Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 1, 2012 at 2:38

Has the primary term of your lease expired?

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Permalink Reply by RONNY on March 1, 2012 at 3:28

Yes.

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Permalink Reply by Skip Peel - Mineral Consultant on March 1, 2012 at 3:37

Depending on any lease language addressing the definition of operations you may be in a position to terminate the lease.  I suggest you contact an experienced O&G attorney.  Especially if you have significant acreage.  Petrohawk may even be interested in offering you a top lease in the meantime.

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Permalink Reply by RONNY on March 1, 2012 at 6:43

Any suggestions on language for approaching Petrohawk about top lease would be much appreciated?

thanks

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Permalink Reply by Skip Peel - Mineral Consultant on March 1, 2012 at 6:51

Have you reviewed your lease for language addressing the definition of operations?  Petrohawk won't be interested in a top lease if you have a lease that contains a broad definition of operations.  The industry as a whole tends to defend the standard lease language as maintaining the lease if the primary term expires after the well is drilled but before it has been completed.  As The Baron mentions there are a lot of details which are important.  I suggest that you consult an experienced O&G attorney.

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Permalink Reply by The_Baron on March 1, 2012 at 5:09

I can tell you that they will probally write back and inform you that the well is not shut in but is activly being completed and the lease is held by operations.

 

Hard to say more without more detailed knowledge of the timeline of events, well info and your specific lease language.

 

 

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Permalink Reply by flex auger on March 1, 2012 at 10:04

From the time they cut the fence to put in a drive way they are "pursuing operations" and they may not build the driveway for 2 years. Your pretty much stuck with them for years even if they dont do anything, if they do "anything" the years can stretch to decades. A good lawyer and a sack full of money might get you back to just "years" and not decades but it wont be easy. I had the fence cut, a culvert thrown n the ditch and a load of rock dumped on it in about an hour, this happened two days before the lease ran out.

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Permalink Reply by Skip Peel - Mineral Consultant on March 1, 2012 at 10:17

flex, these days the courts do not recognize site work as operations.  But there again we are back to attorneys.  The Haynesville Shale and horizontal wells have rendered out-of-date if not obsolete a number of state regulations and concepts of mineral law.  Although a lot of wells have been fractured stimulated in the past it was nothing remotely close to the number of horizontal wells drilled in the Haynesville Shale Play.  The number of drilled but not fracked wells (Waiting On Completion)  reached into the high hundreds.  As recently as a year ago, Feb. 2011, there were over 600.  There was simply inadequate pressure pumping equipment and crews to keep up with the drilling.  That created a situation where primary lease terms ran out and there was no production.  Operators declined to make shut-in payments and held that leases remained in force through continuing operations although there were no discernible operations to be seen.  In some cases for six or more months.  The backlog of WOC wells is now down to about 50 and that number will be considerably less soon.

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