Samson Pre-App Hearing 11-19

I attended the hearing this afternoon for Samson's application for 10 units in North Shreveport. Samson did not have a specific company representative present but attorney Smelley presented along with geologist Joe Adams. Two or three independent landmen, working for Samson were there but did not answer any questions. I was not given a percentage for leased acreage but they did admit that some sections had 0% leased minerals. I questioned how they could apply for a permit without leasing any land or doing any test wells. Was told it was standard procedure. I objected to combining downhole production for CV and HA and was told it would be noted but Samson wanted to use the CV for shelf life for depleted HA to increase pressure. To the question of horizontal drilling experience the attorney and geologist was sure Samson had drilled horizontal wells but couldn't name any and stated that they were "just" the operator and would contract with experienced drilling companies. So, it appears that a company with limited horizontal drilling experience, few leased acres and no test well logs for geo info is applying for a permit for over 6000 acres. The meeting was well attended, standing room only and took over an hour.

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Permalink Reply by Iris on November 21, 2008 at 0:40
Ok, so I'm gonna risk sounding dumb again. I'm in section 4. Based on what you are saying they don't have any plans to drill or test there in this decade--I've noticed many of the sections seem to have no road access whereas 4, 10, & some on Pinehill Road do, what are their intentions? The landman called me back while I was in the middle of a busy Atlanta airport & he may have been saying they don't have any plans for my section anytime soon. Why are they trying to unitize us (sec.4,10) unless they have some far fetched plans for road access?
Permalink Reply by Skip Peel - Mineral Consultant on November 21, 2008 at 2:01
Good morning, Tiger. Have you asked those leased or with an offer on the table what the term of their lease is and if there are extensions? "Next decade" sounds like a long time but if the application hearing is not scheduled until early next year, that's less than 12 months. Existing road access is not a major problem nor much of a determining factor in where an operator will drill first. One of our members in this part of the parish who leased about 30 days ago already has an access road under construction next to his property. His property is residential and the road is on undeveloped land adjoining. The first drilling should start in sections where the operator currently holds a higher percentage of acres under lease. And operators can build an access road surprisingly quickly through even heavily forested land. Also, from my experience, the acreage leased by Twin Cities in most areas is predominantly urban/suburban, residential lots. The total acres under lease to Twin Cities may be relatively small in relation to a 640 acre unit. Those sections with significant unleased acreage will not be scheduled for a well until sufficient additional acres are under lease. Keep in mind that the operator wants you leased. "Forced pooling" seems a daunting prospect to landowners when in fact operators can not make their development investment payout with a lot of unleased acres in a producing unit. After the public hearing early next year, I think you will see leasing activity accelerate. After all there is no use to forge ahead too quickly when no unit application has been approved. And I think you will be hearing from the operator within a few months of that hearing date. I respectfully suggest that you decompress and enjoy the holidays. I do not think that you will have to be patient too much longer. Good Luck and Happy Holidays.
Permalink Reply by Iris on November 21, 2008 at 6:57
Thanks Skip for all your information...I was partially joking when I said the next decade.
Permalink Reply by louisiana lady on November 21, 2008 at 3:06
KB,

Thank you for making this easy.
Permalink Reply by insomniacnla on November 21, 2008 at 3:29
Sorry, I can't get this to post at the end of the discussion.

Did Samson's Pre-Hearing Notice ask that Samson be appointed operator of all the sections or is Samson only unitizing the sections?
Permalink Reply by Grice on November 21, 2008 at 5:19
3. To designate an operator of, and unit wells for, the proposed units as may be appropriate.
Permalink Reply by Cory Godwin on November 21, 2008 at 4:29
For the record, Samson has been very active drilling horizontal wells for a number years. They have drilled a bunch of James Lime horizontal wells in East Texas.
Permalink Reply by Skip Peel - Mineral Consultant on November 21, 2008 at 4:32
Cory, do you know the answer to insomniacnla's question? There are quite a few members curious to know that answer.
Permalink Reply by Les Bamburg on November 21, 2008 at 4:41
KB, pretty clothes?
Permalink Reply by The_Baron on November 21, 2008 at 4:45
We may have found her weakness. Maybe she'll lease for a bonus paid in Dillards gift cards.
Permalink Reply by insomniacnla on November 21, 2008 at 4:53
It should be stated in the initial correspondence from Mr. Smelley's office. I know that a copy was posted on this site previously but I cannot locate it now.

It would be something like "To designate Applicant as operator of any unit well".

The reason that I was asking is I was not sure what obligation Samson has if they only unitized the areas.

I could be wrong about this part... I think that any company can unitize an area and not have any obligations to produce it. Also, any company can apply to and be appointed operator of a unit as long as there are no objections from the o/g company that has the majority leased. Once an operator has been appointed, then the o/g company may have certain obligations.
Permalink Reply by louisiana lady on November 21, 2008 at 5:13
It was not discussed at the conference but in the notice it asks to designate an operator "as may be appropriate". What ever that means.

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