It will be that, IPs mineral title is very complicated. I have more extensive work done in Sabine Parish that involves IP and also in other parishes but not in DeSoto. The only thing I remember doing in DeSoto was the mill.

CHK it seems to me is taking on IPs ability to launch the cat fight and you can bet it will be one. Ip has done their best to try to confuse the situation with all kinds of documents filed over the past couple of years. Lawyers are going to have plenty of work sorting through this mess. I haven't looked into a lot of it, but one company that I do work for holds a lease covering 6000 acres and there is no delay rental in the deal, but the language states that if they drill a well every 180 days it will hold the lease beyond the primary term. This lease is for shallow rights and you can bet that CHK ain't gonna spend too much money trying to get back shallow rights that they will never drill.

IP sold CHK everything but it is subject to existing leases and servitudes if I recall. I have the deed but it is big and I haven't had time to read the whole thing. There will be a can of worms opened with that transaction you can bet.

cHRIS, kEEP ME POSTED.

bEST,

jAY

I am not knowledgeable concerning the transaction you mention. But it is vaguely familiar. I think it has been discussed before and if I remember correctly, Les B. or Two Dogs, was familiar with it.

Interesting development. Do you know when Petohawk's other leases expire? It would appear that Petrohawk is willing to let this section go. They may retain a small interest just to have access to the well data in the future. Chesapeake's "carry" from PXP and their hedge position gives them more options than Petrohawk at this time. And Petrohawk will have to make some tough choices. They can't drill it all. And they can't afford to pay for lease extensions on all the leasehold expiring. They will have to pick and choose a lot as long as the price of ng is so low. Keep in mind that last summer a good well paid for itself in 60 days and that money could be reinvested in the next well. Now any production not hedged takes 3 to 4 times as long to pay a well out. Instead of 6 wells a year for the same dollars, they get 2. Tough times when all they have to work with is cash flow. Until the market improves, that's the only option they have.

Just a quick FYI::

1) Recently received a pre-app notice that CHK is going to unitize Sec.'s 17 and 16 in T11R15. Therefore (according to my figurin'), this leaves only a couple of sections in 11&15 not yet unitized, other than those under Toledo Bend or HBP.

2) I attended a conference in Natch. on 3/25 concerning their (CHK)'s attempt to TACK ON 400 ac. in Sec.#29 to Sec.#20, thus making a unit of1040 ac. Reasoning presented was that the rest of 29 is under water and too close to the Texas line to stand on its on, basically. Some landowners in 20 not too pleased with this as no concrete information was given as to just how they intend to develop 29. It appears to me to be nothing more than a transparent attempt to HBP 29 with the upcoming production in 20. Just my opinion, but I think I'm correct.

JUST ANOTHER LAND-GRAB BY THE O&G GUYS!

Any thoughts on this?

Chris, Hope it all goes well for you.

JM

Chris, In order for this to be made community property you will need to prep a deed granting your wife an undivided 1/2 interest in the property.

Jay

Did the OGML that you signed pre date the "communitization?"

Two Dogs is right, your lease as a single man is a good lease.

Hi Chris, It sounds like this is community property unless you specifically called it separate (and she acknowledged it was yourseparate) when you did the refi. My expert (my wife) on real estate title says some lawyers might disagree on this one. You said you communitized the asset, did you convey an undivided 1/2 to her in a deed?

Jay

Sometimes a company keeps a small fraction of a section under lease or comes in at the last to try and get a small portion leased just to be a Working Interest in the wells. That way they have access to all the logs, cores, etc. In other words, the science generated by the drilling. It can be quite valuable. It's usually CHK that I hear doing it but all operators at one time or another do it. In this play good data is hard to come by so it happens more often. Since you have had a landman course, you are probably familiar with the "day book" at the clerk's office. Just stop in and flip through it. It will take less than 5 minutes to discover if any lease extensions or top leases are being recorded.

Last year the rule of thumb was 90 days. If a permit had not been issued 90 days from the lease expiration date, it was practically impossible to get a well spudded in time. I think that has changed now that the industry has slowed development in other plays. Now there are more rigs available. Also more of the subs that build roads, pads, etc. It may be possible to get a well spudded in 60 days now. The first activity to look for is lease extensions being filed in the clerk's office. They will be "memo of lease" or "amendment of lease" documents. If there are none filed and it is 60 days from the expiration of your lease, you are in the zone. But if you are in a good area and other operators are interested you may receive some "top lease" offers 4 to 6 months out. That's if a competitor knows or suspects something. Otherwise the big boys don't normally draw top lease action. The smaller operators do.

I do not know the answer to your question. And I do not provide legal opinions as I am not a lawyer. It seems a simple enough question for the legal eagles on the site. If you do not wish to post it on the main page, I suggest you send it to KB on her personal page. Though KB is not an O&G attorney, she is an attorney and IMO qualified to answer your question.

Herefordsnshale,

As far as I have been able to determine, my tract of 75 ac is the only relatively SIZABLE piece of dirt in #20 that is not yet leased. I say this as there may be some lots back in Chester Lowrey's old subdivision back on the south line of #20 that are not leased.

I am not opposed to leasing, it's just that I am NOT going to fork-over 3/4 of my minerals (under a 25% royalty lease) for what amounts to "pennies", let's say. I do not, by the way, buy into all the "horror stories" put out by the O&G folks about going into a well as an UMI.

Furthermore, I was told by a very reputable souce (landman) that the lease on the 80 ac just to the West of me on the W/ line of #20 expires the middle of April, and thus for the "hurry-up" to get #20 going. Most, of the land in #20 was leased by the Classic H. bunch a few years back. CHK got all these leases, I understand. (I did NOT lease with these folks, by the way.) I have talked with several people who thought that their lease was going to expire at the end of 3 years, only to find out that there was a 2 year extension that they really didn't understand was there! Not-to-happy folks, to say the least. (It is also my understanding that the 80 mentioned above DID NOT have the 2 year extension.)

There are so many reasons and interplaying factors involved in this whole business as to why one section is not looked at any one particular time, that I would not hazard a guess about your section. I'm sure that in time the answers will become evident.

Thanks for the correspondence. Stay connected, and in return, if I hear of anything that I think you might be interested in, I'll "holler".

BTW, I believe you to be in the timber business. Yes? If so, you might know my brother-in-law. His name is A. Robbins who just retired with IP after 32 years. His family is from the Oxford area (where we buried my sister in April of last year.) Just a thought.

And, if ole' "Fox" gives you any trouble, just let me know -- we'll get a switch and give him a good whoopin'!

Have a blessed day!

I would take CHK or HK over any other operators with the exception of Devon or EOG for overall horizontal completion experience. CHK and HK have the added benefit of experience and data for your specific locale. Now as to leasing, I have no advise. But from a standpoint of who pokes the holes in the ground. I would be satisfied with a coin flip between the two. Good Luck.

I don't wish to guess what Petrohawk's tolerance may be for unleased acres in a section. You may wish to check out the discussion I just started concerning the current economic impact on HS operators. There are other factors that can come into play when the money pinch requires triage. For example, you have two sections with approximately the same acres under lease but the capital to drill only one. The average royalty in one is 23.5% and 18.75% in the other. If associated development costs (roads, pipelines, etc.) are the same, which one would you choose to drill? Instead of drilling one $8M horizontal to HBP one section would you choose to drill 3 $2.5M verticals to HBP three sections? If Petrohawk is serious about your section and one or more landowners are unwilling to lease, the leased landowners will receive offers to extend their leases. If those leased landowners are leased at less than 25% and will accept an increase to 25% in exchange for the extension, Petrohawk may hang on for a better day. If landowners demand a lease bonus for the extension, Petrohawk may walk. As you can see it's a complex question with many possible circumstances and outcomes. Let me know if you or your neighbors are approached with an extension offer and I'll try to give some advise at that time. Good Luck.

About all I know. My/our lease expires 8/09 through Petrohawk. Either I pray the lease expire before a well is drilled (this way/us would receive a new lease with a huge up-front bonus) Or pray they do hit a well and it's a big one.