Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 9, 2010 at 3:20

There is no minimum percentage of mineral acres under lease in a section (unit) required by the DNR/LOC for a company to apply for and receive a drilling & production unit order. In your example, either A or B could apply. B would have the option to oppose A's application. The real question here would be is B an operator. In other words, capable of drilling and completing Haynesville Shale horizontal wells. If not, they might negotiate an operating agreement with A. Remember that holding a unit order gives a company the option to operate or to designate the operator. As an example, major shale players are often the operator in units/sections under order to a smaller company.

• ▶ Reply

Permalink Reply by Henry on March 9, 2010 at 3:35

Skip, In this case, both A and B are major players/drillers in HS.

• ▶ Reply

Permalink Reply by Les Bamburg on March 9, 2010 at 3:47

Henry, even a minor player could drill and complete a vertical well to hold the acreage.

A common practice is the "drill to earn". Exco has rigs available and expertise and is willing to drill a horizontal HS well on another operator's unit in exchange for a working interest.

• ▶ Reply

Permalink Reply by Les Bamburg on March 9, 2010 at 4:07

By the way, there are plenty of situations where a company operates without being the largest working interest owner.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on March 9, 2010 at 3:48

Then A would acquire B's interest or B would object to A's application.

• ▶ Reply