O.K. Newbie here so cut me some slack if I screw this up. I just noticed there's no discussion group for my parish and communication among our residents is sketchy and patchy at best because we are VERY new to the oil play, so we don't have any collective wisdom here. Any comments, insights, or even heresay welcome here. What I have to contribute is just information on lease rates and the areas they are concentrating in right now. (Averaging $150 for first three, varying for next two. From 1/6 to 1/5 royalties.) Devon is about a month into drilling it's first Tangipahoa well just a little north of me in Fluker, Louisiana. I have friends who are part of the unit but they are not hearing much of anything. Security at the site is TIGHT with our local sheriff's office maintaining 24 hour presence a couple of hundred yards from the rig itself. They ask you your business and write it all down. I think it's called a "tight hole" or something like that. They are also going to be buying all the pond water nearby. I don't know how much they are paying but will ask around.I have heard that our state is limiting the drilling of wells for water but I'm not sure of that. It was just hearsay from a friend. Well that's it for now.This is a great site. I've learned tons here. Amelia Resources has been a great help as well. Keep up the good work people.

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I own 126 acres in Tangipahoa parish within one mile of the Mississippi line. Iam being offered a lease of 275 an acre and 20 percent royalty.      What are the going offers out there?

If you would tell me the, township, range and section numbers, I will get you a good price.  You can send me a private message if you wish.

Joe,

As to unit sizes - I understand your frustration. Louisiana law is pretty clear on how the sizes of units are to be determined: "...A drilling unit, as contemplated herein, means the maximum area which may be efficiently and economically drained by one well..." LSA-R.S. 30:9(B). The problem is that horizontal drilling, along with unconventional (low-permeability) resource development has kind of challenged the conventional 80/640 acre units that have historically been formed for oil/gas. (In fact, there is a class action lawsuit over this very issue currently going on: Robert H. Gatti v. State of Louisiana et al)


However, even though i'm well aware that new technology makes these units a bit harder to measure by traditional standards (a lateral may be more than a mile long, and not fit in a 640 square, and one well probably doesn't adequately drain 640 acres of tight HS gas), it seems like an 1100 acre unit may be throwing the baby out with the bathwater of conventional wisdom on unitization. No doubt the operators are seeking to hold the maximum amount of acreage, but I have yet to hear (but would be curious to) a geological or legal explanation for why these enormous units are being approved. If there will be infill drilling in the future it seems like it would be even harder to justify, especially considering that the operators are making the same return on a well in a big unit but the royalty owners are getting diluted. 


That may have been a bit of rambling, but suffice to say I have a healthy dose of skepticism for a such large units being formed with infill drilling allowed when the plain language of Louisiana law mandates otherwise.

Andrew,

What I've seen over the years is the DNR will agree to do almost anything that the companies want. I was not aware that the DNR was allowing infill drilling until I got on GHS and started reading the postings from the Haynesville. 

I do agree that the royalty owners are getting diluted with the large units that are being proposed and accepted. The problem is I went to the first pre-conference meeting for the unitization that Anadarko was proposing for Austin Chalk. When I brought up the large size of the units that they were proposing the royalty owners at the meeting wanted drilling and it did not matter how large the units were. I did not go back after that. Now that these wells are producing minimally and may do that for 20 years or more on 1980 acre units I wonder how they now feel.

I do not agree that royalty owners are getting diluted in the larger units provided that the operator sets the lateral lengths and spacing of the wells to most effeciently drain the formation under the unit.  Then the royalty owners are getting the same per acre payment no matter what size the unit.

No you are not correct. You cannot drain a shale or Austin Chalk formation with these large units. Its simply a ploy by the oil companies to hold acreage and spread the wealth around. Drilling and production history in the Haynesville and the Texas Eagle Ford and Austin Chalk prove that to be wrong.

I think you need to look at this from the standpoint that the Company gets the same amount whether the unit size is 1 acre or 1,000,000 acres. As I'm sure you will agree their will be more royalty/mineral owners in the 1,000,000 acre unit then in the 1 acre unit. The 1,000,000 acre unit will dilute the royalty paid to the owners because of the size and number of mineral owners. That is spreading the wealth around and holding acreage by production. 

You wrote, "I think you need to look at this from the standpoint that the Company gets the same amount whether the unit size is 1 acre or 1,000,000 acres."  This is patently false.  The production from these long......Hey!  Time out! Why don't we discuss this in private, so as not to bore the rest of the thread?

This info does not bore us..it's why most of us are on this site.  Kindly continue please!  All info is good.  We, as humans, can pick and choose what we want to read and remember~

i agree,  i have never been bored by anything that i read on this site.  thanks for all the great info. 

Joe:

Shale formations and chalk formations are different and should not even be placed in the same sentence to intimate any similarity between the two.

Shale formations do not permit communication of significant amounts of product, even in places where natural fractures occur, whereas chalk wells are usually designed to utilize such natural fractures to increase drainage and thus production.  The potential area drained by a chalk completion is much larger than that of a shale completion, with or without fracture stimulation.  This is a primary reason that chalk wells could be drilled profitably using lateral completions even 15-20 years ago, while shale wells have only become profitable within the last 7-10 years, after both lateral technology and high-pressure fracking have come of age.

I agree with you that the royalties for the mineral owners will be the same long-term if the unit sizes are designed to accommodate the most efficient and economic development of that acreage. But, if the units are larger than they need to be to make that accommodation then the royalty owners have a smaller portion of the unit today, and the hope of infill drilling in the future to maximally exploit their resources. Once their acreage is in a producing unit they could be waiting decades for that infill drilling. Thus, they are "diluted" in the sense that the time value of money makes their future royalties less valuable the further into the future you go. The whole point of constraining unit sizes rather than making them all field-wide is to provide incentive to the operator to drill in a timely fashion, which incentive is not there as much in an HBP unit.

Maybe it would be appropriate for someone to start a thread about unit sizes in the TMS forum...

Sounds reasonable to me.  Bear in mind that the main reason for larger units is to allow for long laterals.  Too keep things simple the width is generally held to one section.  I want to attend hearings if the units get close to our acreage.  I am still struggling to learn the DNR website.

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