Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on December 11, 2009 at 10:17

dale, that's mostly old news. It happened too frequently a year and a half ago but not so much lately. Since you are in a Chesapeake unit, I'd say the likelihood is close to zero.

Permalink Reply by drilltheshale on December 11, 2009 at 12:48

Skip,

Good advice from someone who knows a lot more than me about this. Thanks. The MBS is agreed kind of unknown, but the maps are putting it in central to south Desoto where were are. Also, perhaps less relevant, we're once-burned. The HS was an unknown and cost us tens of thousands in lease bonuses. First time shame on them, second time shame on us.

Having said all that, the drillers are in a big hurry, and we're not.

Just curious, one brother has a smaller plot and earlier this year was offered a re-lease three months before his expiration. Anyone know if this is common?

Permalink Reply by Skip Peel - Mineral Consultant on December 11, 2009 at 13:05

When a lessor is offered a lease that will take affect upon the date that his existing lease expires, it is called a "top lease". A "release" is a legal document filed of record with the parish clerk by which a lessee acknowledges that a lease has expired in whole or in part. A release makes it easier for those examining the public record to ascertain that a lease or some portion of the lease agreement is no longer in force. When a top lease is offered, only a portion of the rental bonus is paid in advance and is usually non-refundable. Say the top lease calls for a $8,000/acre bonus. The non-refundable bonus payment may be 5 or 10% or $400 or $800/acre. Upon the expiration of the prior lease, the top lease becomes effective and the remainder of the rental bonus is paid. And yes, this is common.

Permalink Reply by drilltheshale on December 14, 2009 at 11:32

Thanks very much, Skip. I had wondered how that worked.

Permalink Reply by lanadan Ds3 on December 14, 2009 at 23:34

Skip,

" . . . And without completed and producing Bossier wells in close proximity to your minerals . . . "

Question: Just what do you consider "close proximity"?

Permalink Reply by Skip Peel - Mineral Consultant on December 15, 2009 at 2:58

The definition of "close proximity" is subjective in this case. For an "unconventional resource play" (which both the HA and BO are), I would consider any well within three miles to be in "close proximity". The best case scenario to establish the prospective nature of the BO would be to be bracketed. A well in close proximity to the north and one to the south for example. There just aren't many BO wells currently available to help establish the prospective nature of a tract. That will change with time. The BO maps published to date are not supported by sufficient data to be definitive.

Permalink Reply by J B Nabors on December 14, 2009 at 20:14

Re: "As our lease is looking like it will expire" . . .

The oil companies will take expeditious action to ensure your lease does not expire. Wouldn't you, in their place?

Q1.) Does your lease contain a Pugh Clause for depth?

Q2.) Is your acreage included in a currently established Haynesville unit?

Situation 1.) If you do not have a Pugh Clause, and a Haynesville Unit has been established containing your acreage, is there any currently producing well on the Haynesville Unit acreage? If so, you may be "Held By Production"

Situation 2.) If you do not have a Pugh Clause, and a Haynesville Unit has not been established containing your acreage, you may have a chance for your lease to expire. Be sure to formally request and physically attend all meetings of which you are notified, even if the notice says "You do not need to attend".

Situation 3.) Your lease includes a Pugh Clause for depth, and there is no Haynesville Unit permitted which includes your acreage, you may have a chance for your lease to expire, even if a shallower well is currently producing (or being drilled on that unit acreage). Be sure to formally request and physically attend all meetings of which you are notified, even if the notice says "You do not need to attend".

Situation 4.) Your lease includes a Pugh Clause for depth, and a Haynesville Unit well has already been permitted. There is a very slim possibility that your lease will expire prior to some drilling activity. If you hold significant acreage, even less of a chance. You might be able to delay the drilling of a well, if you can prove irregularities in the unitization process (for example, you or other mineral owners were not notified of the unitization plans.)

I'll keep my fingers crossed for you. (My family was in Situation 3; we are litigating to determine whether our lease expired, or was HBP by a shallower well.)

Permalink Reply by drilltheshale on December 22, 2009 at 3:22

Not HBP, well is permitted but not drilled. Grant there may be slim possibility of expiration (about 4 mo. left), but one for which we should be prepared. Certainly not an O/G man, but I can compare the number of rigs in N. LA vs. the number of units they're trying to lock down. I'm imagining a number of leases will expire.

Having said that, if they drill tomorrow and sell gas soon, that's not so bad either.

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