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Permalink Reply by Grice on November 20, 2008 at 14:36

Doesn't Louisiana law already allow for termination of the unit (section), even if unitized with other units, if a well has not been drilled in the section within 5 years?

Example: Section 1, 2 and 3 are unitized as a single unit. A well is drilled in section 2. All three section share in the proceeds of the well that was drilled in section 2. After 5 years has elapsed, and no well has been drilling in sections 1 and 3, the lessor can petition the commissioner to terminate the unit which no drilling has taken place. Even if the operator were to drill 5 wells in section 2, the remaining sections could be terminated after 5 years of no well has been located in those sections.

This prevents an operator from holding all three section hostage, while providing only a minimal amount of production, allowing all of the sections to be HBP.

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Permalink Reply by Grice on November 20, 2008 at 14:46

What if the mineral owners in section 2 did not want to share with the mineral owners in section 1 and 3.

Could the mineral owners in section 2 petition the commissioner to terminate sections 1 and 3, therefore increasing the shares of production for the mineral owners in section 2?

Of course, in my example, I only used 3 sections. Things may become more interesting as more units (sections) are added to the pooling and unitization order.

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Permalink Reply by Les Bamburg on November 21, 2008 at 4:52

Grice, the concern involves a single section unit (640 acres). The operator drills and completes a single vertical Haynesville Shale well and is holding the entire 640 acres even though the well is only draining ~ 10 acres.

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Permalink Reply by The_Baron on November 21, 2008 at 5:01

Les,

These are good ideas, but in the real world it would take a large staff just to watch over all the units. The amount of beraucracy that would be added would only create more problems than your solution would solve.

The Best soloution would be for individuals to define what obligation an operator has to develop the unit in their lease.

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Permalink Reply by louisiana lady on November 20, 2008 at 14:47

The Baron, this was my first hearing and it surprised me with lack of professionalism and answers...the landman actually rolled their eyes and shrugged their shoulders but never commented when questions were directed specifically to them, (they were introduced and sat in unison at the front of the room). If Samson was going to "sub" the work, maybe they should be forth right. Also, with Samson in control of permits does it negate other companies getting into the drilling without Samson permission. Restraint of trade, type of thing, if intentions are not to maximize drilling on the part of Samson.

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Permalink Reply by The_Baron on November 20, 2008 at 16:24

I would hope they could find someone who could at least act intelligent.

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Permalink Reply by louisiana lady on November 20, 2008 at 19:32

I was surprised that Samson didn't send a company person because I expect that the attorney and geologist do this type of presentation for other companies, too. That is why they mistook fields and didn't anticipate specific company type questions.

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Permalink Reply by The_Baron on November 21, 2008 at 4:56

All government applications are a cookie cutter process. Its how the process is fair.

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