Replies to This Discussion

Permalink Reply by Joe Aldridge on June 23, 2013 at 20:56

Skip, 

I understand first hand. I butted heads with Exxon back in the 80's over a tract that they wanted to drill for TUSC. We both lost. I had a problem with them trying to run the size of a unit up 20% on another tract that we were going to be included in and it just got to the point of "no trust". I even appeared at the unitization hearing and put in a statement as a landowner before the Commission. The Commissioner redrew the units that we were concerned about and made them all 640 acres in size rather than 860 acres that Exxon wanted. So my attitude at times here on GHS is jaded by my past dealings with operators. One lesson though is that you as a land owner with a fairly large tract can bust a block. That's what ended up happening with me and Exxon.

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Permalink Reply by Andrew on June 23, 2013 at 23:47

I agree with Skip's comments on this subject. Unless someone has substantial acreage, going UMI is not a "punishment" for the operator, it is an annoyance at best. 

And the observation that many Haynesville wells will never pay out is a good one. Even for an average Haynesville well, a mineral owner with a 25% royalty from first production and no bonus will receive more total money than a UMI - and a whole lot sooner. In that case, the UMI has done the Operator a favor - the Operator has paid the exact same amount to drill as if they had a lease, but the Operator gets out of having to pay any royalty before payout (which may be most or all of the production). 

Some times going UMI is the better decision, but the well(s) have to be above-average profit-makers in order for that to be the case.

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Permalink Reply by 1kw6x71km1v37 on June 26, 2013 at 5:35

I am reminded of an old acquaintance with who was unleased  in the A.Chalk who once said, "If they can make money, I can make money."

They did, and he did. But in the final analysis, those Texans screwed that old man and his wife out of a small fortune with fraudulent saltwater disposal charges.Then he died. His widow put the outcome in the hands of Jesus, then she died, too sometime after the well went bad. Ain't nobody heard about it since. You think Jesus would have to account in this case, or be in default. But I reckon He's got the upper hand, just like the oil company.

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