Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on December 6, 2021 at 14:11

Roger, I got the alert email for your new discussion.  I hope you'll get some responses from the Vernon Parish members.  There's not been much leasing activity in your specific area, so it's hard to compare what is "fair market" terms without some feedback.  I always prioritize the royalty fraction over the bonus and would gladly trade less bonus for more royalty if possible.  It is important to look at the size of the drilling unit to determine the percentage of the whole that your tract represents.  Obviously the more acreage you have, the better your negotiating position.  It is a good idea to understand the ramifications of some of the other lease terms.  For example, there is value in surface locations.  Tracts close to roads and located near the edge of drilling units may have value for surface use such as lease roads, pipeline (gathering system) pipelines and drilling pads.  I suggest that mineral lessors include a no surface use clause, just in case.  I would tell a landman seeking a lease that I won't necessarily deny surface use but I want the clause so I can negotiate the compensation for it and the damages or loss of use for the acreage.  I further suggest that you don't "warrant title" and that you stipulate a significant per acre price for any lease extension.  A three year primary term with a two year option to extend is common.  The five-two is less so and should come with a little better compensation.  After all those observations, I'll close with this:  the Austin Chalk in this specific area is not proven economic.  It is a tough nut to crack and for that reason I would be offering similar terms to Continental.  There is plenty of risk involved for all parties.  Good luck.

Permalink Reply by Rock Man on December 6, 2021 at 18:51

Adding to Skip's comments, considering the primary play in this area (i.e. the Austin Chalk), operators will try to put together a positive as inexpensively as possible as to up front dollars plus royalties given. Trying to get more term up front fits with the difficulties of this play concept - should need as much time as possible to see if this play may work out.

Ultimate Catch 22 here, i.e. mineral owners want best terms for them, but if mineral owners hold out for higher terms - the operator may just ditch the play in total.

Mineral owners get their big money once wells are drilled - leasing compensation is small compared to O&G production related revenues. And should consider this when dealing with operators in these tough play concept areas.

Interesting conundrum for sure.

Permalink Reply by Skip Peel - Mineral Consultant on December 11, 2021 at 3:47

I will post drilling updates on the Labokay 20-17H #1 in the Austin Chalk Group.

https://gohaynesvilleshale.com/group/austinchalk/forum/topics/conti...

Permalink Reply by Roger Boehme on December 11, 2021 at 6:19

Skip and Rock Man, thank you for your comments. Very good point about surface rights, that aligns with our preference both now and possibly in the future. I'll make sure we address that and your other recommendations. I also see the point of bonus money vs. royalties and will try and seek a happy medium understanding the AC seems to be tough to drill and produce. Thanks for update on Labokay 20-17H #1 on the Austin Chalk page. Hope they are successful with the well.

Permalink Reply by Skip Peel - Mineral Consultant on December 11, 2021 at 6:43

You're welcome, Roger.  Please pass the word, we can use more members.  Also this month, I am asking all my site "friends" and members who receive value from GHS to make a donation to keep the website up and running.  This is not Keith's primary job.  He has to work like the rest of us at doing something other than GHS.  He has a $3k fund raising target.  We can get there with modest contributions from most of the members who participate on a regular basis.  It's a good investment.

Permalink Reply by Skip Peel - Mineral Consultant on December 18, 2021 at 4:07

On 12/17, Nabors Drilling Rig #B15 reported 17 Days Drilling Ahead @ 13,862 on the Labokay 20-17H #1.

The permitted True Vertical Depth (TVD) is 9632' and the Measured Depth (MD) is 20,318'.  At 13,862', the wellbore should be in the "heel" of the lateral having gone horizontal.

Permalink Reply by Roger Boehme on December 19, 2021 at 15:44

Skip, good point about donations to the website. I'll follow up on that. Thanks for the Labokay update.

Permalink Reply by Skip Peel - Mineral Consultant on December 19, 2021 at 16:56

You're welcome, Roger.  Here's hoping that the full length of the permitted lateral is successfully drilled and cased.  The next couple of weekly reports will tell how smoothly that goes.

Permalink Reply by David Crockett on December 22, 2021 at 6:45

I see there is a new permit for Vernon Parish #253160 dated today 12/22/21

Permalink Reply by Skip Peel - Mineral Consultant on December 22, 2021 at 6:56

Thanks, David.  Brammer Engineering in the Sugartown Field.  Rock Man, does this look like an AC well?  Seems too shallow for AC in this area.  The permit should be entered in the database in the next 24 or so hours.

SERIAL	WELL NAME	WELL NUM	ORG ID	FIELD	PARISH	PROD TYPE	SEC	TWN	RGE	EFFECTIVE DATE	API NUM
253160	CROSBY LAND & RESOURCES LLC H	001	0683	8744	58	00	011	02S	07W	12/22/2021	17115202390000

 

PRMT DATE	SPUD DATE	STAT DATE	ST CD
12/22/2021		12/22/2021	01

WELL SURFACE COORDINATES

Surface Longitude	Surface Latitude	Lambert X	Lambert Y	Ground Elevation	Zone	Datum
93-2-55.72	30-53-46.26	1461885	814818	181.1	S	NAD-27

WELL SURFACE COORDINATES GENERATED BY DNR

UTMX 83	UTMY 83	LONGITUDE 83	LATITUDE 83
495320.14073442	3418118.81608048	-93.04897466	30.89638066	View GIS

BOTTOM HOLE COORD

EFFECTIVE DATE	END DATE	PLUGBACK TOTAL DEPTH	TRUE VERTICAL DEPTH	MEASURED DEPTH	LAT DEG	LAT MIN	LAT SEC	LONG DEG	LONG MIN	LONG SEC	COORDINATE SOURCE	LAMBERT X	LAMBERT Y	ZONE	COORDINATE SYSTEM
12/22/2021			11981	17148	30	52	52	93	2	53.99	02	1461954	809334	S	01

WELL HISTORY

SERIAL	WELL NAME	WELL NUM	ORG ID	FIELD	ST CD	PT	WELL CLASS	EFF DATE	END DATE	STAT DATE
253160	CROSBY LAND & RESOURCES LLC H	001	0683	8744	01	00		12/22/2021		12/22/2021

SCOUT INFO

REPORT DATE	WELL STATUS	MEASURED DEPTH	TRUE VERT DEPTH	DETAIL
12/22/2021	01	17148		894' FSL & 469' FEL OF SEC 11-T2S-R7W. PBHL: 716' FSL & 465' FEL OF SEC 14-T2S-R7W.

Permalink Reply by Rock Man on December 22, 2021 at 7:35

With this vertical depth, this looks like a Lower Wilcox SS target.

Permalink Reply by Skip Peel - Mineral Consultant on December 22, 2021 at 7:37

Sand Stone?

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