Replies to This Discussion

Permalink Reply by Dion Warr, CPL on January 19, 2009 at 6:47

Group:

I would concur with the reasoning of a certain cited offstage "unnamed party" in that you are looking at a well drilled off-unit, to be completed (either directionally to an entry point in Sec. 20, then drill the lateral, or vertically to total vertical depth, then laterally from Sec. 29 into Sec. 20, but only perforating the portion of lateral into Section 20). Either one of these operations would have to be approved by LOC as an exceptional location.

I have attached Order No. 191-H-26, which creates the HA RB SUL unit in Caspiana Field, encompassing Section 20, T15N-R11W, as well as nearby HA RB SUM, encompassing nearby Sec. 29. While I would not take the "ownership" shown on the plat as gospel, please note that Peironnet owns large percentages in both units.

A rough well location places the surface location on Peironnet acreage in between two other tracts of land along the northern portion of Section 29, but a small distance away from highway access along Hwy. 1. Please also note that nearly the entire of Section 20 lies north of the Red River levee. Instead of haggling with the levee district and the Army Corps of Engineers, it would appear that CHK just placed a wellpad as near as they could along the northern portion of Section 29 on Peironnet property, and since Peironnet owns nearly the entire of Section 20, they were more than happy to oblige.

As to the division of taxes of a unit split amongst parishes, this is done on a routine basis when such situations arise. As parishes are due to receive a certain portion of the oil and gas severance tax that is collected by the state, the production must be proportionally allocated to each parish either proportionally due to surface area (for a geographic unit such as HA units) or commensurate to the tract share of each tract within the parish in which is the tract is located (for a geologic unit). The accounting is crucial to the fund allocation to each parish, as it is calculated on a percentage basis and is subject to a cap limit annually.

P. S., Since I did not receive any email from our esteemed resident herpetologist, I am assuming that I would not be the one that could be guilty of being SPAK. I cannot view document images from SONRIS at home very easily, and since I could not pull the scan of the well permit (which btw I cannot view from my office either, leading me to believe it is just not scanned into the system yet), I wanted to refrain from comment until I had better opportunity to dig.

Attachments:

• Order 191-H-26.pdf, 168 KB

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Permalink Reply by Dion Warr, CPL on January 19, 2009 at 7:06

Followup:

For an example of how accounting of production in a single geographic unit would be split and allocated to two parishes, please see the production history on SN 236781, CV RA SU50, Cupples 39 #1-ALT, located in Sec. 39, T15N-R12W, Caspiana Field. The referenced Cotton Valley unit being located in Bossier and Caddo Parishes.

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Permalink Reply by Snake Stewart on January 19, 2009 at 7:21

If you were refering to me Dion, except for about 6 hours a week or so back, you have always been O.K. with me. HA!HA!HA!

This is business. Big business, and people like myself are very leary of what can and will happen as this thing progresses. If I were already under lease, I may not feel as touchy as I do.But I am not under lease, so I will have to continue to ask questions and re-ask them again from time to time. I appreciate the time that you guys use to try and help us out. There is only so much that one can glean from secretly taking a Landmans refresher seminar course.(wink,wink) You have the knowledge and experience. Please just dont be offended if the info that you guys provide has to be weighed.From a simpltons view point, why would a representative from the O&G business help people to keep from getting hosed by said business ? While it should be more appreciated, it still must be tested & questioned.

To any and all whom this may apply to.....It isnt a personal matter in regards to one being leary of the O&G's from a mineral owners standpoint. I will try harder to smooth some of my rough edges but the content will still be the same. It isnt personal unless you want to make it.

Jay,
Your geology department keys are on the table. Do with them what you will. I will not make mention of it again.
While I can be quite the putz, I will not be a pawn. That just so happens to be one of those areas of knowledge that I do have some experience at.

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Permalink Reply by Dion Warr, CPL on January 19, 2009 at 8:04

Why yes, dear herpetologist ("Snakeologist"), t'was you to which I was referring. (;-{D>)

Weigh me all you wish (I'll save you the trouble, I'm currently 215#), I generally welcome being scrutinized and questioned, and certainly enjoy the debate. IMO, it makes me a better landman if I have the best information available; and anything that I post should stand to such examination. Les B and KB have caught me in a couple of gaffes in my earlier posts of my GHS life; while I don't like being wrong, I certainly will stand corrected when I am, and happily learn from the knowledge of others (rather than 'beat the table' or ignore it like certain other 'lanmans' seem wont to do).

I try to help b/c I am a nice guy, b/c as l/o's you should know (and deserve to know) how your minerals are identified, extracted, and utilized, and also because I could be the next landman through your door. If I am the next landman through your door, I generally get to pay for all the misinformation and screw-ups that the landmen before me made. While I cannot expect for you to trust me implicitly b/c I am representing my client (and you should rightly do your own research and soul-searching), I certainly want my word to be trusted in that while my relationship to my client may not allow me to 'tell you everything', but what I can tell you is the truth as best as I know it.

That doesn't change the fact that your personal dealings with your property are most important to you, and because of that, you may not want to deal with me (or my client), or accept the terms of the deal that I am authorized to offer. However, IMO, it is a disservice to you as a l/o that, along with having to 'fight' everything else, that you should have to question the trustworthiness of the representative in front of you, or the validity of the statements that are being made by that representative.

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Permalink Reply by Snake Stewart on January 19, 2009 at 9:06

Hey GoshDarn,
I agree wholeheartedly with your assessment.
While I certainly wouldnt look forward to staring at Dion across the negotiating table, it would'nt be because I didnt respect him (even more now then I did) it would be because he could get the best of me. That frankly is just unacceptible. So until I sign a lease......To the plank with this fellow! Very shallow, warm water of course but walk it none the less! :-)

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Permalink Reply by Bobi Carr ("parker") on January 19, 2009 at 21:35

Snake,

I believe that you may have missed the INDEPENDENT LANDMAN part with Dion. My friend that he helped was a landowner. Don't forget that landmen can work for either party.

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Permalink Reply by Dion Warr, CPL on January 20, 2009 at 4:02

Yes, it is true, just like... Skip Peel, Independent Landman and Site Sponsor!... Click on his ad right now... or click around until you see his ad on the right, then click it...

(Btw, Skip, do I get a split on the hits that I help generate?? LOL!)

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Permalink Reply by Bobi Carr ("parker") on January 20, 2009 at 4:44

Dion,

I don't want a split or an over-ride or anything else for that matter.

I just want to put out correct information.

Lots of landmen are "good guys". IMHO, you are one of them. As is Skip, Two Dogs and Jim Krow.

Snake or anyone else can take my opinion as they may, but I appreciate truthful information.

And if I were presently negotiating a deal, I would not hesitate to hire any of you that I mentioned. I believe that each of you would work diligently on my behalf.

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Permalink Reply by Dion Warr, CPL on January 20, 2009 at 4:57

Parker:

Sorry for the misunderstanding. I do not plug myself (being a non-sponsor; no soliciting on the forums), so I plug Skip instead.

I was referring to the all the "hits" that I generate by referral (a huge number, I am sure! LOL)

Permalink Reply by Bobi Carr ("parker") on January 20, 2009 at 5:02

Dion,

If I were you, I would remedy that and become a site sponsor.

I don't know for certain but I imagine that you and Skip have different services to offer.

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Permalink Reply by sesport on January 19, 2009 at 8:00

Dion - Thanks, the visual helps immensely. This helps me also understand what could happen in T16N, R14W around sections 10 and 15. Appreciate your efforts.

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Permalink Reply by Love Horizontals on January 20, 2009 at 9:57

With such high drilling cost, oil companies like combining units and doing longer laterals to drill fewer wells and maximize drilling cost. Oil Companies can afford to sacrifice maximizing well spacing and forego some production because they offset part of the loss in production with savings in driling cost. Numbers game for them. Royalty being paid prorated pro rata over the 2 combined units or "new unit" doesnt account for this factor . When an oil company does not maximize prodution in exchange for offset in their cost, royalty owners lose (exactly what some royalty owners and their representatives have figured out after the fact. If the Royalty Owner has a well-written lease (not the one the oil company tries to get royalty owners to sign) the oil company can not combine units without the royalty owners written consent. This provides the Royalty Owner with the opportunity to be compensated for any loss in production that would have been realized had the oil company maximized drilling out each of the original individual units. You cant blame the oil companies because they are in the business of maximizing their NET income whether that comes from increasing production, decreasing expenses or some "balance" of the two. A dollar saved in expenses is a dollar earned for the oil company. However a dollar generated in production is only $.75 earned to the oil company ($.25 goes to the Royalty Owner). Therefore, the Oil Company is not focused solely on the gross production like the Royalty Owner. They look at maximizing the NET return for each dollar of expense invested regardless if that means less dollars to the Royalty Owner.



Rembember, a dollar saved in expenses is a dollar earned for the oil company. However a dollar generated in production is only $.75 earned to the oil company ($.25 goes to the Royalty Owner). Therefore

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