Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2012 at 14:00

don, please explain "horizontal lease".  I look at a lot of leases (in fact I have over 1200 on my desk at the moment) and I am unfamiliar with the term, "horizontal lease.  23N -13W is a little too far west for this lease offer to be in conjunction with the Lower Smackover/Brown Dense prospective fairway.  There are numerous known potentially productive zones below the depth defined as Rodessa.  Don't get focused on the Brown Dense, it could be a pump fake.  Has the Shreveport landman revealed who he is leasing for?  Have you read through the discussions in the North Caddo Parish Group?  Use this link:

http://www.gohaynesvilleshale.com/group/NorthCaddo

Permalink Reply by don3833 on February 14, 2012 at 6:45

Skip,

Thanks for your input, sorry to confuse  you. "HorizontaL lease" is my term in an attempt to convey the lease contains a "horizontal pooling clause", a horizontal Pugh clause and according to the landman the operators intent to drill wells with horizontal/lateral lines.  There's a map on the Bossier discussion (you may have posted it) showing the LSBD in southern Arkansas and northern Louisiana.  It's gas mostly in La. by that map but the boundaries appear pretty close to my property. I recognize that map is an approximation of the LSBD boundaries and the scale makes it difficult to locate specific property.  The landman has not identified who he is leasing for. 

My real concern is if they were to work the LSBD and find gas they would probably shut-in the well and hold it until gas prices make production more economical which, with the abundance of gas in the US, could be a long time.  I've included a time limitation in the shut-in clause but even then I could have my land tied up for a very long time without any royalties.

Thanks again for your response and for all the good advise you provide to land owners.

Permalink Reply by Skip Peel - Mineral Consultant on February 14, 2012 at 8:54

A horizontal Pugh and a horizontal pooling clause are the same thing and have nothing to do with horizontal drilling in particular.  The landman may or may not be sufficiently knowledgeable to state what kind of wells are planned.  Unless you own a large acreage position in a prime location there is nothing other than a basic vertical Pugh and Shut-In clauses that will protect you.  It doesn't make sense to drill expensive horizontal gas wells just to shut them in.  With crude at $100 a barrel and expected to go higher, much recent activity is connected to oil bearing formations many of which are conventional reservoirs that can be produced with less expensive vertical wells. 

Permalink Reply by Skip Peel - Mineral Consultant on February 14, 2012 at 9:29

Here is a good example of my last statement above..  We have discussed Source Oil in the past.  They came to my attention when they bid and won a tract west of Vivian in a state mineral auction.  Today they permitted a vertical Paluxy well with Measured Depth of 2700'.

Organization Id	Organization Name
S419	SOURCE OIL, L.L.C.

Cnt	Well Serial	Well Name	Well Num	Status	Class	Class Type	API Number	Org ID	Field ID	Permit Date	Sec-Town-Rng	Parish	LUW Association
1	244459	CAUDLE	001	01			17017351590000	S419	2152	14-FEB-12	028-22N-16W	09	GO TO LUW INFO	2700

Permalink Reply by don3833 on February 14, 2012 at 9:47

Skip,

Thanks, seems like I've been worrying needlessly.  Being outside the LSBD area and with the expense involved with horizontal wells you're probably right that they are looking at a conventional oil play which suits me fine.  I have a time limited Shut-in clause and a vertical Pugh.  I've also asked for a no cost royalty clause which seems to be the only sticking point other than bonus amount which we're close on.

Thanks again, I always benefit from your posts as do the other members.

Permalink Reply by Skip Peel - Mineral Consultant on February 14, 2012 at 9:51

Good Luck, don.  And while we're on the subject, the Source Oil bid for the Vivian tract carried a quarter royalty.  That's one of the reasons it caught my eye.

Permalink Reply by Cal Carter on February 13, 2012 at 14:08

What is a "pump fake" Skip? 
Yow, 1200 leases!  Maybe you can share exactly what the Land Man does sometime when you aren't too busy.
Thanks for all your helpful posts!

Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2012 at 14:31

The pump fake is getting you focused on formations or zones that are not a target.  It happens a lot these days owing to the Haynesville Shale.  There are leases for lands far south of the most southerly Haynesville Shale development that exclude the Haynesville zone.  Lessors think they are protecting themselves.  The lessee knows there is no chance of productive Haynesville but use it as a ruse to get rights to the zones they truly want for a cheaper price. 

I'm not the prototype landman.  I am a database researcher and analyst.  As an independent, I perform research for clients.  The 1200 leases are for a parish in the Tuscaloosa Marine Shale and the client owns over 2000 acres in a good location.

Permalink Reply by Bill Meaney on February 14, 2012 at 5:23

Don, there have been reports of a deeper lease play working through your area. I've heard a couple of names mentioned but don't know for certain. Your area is generally considered too far south for the Brown Dense but as stated earlier there are numerous deeper objectives. I've wondered if folks are starting to look at the Haynesville which in your area is transitional between the "shale" play to the south and the more traditional sandstone play in the Haynesville area. I guess we'll find out sooner or later. Good luck with your decision.

Permalink Reply by Debra Gray on February 14, 2012 at 6:42

Why did you say not to get focused on the Brown Dense Skip?

Permalink Reply by Debra Gray on February 14, 2012 at 6:45

Also Skip, do you have any opinions you are willing to share on how you feel the Lillie Field in Union Parrish will play out?

Permalink Reply by Skip Peel - Mineral Consultant on February 14, 2012 at 8:42

Debra, there is no identifiable Brown Dense activity in 23N-13W and none close.  Bill is a geologist and his comment about being too far south squares with what I have heard from others.    Land (leasing) companies understand that mineral owners get focused and excited about the new unconventional oil and gas plays  and use it to their advantage as I mentioned in my comment above.  It's far too early of have an opinion about specific locations within the Brown Dense prospective fairway.  We will need to see multiple completed and announced wells by capable horizontal developers to form an opinion.  At this point in time anywhere in Union Parish near and along the state line seems a good location to own minerals.  Good Luck.

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