landowner

Holding a Lease

Question... SWEPI has drilled about 20 wells, but not turned them to sales. As an example, the Calhoun well (sonris #238720) was spud in October 2008 (that's 14 months ago), and is "waiting on pipeline" according to sonris. I assume SWEPI must turn this well to production to hold the leases in force. Is that correct? How does this work for the mineral owners -- they get no royalties until production occurs. But must SWEPI start production before the primary term expires? Drilling the well is not enough to hold those leases, right?

I'm asking, because SWEPI has about 20 wells that have been drilled in the last year, but none has gone into production yet. And they have about 100 units that have yet to be drilled.

Tags: HBP, SWEPI, production

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Replies to This Discussion

Permalink Reply by olddog573 on January 2, 2010 at 3:49
Swepi is not the only one. TMR exploration did the shallow horizontal skinner well Ser # 238007 in Belmont and it has not been turned to sales. Heard they were waiting for a pipeline to be laid from a Haynesville in the area. Also heard they had 2-3 years after the drilling was finished before they had to pay shut in fees.

landownerPermalink Reply by Henry on January 2, 2010 at 7:42
Harold,
Thanks. So even though sonris says something like "waiting on pipeline" or "wating on completion," these wells are treated as being shut-in. Is this right?

landownerPermalink Reply by twomule on January 2, 2010 at 8:38
XTO is doing the same thing with SN 238707. I wish someone would come in and actually DO something.

landownerPermalink Reply by sesport on January 2, 2010 at 9:10
Major pipeline approved by FERC in 2009 was much less than previous several years (not sure if this was due to lack of applications or turning them down, tho). Applications & approval for major pipelines are starting to pick up again ... much on the horizon. Can't get it all done in a day, just saying.

http://www.ferc.gov/industries/gas/gen-info/horizon-pipe.pdf

Find the article titled "Finding Approval" that starts on p. 32 here...

http://www.scribd.com/doc/22045114/Pipeline-Construction-09-SEP-OCT...

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landownerPermalink Reply by Henry on January 2, 2010 at 10:14
sesport,
I would not mind my well not being turned to sales, with the price of gas so low. I was just wondering how SWEPI was managing to do this, contractually. It may turn out much better for all their mineral owners in the long run...

landownerPermalink Reply by Henry on January 2, 2010 at 13:26
Harold,
I'm not suggesting anything underhanded on the part of SWEPI. And I don't have any lease with them. I'm just curious how it works for the mineral owners, when the well isn't turned to sales. I always hear it takes production to hold a lease, so I was wondering what happens in these cases. That's all. Thanks for your insiights.

landownerPermalink Reply by sesport on January 2, 2010 at 10:30
Indeed it could ... indeed they are, I'm sure. Legal challenges 80P for all involved.
Permalink Reply by NA on January 2, 2010 at 16:37
Sonris isn't updated.

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