Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on May 27, 2010 at 2:48

Even before the Petrohawk Core Map was released it was becoming obvious that none of the major companies focused on shale development were interested in any leasehold north and east of 17N - 11W. The only recent activity there being in the far southern sections. I appears that the Haynesville zone north and east of 17N - 11W is transitional from shale to sand. The Haynesville Sand has proven productive in a number of fields further north and east. Diamond Oil has applied for drilling and production units in a number of sections in and around 19N - 10W (link follows). By their application their intent is to drill horizontal wells and commingle production from the Haynesville and Cotton Valley sands. This is an interesting approach and if successful could generate interest and investment in areas outside of the shale boundaries.

http://dnr.louisiana.gov/cons/CONSEREN/hearings/2010/06JUN/10-700-7...

Permalink Reply by Skip Peel - Mineral Consultant on May 27, 2010 at 3:27

New Hosston Unit in the Minden Field.

http://dnr.louisiana.gov/cons/CONSEREN/hearings/2010/06JUN/10-698ap...

Permalink Reply by Skip Peel - Mineral Consultant on May 27, 2010 at 5:56

Brammer Engineering - Upper Mooringsport Units in the Minden Field.

http://dnr.louisiana.gov/cons/CONSEREN/hearings/2010/06JUN/10-648ap...

Permalink Reply by tatterscreek B1 on May 31, 2010 at 16:21

Thanks for the info Skip. I guess there is still some hope for us yet

Permalink Reply by tatterscreek B1 on May 31, 2010 at 16:38

Our lease is up next year. We have a 2 year extension option after that. Do you have any idea what to expect from Petrohawk? Will the sell the leases?

Permalink Reply by Skip Peel - Mineral Consultant on June 1, 2010 at 1:24

I question whether any company would be interested in buying your lease from Petrohawk. My guess is that Petrohawk will not renew nor will they sell. Your lease will simply expire. Any company interested in your area would likely wait for the renewal date to pass and then make you a lease offer.

Permalink Reply by Jack B2 on June 2, 2010 at 8:25

Skip, how would this effect leased and unleased mineral owners that were not in the original Hosston unit. Could a lease be held by production by being incorperated into an existing unit if it is adjoined to said unit.

Permalink Reply by Skip Peel - Mineral Consultant on June 2, 2010 at 8:44

Jack, the Hosston Unit (HOSS SUA) is a "Conservation Unit" and as such force pools all mineral interests within its approved boundary. In short that means the operator can fully develop the approved unit formation under Office of Conservation regulations and that all the mineral interests within the unit will be paid according to their status. Those leased are paid royalties in accordance with the provisions of their lease. Regardless of the lessee. Those unleased, if they remain so, will receive 100% of their proportional production after the operator recovers their well costs and associated management fees. The periodic cost of operating and maintaining the well will also be deducted from time to time. All mineral interests will be paid from the production of all the unit wells. The operator usually makes an effort to lease those interests that have remained unleased for whatever reason.

Permalink Reply by Jack B2 on June 2, 2010 at 23:30

Skip, thanks for the reply.

Permalink Reply by LWC on June 7, 2010 at 4:22

We received a pre-application notice from BEUSA June 4th stating they intend to unitize Sec 29, T19N, 10W. We are unleased as are several others; however, I gather 60% is probably leased. Almost half the 640 is Wayerhauser owned. BEUSA is including the Hosston, Cotton Valley and Haynesville Shales in this action. Can anyone explain this further? It is my understanding O&G usually prefer to lease than have "partners"? Please advise, it seems we have 10 days to request a conference for June 25th.

Permalink Reply by Skip Peel - Mineral Consultant on June 7, 2010 at 4:34

LWC, the instances of one lessee holding all the leases for a unit is relatively rare. The more common circumstance is two or more lessees in a unit. Sometimes quite a few. So operators almost always have "partners". If I was a lessee in this section I would not want BEUSA to be the operator drilling the wells. However no other company may be interested in developing the section and a lease to BEUSA or any lessee is binding on whatever company ends up drilling the wells. In areas where the Haynesville is deemed less productive, it may require producing additional formations (Hosston and Cotton Valley in this instance) to make development economic.

Permalink Reply by LWC on June 7, 2010 at 5:06

Has this area been shown to be less productive? As far as I can tell there has only been the Harold Montgomery well and the one in progress on Pilgrim Rest Road? The leasing companies have been BEUSA and Petrohawk. I'm not sure who Wayerhauser leased with. Granted from what I've heard BEUSA isn't who I would choose; however, I don't have much to say about it, do I?

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