Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on February 22, 2010 at 8:54

ernie. Well permits can be for six months or 12 months. The operator is not obligated to drill within that time however and may allow the permit to lapse. In that case, they can reapply, be assigned a new well serial number and pay another permit fee. The fee is about $1200 for six and $2400 for twelve months. Every operator and every well they permit is a unique situation. There is no accurate means to determine an average time to drill. Your best course is to learn how to use SONRIS Lite, the state database, to track your well. Use this link to go to the SONRIS Help Center Group Page and explore. The database is very user friendly. Good Luck.

http://www.gohaynesvilleshale.com/group/sonris_help_center

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Permalink Reply by Linda Blunt on February 22, 2010 at 9:12

Skip,
At any time the past, were permits issued for three months? I have three months stuck in my brain but I can not remember what the three months applies to. Can you help! Thanks!

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Permalink Reply by The_Baron on February 22, 2010 at 9:33

you are probally thinking about shut-in rentals.

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Permalink Reply by Skip Peel - Mineral Consultant on February 22, 2010 at 9:47

Welcome back, Baron. Linda I agree with The Baron as I can think of nothing else that would be associated with a three month period.

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Permalink Reply by Linda Blunt on February 22, 2010 at 10:47

Thanks to both Baron and Skip,
I have never heard of a shut-in rental so I don't know why three months keeps rattling around.

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Permalink Reply by Skip Peel - Mineral Consultant on February 22, 2010 at 11:11

From "Naural Gas Leasing Basics" by Kassi Fitzgerald, Member accessed from the Quick Links on the Main Page: Kassi, We miss you.

Lease Details

• Never sign a standard lease!
• Minerals: Limit lease to petroleum and natural gas and related hydrocarbons only except coal, lignite and uranium.
• Negotiate the best possible bonus payment and try to stick to a 3 year primary term only
• Minimum royalty should be 25%
• Ask for a “no cost” royalty
• Royalty payments should begin within 120 days of production in paying quantities
• Stipulate what constitutes timely payment and what penalties will result from late payment.
• Royalty payments should be based on price of gas at the casinghead or market price.
• Stipulate a minimum royalty per acre per year or define production in paying quantities.
• Shut in provision should include:
– Monthly or annual payment during shut in
– Time limit on shut in
• Allow for reasonable time in the event of a force majeure but stipulate what constitutes a force majeure
• Request removal of any liability of warranty on the title
• Include an indemnification clause
• Include a vertical Pugh clause i.e.: you retain depths from 100 ft below the deepest formation produced by the production company in the Haynesville shale
• Request horizontal Pugh clause
• Do not allow clauses that allow units larger than 640 acres without state approval
• Include a clause allowing you or your agent reasonable access to the Company’s books
• Request horizontal Pugh clause
• Do not allow clauses that allow units larger than 640 acres without state approval
• Include a clause allowing you or your agent reasonable access to the Company’s books
* Request strongly worded water protection including testing of wells if you utilize well water
• Negotiate surface rights separately
• Limit proximity of wells and storage tanks to inhabited dwellings
• Include payment for all surface damages

Leases may allow the lessee to "shut in" a completed well capable of production under specific circumstances such as no pipeline connection but for only a limited, specified period of time.

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Permalink Reply by Mac Davis on February 23, 2010 at 10:01

I think the rig/crew shortage has gotten much better, so it would seem that time from permit to drilling is likely to be shorter than it has been at some times in the past.

Or am I incorrect about the rig/crew shortage?

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Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2010 at 10:10

Yes, I believe that no rig shortage currently exists, Mac. The most common reason for production to be shut in is absence of a pipeline connection or existing pipelines with little or no available capacity. IMO the main reason so many wells are drilled but not completed is lack of connection to market.

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