Update on please help discussion. Another Shelby county post

Hi...I posted about the landman who came to Missouri to see us over the weekend, (unbeknowngst to us).

My husband just got thru meeting with him. He seems nice. Honest. And like he's shooting straight with us. (The last landman told me his boss told him to get the executor to sign the lease without me having a say in it! And other lowdown dirty tactics).

First off, he said this is not Haynesville. I asked my husband how far they are drilling, he said 18,000 ft. I thought that was Haynesville. My husband said, well it's not PROVEN Haynesville. This is a vertical well, not a horizontal.

Also he said the production costs are a lot higher then the Barnett Shale because in the Barnett, the gas there is a pure gas. This gas here has other gases in it that have to be removed. Like three other things he named off, making it more costly.

In the contract he said he's already got it approved for it to be cost free.
He's working on the bonus. My husband said the landman said, they were in fact signing people up and he showed him a 25, 000k bonus that was back in the past when the economy was good. Even went as hight as 30k. He said that was Cpk doing that and they just about put themselves and all the other companies out of buisness doing that.

He was also talking about another guy who was cut out of the deal. They were on the corner and they refused to talk to the landman and so they just cut their block out of it all together. Do you have to be on the corner for that to happen? This guy was on the edge of their " table". I feel for him.

Anyway, because of the extra expense in production costs, and the cost of gas being so low, they don't offer those bonuses here. Well, we've all known that. But just trying to get the most decent offer we can get.

They all learned from the Barnett Shale not to get involved in bidding wars. He said Devon doesn't have any competition where our minerals are anyway in Shelby county, Tx. They've got it all. He was showing my husband maps and charts.

My husband told the landman he saw some bonuses in Shelby county in Dec. for 5k an acre. The landman did verify that he signed people up for that back then. The area this is in is called Pay Day in Shelby County.

So...now we're just trying to decide what to do. Oh also, he said he believes in order for us to be a working interest, we have to put money in to it. That's not the side that he actually works so he doens't know for sure. That doesn't sound right to me. I've always read on here that you just get paid revenues after they pay off the well and royalties and production and transportation expeneses.

He just called my husband on the cell phone and said, he didn't want us to think that they were going to suspend us if we didn't sign. That that's not what they're going to do. (now I really think he's reading my posts!)

Anyone have any input here? Again, thanks for reading.

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Permalink Reply by Dion Warr, CPL on February 3, 2009 at 13:36
Sarah:

Forgive me for my looking back to the offer thread, but didn't you mention a $9,765 offer (approx. $1,500/ac.) prior to this one? I am unsure as to the timeline here; if that offer was made little more than a couple of months ago, it would seem to fit the timing on the downtrend of lease bonus offers.

Overall the ebb and flow of lease bonus has been much less dramatic in TX, presumably because the options available to TX producers can work around holdouts. Still, a drop of 3X over a short span is significant.

Do you know anything else status-wise about your interest in possible prior production?
Permalink Reply by Sarah on February 3, 2009 at 14:40
Sorry Buck...I didn't mean to ignore your post. I didn't see it.

I don't know...this is what the land man told him. What part are you having difficulty with. The vertical well or that it's not proven Haynesville. I saw on the Shelby county group someone mentioning they are doing everything they can not to call it a haynesville well.
Permalink Reply by Sarah on February 3, 2009 at 14:02
Hi Dion,

No problem looking at the offer thread. I appreciate your interest and thoughts.

The 9,765 was last summer, I think it was late July a 1/5 royalty. I don't know about the possible prior production. This is what LesB told me back then. I don't think he'd mind me posting this. Also, they were talking about the Stockman Field recently over in the Shelby county group. I think there's a good well there.

This is what Les told me:

"Sarah, please accept my apologies for the delay in responding. Unfortunately I am less familiar with Texas regulations and it is more difficult to identify the specific location of gas units.

I was able to confirm that Marathon drilled the Pate "A" #1 well in 2000. The well was spudded on 3/21/00 and completed in the Stockman Field, Travis Peak Formation on 4/10/00. The well produced only one month and then was recompleted to the Pettit Formation in the South Stockman Field on 6/24/00. The well is still producion and cumulative production is 1,007,146 thousand cubic feet (Mcf) of gas. It appears as though Pate "A" refers to the name of the gas unit that is 658.51 acres. The only information I saw on physical location indcated the well was 10 miles southwest of Center, Texas. I was hoping to find a map of the unit but did not turn anything up.

Did JPF indicate if the future wells would be into the Haynesville Shale or just into existing production horizons like Cotton Valley? Is the unit they are referring to the original one from 2000 or did they file a new unit?

I am sorry I could not dig up any more information. "
Permalink Reply by Sarah on February 3, 2009 at 21:29
Hi Adam and thanks for the feedback.

My husband said the land man called him on his cell and said he wanted us to be assured that they would not suspend us if we chose not to sign.

I know I'm repeating myself,...my other post sounded confusing though. I'm calling an attorney tommorow if my husband can't squeeze out the time to do it.
Permalink Reply by Robert G. Oliver on February 3, 2009 at 14:22
I don't know how much he was offering but if it was Two hundred or more per acre. Grab it because the value of the minerals in the Haynesville shale , based on the production is about 50.00 per acre. It cost about 6 to 8
millon dollars to drill a well. A commerical well would have at lest 1 (ONE) MCF of gas per foot and shale wells do not come close to that. I have looked at a large number of shale wells and none of them come close to any type of payout.
Permalink Reply by Two Dogs, Pirate on February 3, 2009 at 14:27
Robert, what are you talking about?
Permalink Reply by Sarah on February 3, 2009 at 14:44
Robert they are drilling a new well. That is what the offer is based on. Not sure what the bonus offer is now really. That offer was last summer for the future drilled well. Now it's going to be drilled in a week or two. This old well is possible past revenues because my dad never did sign a contract with them back in 2000. My aunt did, but my dad did not.
Permalink Reply by Bobi Carr ("parker") on February 3, 2009 at 15:18
Earl,

I was told you can say anything at all as long as you say "bless their soul" afterward. It's what separates us from the yankees. Watch, here goes,

Poor, Robert Oliver, ain't too bright, BLESS HIS SOUL!
Permalink Reply by Big Daddy, bcnr on February 3, 2009 at 15:29
OMG, I'm still laughing at Earl's "donation" and now Parker let's a gem loose. Mr. Ollie's logic is an afterthought now. HEY!!!!!!!!!!!!!!!!! I resemble that yankee remark Parker. My dad was born in Desoto parish and my my mom was born in MO. Does that allow me some slack?
Permalink Reply by Bobi Carr ("parker") on February 3, 2009 at 15:31
Cannie,

You are one of us, whether or not you've ever stepped foot in the South.
Permalink Reply by Big Daddy, bcnr on February 3, 2009 at 15:39
Cool, that explains a lot. My co-workers think I'm weird because I love NASCAR, and race home to drink beer and shoot crows from the back deck after work. I never understood it, but I didn't question it either. BTW, Robert just needs a nap. Bless his soul!! See Earl, tain't hard t'all !
Permalink Reply by Big Daddy, bcnr on February 3, 2009 at 16:45
Earl, etal,I'm still workin' on it. Within the month, God willin', I will be "back home" for a short stay. I'll let y'all know as soon as I firm up a flight. Gotta check out a couple of wells and a pipe going across Pa's homestead.

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