been getting royalties from a particular well for months, and the most recent report on sonris for that well is 12 months old.)
Sonris is just reflecting the way the data is reported by LUW code. If you are having a dispute about production, call the operator or hire someone with access to Dwight's.

In theory, the UMO would be due proceeds from all the wells incuded under each LUW code,
Well, looks like this discussion has wound down, so I’ll make a closing comment. In regard to the statewide policy document I sent - which I’m reattaching below – I want to point out that this position by the state can be tracked in similar documents for over 60 years from enact of our one-well-per-drilling-unit law in 1940 all the way into our present decade. What evolved is that the Office of Conservation determined that additional (alternate) unit wells were only to be allowed in situations where they pre-existed when the unit was formed. To conform to the intent of the law each “competitive” drilling unit in the state was, however, limited to the production capability of just one well during this 60+ year period. “Alternate” wells, you see, were not allowed to give their unit a competitive advantage over other units in the gas market. Although not enforced by each district at every point in history, it was and is the law…and it is the law that now governs the Haynesville Shale. This document trail is a big reason why I think the Class Action Group will triumph in this lawsuit. Another is Jack Caldwell, the highly respected, brilliant co-author of the Louisiana Mineral Code and former Secretary of the Department of Natural Resources – if he backs it, you can believe it.

I know this one-well-per-unit system is not what everyone on this site would prefer for our massive Haynesville Shale reservoir – and it’s the not the system I fought for with the Haynesville – but at the end of the day the law must, and will, prevail. In the long run the vast majority will benefit as property owners can expect to receive their “just and equitable” share of production. Companies will no longer be able to hold 640 acres of leases with just one well. I expect Haynesville units to be downsized to somewhere between 80 and 160 acres apiece. Production for each unit will be restricted to the capability of one well, even if there is an alternate well in the unit. As leases begin expiring we should see at least a four fold increase in everything from new leasing and bonus payments, to drilling, to production, to severance taxes for the state. This will be quite a ride. Hold on tight!
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Guys - I'm starting to now wonder if this might be a means to drill in urban areas. If urban is difficult to drill, perhaps smaller units would be better suited to do such? That way rather than have to lease a majority of 640 urban acres, the costs associated with doing so, and the possibility that some of that acreage would be undrillable (is that a word?), the companies might be more willing to drill smaller urban units?

Maybe another "urban exemption" is in order?

thanks 80)
Interesting point. If someone wanted to create a unit that actually is "capable of being efficiently and economically drained by a single well," would the state let them?
Jay - But we already have an example of a section that isn't unitized ... the "donut hole." (the section in SW Shrevesville on Skip's "Snapshot" grid) lol My thought is that this particular urban section would be more appealing for a unit app if it could be made into smaller units. I haven't checked to see what permits have been applied for/granted for that section though, so I'm not sure that it isn't being produced.

Just a thought 80)
urban units will need to be large so long laterals can be drilled from a single pad, unless you want to see the drilling companies buying up homes for drill sites..

Is there something going on with this now in Baton Rouge?

Although it sounds like it would create plenty of additional work for landmen (me).............

 

I am on the "it wouldn't benefit the majority of mineral/royalty owners" bandwagon.  In my opinion, it would be very easy for operators to create units with favorable lease terms (I would grant very favorable lease terms to have my minerals included in a unit as opposed to watching a rig "go up" on the 80 acres next to my minerals). Operators would be able to "pick" the best leases to pool.  Imagine owning 40 acres with a HA well on each side of you and getting nothing.........

 

The Haynesville Shale has enough competition right now anyway (Eagle Ford, Marcellus, etc) - Along with looming fracturing regulations & moderate Gas prices - I would be trying to make it more beneficial to drill here (now), not making it less attractive.

 

--Just my humble thoughts, EH

Leases are time restricted  to the drilling of at least the first well in a unit...(no well, lease expires)..why couldn't they be written to be time restricted for additional wells to be drilled rather than being hbp...maybe even be some kind of law...that would prevent some driller putting in a well and taking it out of production just to hold leases...perhaps another driller would like to lease from those mineral owners..? Wouldn't that possibly motivate drillers to fully develop a unit?..

Drillers now don't lose if they snooze and Mineral owners are at their mercy...

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