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Permalink Reply by GoshDarn on December 8, 2010 at 19:08

Jimmy:

An operator can permit a well with the state (in La.) but is under no legal obligation to proceed forward into a SPUD date.

In fact, from personal experience, HK has unitized one of our sections and has done this expiring-permit thing before. They've permitted, the permit has expired, and they've re-permitted yet again. Plus, there's various permit lengths, too.

So, don't start counting (and/or even pondering) your uptick in finances until they actually get a rig on the pad and they eat da SPUD into the ground.

That said, to give you a general context, these super horiz wells can take months and months to drill and complete (if, if they don't hang up). Then, as can happen with HK, they might also slow-step the royalty payout per double-checking the title yet again to make sure that those big fat first royalty payments are, in fact, correct.

Now, true, HK is a darn good HA IP-er. Excellent in their technique.

Nevertheless, if it was me, I'd plan on not even thinking about seeing any royalty money for possibly a year from a permit date, and that's if it proceeds via normal SPUD-ing without and glitches.

Oh, and this timeline is also dependent on pipeline availability/nearness and capacity and the price of NG. Without pipeline, you might have a flare and a shut-in, i.e., no royalties in the near term at all.

Never easy to figure, this stuff.

It's best to simply go on with your life and hope Santa surprises you before sometime this time next year.

Permalink Reply by Jimmy Stiles on December 12, 2010 at 15:43

Thanks Gosh Darn. That's what we're doing - spending all of that money now and playing in the field like the grasshopper. HaHaHa.

 

Your insight is greatly appreciated and that timeline is even a bit more conservative that what we've factored. Like so many others that I am sure have done little to nothing (except hold onto mineral rights) to deserve anything (if ever received); there's not anything this money will do, if ever found except serve to provide a bit better for those that follow. That's the plan and the ant has spoken.