Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on April 13, 2011 at 15:02

Cal, none of the members currently have much to discuss regarding the  Deep Smackover Play along the AR./LA. line because nothing is happening.  No unit applications.  No deep SMK wells that have been announced complete.  Very few that have been drilled period.  There's a lot of rumor and nothing factual to back it up.  We still are unsure if the leasing in the stateline trend is focused on the L SMK/Brown Dense.  Land work is continual and moves around.  It always draws attention and speculation.  Sometimes it leads to a successful play and sometimes it does not.  As long as the price of crude remains north of $100 the industry will be looking at any and all formation/zones/trends that are a reasonable candidate for oil or liquids.  Personally I have enough on my plate without adding MS.

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Permalink Reply by Cal Carter on April 14, 2011 at 4:50

Thanks Skip!  Just trying to put the pieces together where there isn't much information.  I appreciate the difficulty in trying to moderate multiple areas and not wanting to add to that.  Still, if anyone gleans any information I would certainly like to hear it.  I was informed by a geologist at an exploration company that the interest in those MS counties was the Smackover and he sent this link - http://www.visionexploration.com/smackover.htm

 

Thanks again for the info, this site has been very helpful to those that have had a need to understand how the petroleum business works.

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Permalink Reply by HMI on February 3, 2011 at 4:45

Re: THe depth and temperature issues .... that answers that. Thanks Skip. :-)

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Permalink Reply by Skip Peel - Mineral Consultant on February 2, 2011 at 4:09

There is no way to count noses in a Clerk's record room and translate that into acres leased.  Only the leases filed of record are worth considering.  For those with sufficient interest I suggest doing as tony has done and tabulating actual leases.  Just because a cursory title review is conducted in order to offer a lease does not mean that offer is accepted and results in a filed lease.  I feel fortunate to work in LA. where chain of title can often be run for a relatively short period, 52 years, owing to prescription.  When dealing with areas such as E. TX. and S. Arkansas, the title work is more involved and time consuming.  Of course many leasing companies will forgo thorough title review for leasing purposes and just lease anyone and everyone they suspect may have an ownership interest in a mineral tract.  In cases of multiple heirs there can be a dozen, or more, leases to different family members for the same tract and acreage.  Leasing companies do not attempt to figure the undivided interest of each heir, they sign them all to a lease covering the same tract.  12 leases for the same 40 acre tract are not 480 acres leased, they're for 40 acres.

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Permalink Reply by Skip Peel - Mineral Consultant on February 2, 2011 at 7:12

tony, I admire the effort you have put into this but I do not follow your logic.  Unless every tract with multiple lessors is identified, an overage factor would have to be applied to any cumulative total.  And that's an arbitrary means to an estimated total. In my example leases for 480 acres in reality only represent 40.  That's actually a pretty conservative example for minerals in states that allow for the mineral estate to be permanently severed from the surface estate.  It would not be unusual to find relatively small parcels with 50 or more undivided interest owners.  You can not extrapolate average acres per lease when comparing leases in LA. with those in AR.  The mineral code is different as I have pointed out above. IMO, your total is much more likely high than low regardless of the number of townships represented.

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Permalink Reply by L Davis on February 2, 2011 at 7:35

Skip:

I follow what you are saying.  My lease only shows the gross acres involved which is almost double the net acres.  The net acres were only on the check request for payment.  So it appears that checking on leases filed has nothing to do with the actual net acres leased.  By the land descriptions on the filed leases, one can determine the areas being leased and who is doing the leasing?  Is this a correct assumption?

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Permalink Reply by Skip Peel - Mineral Consultant on February 2, 2011 at 7:56

Yes, I'm currently performing some research compiling acres leased by several companies in an extended block of sections in LA.  It can get tedious when tract totals are common such as 40 or 80 acres.  In that case I have to go back and carefully read the land descriptions so as not to over count the acreage.  In states like AR. and TX. where mineral reservations are perpetual until specifically transferred there can be 4 to 6 generations of heirs with ever smaller undivided ownership interests.  Yes, a standard oil, gas and mineral lease will list the lessor, the lessee, the royalty percentage and a legal description of the land (along with the lease clauses of course).   The lessee may be the company that plans to operate or one or more land companies hired by them.  Lessee not affiliated with an operator but offering leases in the same general area are called "block busters".  The should be avoided.  Knowledgeable mineral owners will recognize their offers as "below market".

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Permalink Reply by L Davis on February 2, 2011 at 8:16

Skip, thanks.

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Permalink Reply by Skip Peel - Mineral Consultant on February 2, 2011 at 8:12

Certainly the total acres under lease are significant.  It's just quite difficult for even the most experienced landmen to calculate that large an area without an exhaustive review.  And in the best of cases the totals tend to be higher than actual for the reasons I have outlined above.  Whatever the total, I am suspicious of the 4/4 lease terms.  This gives a long time horizon for a speculator to find a buyer.  And represents a relatively modest investment for the drilling rights to minerals for 8 years.  To those speculating that this leasing is associated with an oil or liquids play, I have to ask if it makes sense that so little drilling has been done.  By now there should be multiple wells permitted and drilling.  Operators could certainly delay completing or reporting completions for an extended period to allow more time to lease.  Time will tell but I am not persuaded that this is a resource play and is therefore productive over a wide, contiguous area.  The first completed wells tend to bear that out not to mention that the Brammer geologist stated it here on the site.

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Permalink Reply by North LA on February 2, 2011 at 8:28

Skip,

 

Look at the history of the HA. I think there were 4 horizontals drilled over a 2 year period before any were produced. How many acres were leased in HA at $200/acre 18% 4/4 before the land rush?

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Permalink Reply by Skip Peel - Mineral Consultant on February 2, 2011 at 8:39

I am well aware of the early history of the HA play.  I even wrote a blog about it.  However there were more wells than you mention beginning with verticals and then moving on to horizontal drilling.  All of this was verifiable through the state mineral databases.  I do not think the Brown Dense is flying under anyone's radar as the early HA did and I think there are plenty of individuals, industry and laymen, who are capable of performing searches within this area for wells permitted or drilling to the correct depths and reporting to the AOGC.  The J-W O C Denny 1-32H is the only permit of which I am aware and last I looked it had not spud.  I am aware of a lot of leases in NW. LA. that were for less than a quarter royalty and relatively low bonus.  The vast majority had nothing to do with the HA.  Those were leases taken by operators with development plans for the Cotton Valley and Hosston formations who happened to end up in locations prospective for the shale.  I have never seen a 4/4 lease in my review of LA. leases.  If any exist, they certainly are not common.

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Permalink Reply by Max on February 2, 2011 at 9:52

Skip,

What's the most number of undivided interest owners on one parcel of land that you have come across?

 

Several years ago, I was interested in buying an 80 acre track, but it didn't pan out.  There were over 1200 heirs that owned the property.  Some of them couldn't be found and several had no ideal that they were land owners.  Most were out of the state and living else where.

 

Given the right circumstances, four generations' can turn into a lot of folks.  Several heirs lived on the property and paid the tax's and did claim that they owned it. 

 

Claiming and owning are two different words, especially for an attorney.

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