The Economics of the Longer Laterals

I have been hearing for some time that the economics of this play are going to usher in different scenarios then one may be accustomed to seeing. Because of the expences incurred from site prep and of course the shortage of equipment capable of drilling the horizontals, the longer lateral with multistage frac (12 & up) is the apparent future of shale play drilling in this part of the world.I understand its savings from an O&G perspective, but what about from a mineral owners perspective ? For example...............Permit info in care of Earlene. Thank you love.

The Peironnet 001 well, serial # 239339, API # 17017346980000. Caspiana Field , Permitted in Caddo Parish to CHPK actually covers S/29 of Caddo & ends up in S/20 of Bossier. The longest lateral to date that has been seen by the Pro's on this side of the fence. A true vertical depth of 11,876' and a measured depth of 20,000'.

Even tho Jay left me the keys to the Geo Department, I'm not a brainiac. This is going to floor my hottie wife but the facts are the facts. I am however capable of doing some 'rithmatic. If you subtract the 11,876' true vert from the 20,000' measured, that leaves a lateral of 8,124', or roughly a mile and a 1/2.

How exactly are they going to divy up the monies on this deal ? It appears to be 2 different units. Instead of 640 acres (roughly) to be divided amongst, it now appears that you will be sharing your royalty with another 640 acres. Am I looking at this right ? How will the taxes be split up ? 33% of the lateral in 1 parish and 66% in the other ? And I been hearing about paperwork headaches ? HA!

Maybe some were premature in their thoughts on wells being drilled in the middle of a section. Because thats exactly what is going to have to take place for this to happen.
I know this hasnt come to fruition yet as the well has just been permitted but I would certainly enjoy anyones insight on this matter.

P.S. Cannon has been rolled into powder room for short term dry storage. :-)

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Oil & Gas ProPermalink Reply by Dion Warr, CPL on January 23, 2009 at 4:41
Group:

Ah! Let's put the speculation to rest on this one.

Please see the attached well permit information for this well...
Attachments:

landownerPermalink Reply by Spring Branch,mineral owner on January 23, 2009 at 7:09
Just as I suspected. Hope it makes a barn burner of a well! Thanks, Dion
Permalink Reply by James CD1 on January 23, 2009 at 14:57
can anyone give me an explanation for a vouluntary unit and how this differs from a "regular"
unit?

Oil & Gas ProPermalink Reply by Dion Warr, CPL on January 24, 2009 at 6:31
James:

In LA, voluntary units are formed by the pooling of leases around a well, without the formation of a drilling unit by the LOC. The pooling of leases is generally permitted under the terms of the lease without Lessor's joinder, but lessor may alternately negotiate a provision that leases may not be pooled without the lessor's consent. If this is the case, lessee must get permission from lessor to pool his lease with other leases, as the contract is the law between the parties. Voluntary units are declared by instrument, are filed in the courthouse records, and a copy is filed with the LOC along with appropriate permit paperwork.

When the LOC forms a drilling unit, it orders the force-pooling of leases within the drilling unit. It also recognizes one of the lease owners as operator (generally, the party with the most leasehold in the unit). Since LOC forms a drilling unit as the state regulatory body in compliance with the public policy of the state, Lessee did not pool the leases, LOC did it by force of a field order, and lessee did not breach the lease.

Discovery wells at a new formation in a field (or in a new field) can be operated as voluntary units until such time as a petition is made to LOC to form drilling unit(s). Thus, a well can start life as a 'lease well' (e.g., Smith 20 #1), operator forms a voluntary pooled unit around the well (e.g., VUA; Smith 20 #1), petition the LOC to have a unit formed around the well and/or form other units (e.g., Field Order 9999-C creates HA RA SUA through H, force pools the lands, minerals, and leases within each of the units, and recognizes the Smith 20 #1 as the unit well for the HA RA SUA, and the well then becomes 'HA RA SUA, Smith 20 #1').

landownerPermalink Reply by J B Nabors on July 16, 2011 at 4:54

My Lessee (Justiss) in Sabine Parish wishes to include a lease clause to allow "voluntary units".   Can anyone shed some light on the pros and cons of a "voluntary unit"?

 

Much obliged.


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on July 16, 2011 at 8:23
Voluntary units are formed where multiple mineral interests agree to pooling those interests in a designated unit which meets the minimum criteria of the LA. Office of Conservation.  The only limitation to size and shape are the state spacing regulations for the particular reservoir to be developed and the number of mineral owners interested in participation.  We are used to HA horizontal wells being drilled in "compulsory" units where the state gives the applicant the authority to "force pool" the mineral interest within the unit boundary.  In the first you go in willingly, the second you don't have a choice.

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