Landowner in this production unit. I have begun researching the oil and gas industry. As a novice, I would like to know the anticipated life of a vertical well. I would also like to know if SWN plans to drill horizontally in the unit? Thank you for any responses.
Robin, there is no standard life span for a vertical well. Each well is different. SWN has not made any announcements concerning their LSMK leasehold in quite some time although we do hear the occasional mention of a new lease or a lease extension. The horizontal wells that SWN drilled in the Brown Dense were very expensive and non-economic. They actually had better luck with their vertical wells and the Weiser-Brown EXXON-MOBIL #2 well that is the "discovery well" for the Brown Dense is a vertical completion. At current commodity prices it just doesn't make sense to be allocating development dollars to the Brown Dense.
Skip, Love your name! Thank you for the information. My family feared damage to the land resulting from the potential horizontal drilling, thus declined to lease. Not sure if their decision was correct.
You're welcome, Robin. "Damage" from horizontal drilling is rare. In fact horizontal wells utilize less of the surface than development with vertical wells. If you are offered a lease in the future you may consider including a "no surface use" clause. With over 2500 horizontal wells drilled in the Haynesville Shale trend in the last seven years environmental damage has been rare and in the few instances where it has occurred it was minor and easily mitigated.
Thank you for the reassurance. I was offered a lease a short time ago. "We have a check here for you." Sounded a little shifty. I would consider a lease given the new information and back royalties. I have read some of your other comments on leasing and I know of the 25% with back royalties, no surface use agreement, and I would like a Pugh clause. Sound reasonable?
Depends on whether SWN is still interested in offering a lease. And how many acres you own in the unit. There are two basic Pugh clauses, horizontal and vertical. The horizontal is also called a pooling clause and releases from the lease agreement any portion of your acreage not included in a producing well at the end of the primary lease term. The vertical Pugh releases your rights below the deepest depth being produced plus 100' at the end of the primary term.
Some confusion. I have become familiar with the acronym UMI and the Louisiana statues on oil and gas production. I have requested information from SWN, however, the information has been very general and less than official reports. I received a spreadsheet, on production and royalty for the two wells a day ago; very thrown together. As a UMI, do I wait until the entire unit's costs for the well are covered or is my family's tract production and well expense calculated based upon our individual mineral interest production and well cost? My family has 95 Acres in total.
Robin, I'm not understanding what you mean by thrown together. UMI's receive 100% of their proportional share of production after each well pays out.
Read this on LA UMI:
I have been requesting detailed reports, however, I was initially told that I wasn't entitled to them as a UMI. I insisted on reports of production and expenses to remain abreast of the well's progress. I was sent net information. I explained to SWN that I would like to see the gross production, along with sales information. I was told that the numbers would be gathered for the wells in question. It took about 5 weeks. I was sent a spreadsheet formulated just for me from a desktop-not a formal report on the well expenses, production or revenues with SWN heading or any identification of what the spreadsheet contained.
SWN is not required to provide what you ask for; they are required to provide what the state mineral code specifies. If you think you deserve more than what has been supplied you can engage the services of an O&G attorney.
Read the UMI Basics.
An actual e-mail:
We need to gather a few more pieces manually from a third party purchaser in order to have the complete 8/8s you requested. I will follow up with you early next week.
Skip, I just spent the last hour between our previous dialog reading the very information you referred me to.
Reading is fundamental! And, yes I did read the UMI basics last night. I appreciated its format, "Read and re-read 30:10," etc. My information requests were in accord with the information the UMI Basics listed. The acreage of the unit is 1280 with 3 wells. One is inactive. My expectation is transparency. The numbers for production, production sales, well expenses, leasing expenses and royalties. My data interest appears to be within the UMI's right. I will follow the UMI Basic's procedure for obtaining the information on a quarterly basis-certified letters. Thanks again, Skip. Really appreciate your time and information.