Comments - Texas Statewide Rule 37 Exceptions and the Mineral Interest Pooling Act - GoHaynesvilleShale.com2024-03-28T15:00:27Zhttps://gohaynesvilleshale.com/profiles/comment/feed?attachedTo=2117179%3ABlogPost%3A1750805&xn_auth=noThat is an interesting situat…tag:gohaynesvilleshale.com,2011-09-19:2117179:Comment:20964382011-09-19T16:48:33.478ZBen Elmorehttps://gohaynesvilleshale.com/profile/BenElmore
That is an interesting situation. Under Texas law, EOG and Grenadier would be viewed as co-tenants, just like the lessors under their respective leases are co-tenants. As such, any co-tenant can produce the minerals with the only requirement that they account to their co-tenant for the co-tenant's share of the minerals. Using the EOG/Grenadier as an example, it sounds like EOG included its lease on the 50 acre tract in a unit and did not make it a drillsite tract. As a result, Grenadier…
That is an interesting situation. Under Texas law, EOG and Grenadier would be viewed as co-tenants, just like the lessors under their respective leases are co-tenants. As such, any co-tenant can produce the minerals with the only requirement that they account to their co-tenant for the co-tenant's share of the minerals. Using the EOG/Grenadier as an example, it sounds like EOG included its lease on the 50 acre tract in a unit and did not make it a drillsite tract. As a result, Grenadier would not be entitled as co-tenant to any share of the unit well without ratifying the unit. Grenadier would need to use MIPA most likely if EOG is not willing to cut a deal to include its lease in the unit. As for EOG's right to a well Grenadier would drill on its lease, first Grenadier has a right to drill a well on its lease even though the tract is within the bounds of the unit, subject to spacing rules, etc... If Grenadier drilled a well, EOG would share in its production as a co-tenant because again, they are co-owners of 50% undivided interest in the tract. That is my initial gut reaction to the situation you describe. The unit operator has drilled…tag:gohaynesvilleshale.com,2011-09-19:2117179:Comment:20962862011-09-19T15:16:07.226ZDoobhttps://gohaynesvilleshale.com/profile/JohnRhodes
The unit operator has drilled a well on the east edge of a ~600 acre unit. There is a ~50 acre tract inside the unit and the operator has a non-drillsite lease an undivided ~25 acres of that lease which is included in the unit but the other half interest in the tract is not included. If the lessee of the tract that is not included in the unit drills a well to capture their portion of the minerals not included in the unit, what happens to the mineral interest of the operator that is in the ~600…
The unit operator has drilled a well on the east edge of a ~600 acre unit. There is a ~50 acre tract inside the unit and the operator has a non-drillsite lease an undivided ~25 acres of that lease which is included in the unit but the other half interest in the tract is not included. If the lessee of the tract that is not included in the unit drills a well to capture their portion of the minerals not included in the unit, what happens to the mineral interest of the operator that is in the ~600 acre unit? I would assume they can't claim that their minerals are in both the 600 acre unit and the 50 acre unit. I am interested in a Haynesville situation, but the same thing is at issue in the example of RRC Oil & Gas docket No 09-0262864 between EOG and Grenadier. If Grenadier drilled their interest on the "Bower Lease" would EOG have any interest in that well? It seems to me their portion of the undivided interest is included in the Whiteside unit. Are you leased? If I underst…tag:gohaynesvilleshale.com,2011-09-19:2117179:Comment:20962032011-09-19T14:28:54.686ZBen Elmorehttps://gohaynesvilleshale.com/profile/BenElmore
<p>Are you leased? If I understand you correctly, a portion fo your tract is included in a pooled unit and is a non drillsite tract in that unit. As to the non-pooled portion, yes, you can drill a well on that portion (or your lessee can). I don't quite understand your question about a non-pooled interest getting in the way of development. Is it an unleased interest? In general, operators can change the unit configuration, but they risk getting sued. Most operators will get written…</p>
<p>Are you leased? If I understand you correctly, a portion fo your tract is included in a pooled unit and is a non drillsite tract in that unit. As to the non-pooled portion, yes, you can drill a well on that portion (or your lessee can). I don't quite understand your question about a non-pooled interest getting in the way of development. Is it an unleased interest? In general, operators can change the unit configuration, but they risk getting sued. Most operators will get written consent from the pooled participants.</p> Concerning (not) pooling an u…tag:gohaynesvilleshale.com,2011-09-18:2117179:Comment:20956772011-09-18T23:56:01.658ZDoobhttps://gohaynesvilleshale.com/profile/JohnRhodes
<p>Concerning (not) pooling an undivided interest in a non-drill site tract…</p>
<p>The Haynesville units are being formed in anticipation of multiple horizontals. A<br></br>unit can be held together with a single well frequently on the edge of a unit,<br></br>and cost and revenues shared among pooled participants. If in the future an<br></br>operator deems that a tract with non-pooled interest is in the way of optimal<br></br>development can they change the unit, and what would happen to historic…</p>
<p>Concerning (not) pooling an undivided interest in a non-drill site tract…</p>
<p>The Haynesville units are being formed in anticipation of multiple horizontals. A<br/>unit can be held together with a single well frequently on the edge of a unit,<br/>and cost and revenues shared among pooled participants. If in the future an<br/>operator deems that a tract with non-pooled interest is in the way of optimal<br/>development can they change the unit, and what would happen to historic revenue<br/>and expense with changed participation?</p>
<p>The RRC contends that a non-pooled undivided interest can protect their minerals by<br/>drilling their own well. But how can that work if the pooled portion of the<br/>undivided interest is receiving revenue from their portion of the tract? If we<br/>as non-pooled undivided interest in a non-drill site tract decide to drill in<br/>that tract, how are the other undivided interests treated in that tract if they<br/>are already in a unit? They can't get paid for their share of oil and gas twice<br/>can they?</p>
<p> </p> The umo can drill his own wel…tag:gohaynesvilleshale.com,2011-02-18:2117179:Comment:18004512011-02-18T02:25:40.377ZBen Elmorehttps://gohaynesvilleshale.com/profile/BenElmore
The umo can drill his own well, sign a lease or ratify the unit, or seek protection under MIPA. That's the status of Texas law.
The umo can drill his own well, sign a lease or ratify the unit, or seek protection under MIPA. That's the status of Texas law. As a follow-up, how does the…tag:gohaynesvilleshale.com,2011-02-17:2117179:Comment:17994792011-02-17T18:25:59.949ZNacmanhttps://gohaynesvilleshale.com/profile/ACowan
As a follow-up, how does the UMO under the rule of capture protect its interest?
As a follow-up, how does the UMO under the rule of capture protect its interest? Rule 37 only applies to the p…tag:gohaynesvilleshale.com,2011-02-12:2117179:Comment:17922202011-02-12T14:14:51.933ZBen Elmorehttps://gohaynesvilleshale.com/profile/BenElmore
Rule 37 only applies to the physical location of the wellbore, not the distance the proppant travels via the frac. In fact, our Texas Supreme Court recently held that a frac that extends across lease lines underneath acreage not included in a unit or leased by the operator is not a trespass. <em>See Coastal Oil & Gas v. Garza Energy Trust. </em> They held it was simply an application of the rule of capture. They departed from 100 years of case law on the subject. So yes, an operator who…
Rule 37 only applies to the physical location of the wellbore, not the distance the proppant travels via the frac. In fact, our Texas Supreme Court recently held that a frac that extends across lease lines underneath acreage not included in a unit or leased by the operator is not a trespass. <em>See Coastal Oil & Gas v. Garza Energy Trust. </em> They held it was simply an application of the rule of capture. They departed from 100 years of case law on the subject. So yes, an operator who does not apply for or fails to obtain a Rule 37 exception, can place its horizontal drainhole in a legal location within the spacing requirements, but frac close to the UMO lease line and draw hydrocarbons from underneath the UMO land. The Supreme Court simply says it is up to the UMO under the rule of capture to protect its interest. Wow. Thank you for writing th…tag:gohaynesvilleshale.com,2011-02-12:2117179:Comment:17920822011-02-12T08:34:42.024ZSarahhttps://gohaynesvilleshale.com/profile/Sarah18
Wow. Thank you for writing this! I think this is happening to me. (the being drained part without getting paid.) I appreciate all that you said here.
Wow. Thank you for writing this! I think this is happening to me. (the being drained part without getting paid.) I appreciate all that you said here. Thank you, Ben. I commend yo…tag:gohaynesvilleshale.com,2011-02-07:2117179:Comment:17844882011-02-07T23:14:17.234ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
Thank you, Ben. I commend your ability to convey the meaning of the statutes in such a way as to be understood by a layman. I find the Texas mineral code to be arbitrary and punitive in it's regard to the rights of mineral interests affected by these two statutes. And although the LA. Mineral Code is considerably more favorable in it's treatment of UMO's, both states need to to perform a thorough review of the applicability of mineral codes as they relate to horizontal drilling and hydraulic…
Thank you, Ben. I commend your ability to convey the meaning of the statutes in such a way as to be understood by a layman. I find the Texas mineral code to be arbitrary and punitive in it's regard to the rights of mineral interests affected by these two statutes. And although the LA. Mineral Code is considerably more favorable in it's treatment of UMO's, both states need to to perform a thorough review of the applicability of mineral codes as they relate to horizontal drilling and hydraulic fracture stimulation. The Haynesville Shale being the first major play in an age of wide spread Internet participation by private mineral owners can, and should, have the effect of bringing regulatory and legislative scrutiny to these issues.