Hi everyone,

I'm new to the group & am trying to help out a friend who has a lease with Ellora that will expire later this month as to all depths below the base of the deepest producing formation in the DHSU #2 well (which I assume is the only well serving to hold the unit).  Ellora has been after a renewal of this lease since December and they are specifically interested in my friend's acreage within that unit (well 2-H).  Has anyone seen any site preparations going on within that unit?  I have a feeling they are renewing leases for XTO since as of this month my friend is getting royalty payments from XTO on the shallower production from the DHSU #2H.  Any info would be very much appreciated as we are trying to decide if we should let the deeper stuff expire (assuming a rig isn't about to move on location).  Many thanks in advance.

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Did you check the county records to see if that lease was assigned by Ellora to anyone else?  Chesapeake has two wells drilled in A-721 and the Jeannine #1H (419-31638) takes in part of the Davis-Harvey South unit acreage.  I would not be totally focused on XTO since CHK is also in the area and if I had a chance to get my deep rights released (from Ellora) I think I'd take advantage of it... but that's just me.  Why keep them committed to someone who is not going to produce them? 

But you need to check the Unit Designation, in the county records, for the Jeannine Unit just to make sure that lease is not already HBP as to deep rights.  They just finished drilling in late April.

 

DHSU Plat: http://webapps.rrc.state.tx.us/dpimages/img/600000-699999//PR000067...

Jeannine Unit Plat: http://webapps.rrc.state.tx.us/dpimages/img/1000000-1099999//PR0001...

Many thanks, jffreel1,

I have not been to the county clerk's office to do any kind of record check, but my friend's acreage is in the George Neil Survey, A-524, and it does not appear to be within the Jeannine unit.  Moreover, the fact that Ellora is currently willing to pay my friend a boatload of money for 22 net acres (over $2,000/ac) leads me to believe that Ellora is trying to get the deeper Haynesville or James Lime, and that it's not doing that for the account of Ellora, but for XTO.  My guess.  Also doubt that this acreage is HBP at these depths given the fact that the RRC doesn't reflect any completions in the Haynesville (though it seems to have been permitted down to that depth), the money being offered, and the fact that the lease on the table specifically includes all acreage within the DHSU in the #2 well not currently HBP.  This must reflect their need for the Haynesville/James Lime that was horizontally pughed out in my friend;s last lease.  Any landman, or his supervisors, would be double checking their title takeoffs to be sure they were getting their money's worth, especially, as in my friend's case, when the lease provides that the lessee takes the risk of a failure of title as to bonus payments.  In fact, my guess is that at those prices, they are working off a title opinion (probably for the original #2-H well).

Again, thank you for your input.  Do you know/hear/see any location work in that area?  We're kinda fighting the clock on this one.

 

No, I'm not on the ground up there so I don't know about any prep work.  I look at RRC records daily, though, so I'd notice if anything new came up in that area.

Thanks, you're providing a great service to all of us trying to stay up with the oil companies on the shale play.  Please let me know if you get any updates on location work.

Are you also keeping up with the Eagle Ford?

I've been thinking about it since this play has slowed down at the moment.  I guess I need to make up my mind before I get much further behind on development.

Do you think the activity has slowed down, or just become more focused?  My friend is getting an offer that seems to be well above the going rate for new leases, but not for leases within an offset (.. or a screw-up where a vertical pugh clause left a lessee hanging out), on known deeper production.

Please look for me in the Eagle Ford Shale discussion group - I think it it's the "General" group.  We're in Lavaca County, which seems to be on trend with the Eagle Ford and which explains the renewed interest in the Austin Chalk in that area.

I think it is very focused now.  But it is a good bit slower compared to this time last year, particularly in Shelby County. Most of the south end of the play is being consolidated under fewer operators and if it is held to all depths by shallower production I don't expect that the shale will be drilled until the gas price improves. 

A depth clause is rare down here and you could be right about why Ellora is making that offer.

 

Where are these units?  Davis-Harvey?

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