Replies to This Discussion

Permalink Reply by Bobi Carr ("parker") on November 17, 2008 at 4:38

No, not officially.

They gave notice to Fite and then gave notice to Encana, giving them time to correct the problems that Fite created. So the actually suit was against both.

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Permalink Reply by Bobi Carr ("parker") on November 17, 2008 at 4:49

Suit contends-

Lessor failed to limit access to agreed upon designated route

failed to maintain roads and bridge

failed to maintain adequate fencing

improperly and without right, utilized and disposed of saltwater in existing SWD

improperty disposed of waste

improperty operated pits

generally failed to maintain the involved property

failed to make required surface damages

failed to reasonably develop the property

FAILED TO MAINTAIN THE LEASES THROUGH PRODUCTION IN PAYING QUANTITIES.

Permalink Reply by The_Baron on November 17, 2008 at 4:56

Sounds like a generic list of violations. Seems to me that they are using every play in the book to break these leases.

Personally, I would want the chance for a HA well, espessially since the leasing frenzy has cooled down.

Permalink Reply by Bobi Carr ("parker") on November 17, 2008 at 4:59

The property was included in the unitization application.

Sounds to me like they have had lots of problems.

It makes those of us that aren't done extremely leary. Just makes me want to be even more careful with the items my lease should contain for my unleased property.

It also alerts me to the possible problems on my leased property.

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Permalink Reply by The_Baron on November 17, 2008 at 5:18

I'm not saying that the problems aren't legit.

The gaps in production are probally the best hope for breaking the leases. I would think any of the other problems would result in monetary damages.But then again, Who knows what the judge will do.

I would be sure to make some mention of how long production can cease without some kind of rental or even expiration of the lease. Things can happen to well that take time to fix, but unless work is actively occuring to fix the problems, I would not want to be HBP.

Permalink Reply by The_Baron on November 17, 2008 at 5:19

Also, make sure there is some mention of surface damages, maybe even a reqirement for written notice of surface operations.

Permalink Reply by Dion Warr, CPL on December 5, 2008 at 12:26

Parker:

Is this who I think it is who filed suit?

If it is, those leases were relatively old, if I am remembering properly. The production is shoddy, but wells were drilled here and there all over them.

Most of the time, it is easier to obtain relief from the court (by partial release) if the acreage was not fully developed, provided that there were no wells during the term of the lease on large, definable portions of the lease (a la the suits against Arkla Gas or predecessors on 'development leases' covering thousands of contiguous acres, in which 'hit and miss' drilling was done on the bulk of the lease and production was concentrated in one or two 'centers' of activity for an extended period).

I guess if the trangressions were egregious enough, one could argue for dissolution, but generally if the operator is making the effort to develop and produce, even if not wildly successful, many courts are loathe to dissolve an oil and gas lease. Sanctions, money judgments, court-ordered restoration activities, sure; but even then, one would have screw up pretty badly to have leases dissolved when there are maintained, productive wells on them.

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