Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 11, 2010 at 16:00

Pam. On what date was the well reported as Code 33? If a shut-in payment has not been received by the due date, I suggest you contact an O&G attorney.

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Permalink Reply by Pam on March 12, 2010 at 8:00

Thanks Skip and Baron. The stat date for code 33 is 09/24/2009. I believe it's a unit well because I have received notification of unitization and force-pooling but I will double check all my paperwork at home. They have reported some gas (and a little oil) production. The most reported was in July 2009 at 8912 MCF and 50 BBL. No production for Sept and Oct and then a little more in Nov and Dec. I have received no correspondence whatsoever from the operator.

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Permalink Reply by The_Baron on March 12, 2010 at 4:17

A couple of things come to mind.

1) they may be activly working on the well, maintaining the lease by operations. Just because they are not out every days does not mean that there is no activity. SONRIS will only tell you so much, I would call the operator.

2) I interpreted your comments to mean that the well is in your section, but not on your land. Is the well a unit well or lease well. If it is not a unit well, or if it is a unit well and you are not in the unit (not all units are on section lines), Then this well will not effect you or your lease. I can not say more without more information.

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Permalink Reply by waltcop on March 12, 2010 at 6:52

Here are a couple of "IF" questions:

1) IF a well has been reported as shut-in, can shut-in payments be legally held up by the operator because they may be (or say they are) actively working on the well?

2) IF, in Louisiana, a well is in my section, but not on my land, can it be a lease well? I thought it had to be in a unit.......maybe I don't understand the ins & outs of a unit vs lease well.

These may be dumb questions but sure would appreciate a clarification.

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Permalink Reply by Skip Peel - Mineral Consultant on March 12, 2010 at 7:30

waltcop. 1) is kinda ambiguous, so I leave it for The Baron. LOL!
2) A lease well can exist in any location regardless of section lines as long as it meets all the requirements of the LOC. If a well is producing from a formation or zone that requires a minimum 40 acres, then the lease must cover at least 40 acres roughly in a square. Lease wells are voluntary meaning to drill one an operator must have the required acres under lease, no force pooling. A unit creates compulsory wells, force pooled, and allows for the maximum number of wells within the unit by LOC spacing. A 640 acre HA unit with 80 acre spacing per well would qualify for up to 8 wells. Whenever you see the term, "non_unitized", on a HA well permit, that's a lease well. It is a common occurrence for multiple units of different sizes for different formations to exist at different depths under the same section. You gotta think 3-D.

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Permalink Reply by Robert Griffin R on March 12, 2010 at 8:26

Skip,
What are the rules when a non-unitized or lease well of say 40 acres draws oil and/or gas from beneath my land which is adjacent to but NOT within the 40-acre lease? Is the burden of proof on me to prove, legally at my expense, that the well is producing from my minerals or for the operator to prove that the well is not producing from my minerals? In the past I always thought that all landowners in a section always shared proportionally based on their acreage from the production in any section well regardless of section size or shape. Many of the discussions on this site over the last 2 years have about convinced me that is not always true.

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Permalink Reply by Skip Peel - Mineral Consultant on March 12, 2010 at 8:51

Robert, there is no such thing as a "section" well. A well is a unit well or a lease well. The LOC sets minimum spacing based on the computation of a formation's petrophysical characteristics including the area that a single well is capable of draining. If the LOC thought a Pettet well, for example, would efficiently drain x acres, then they make the minimum spacing x acres. In one section there could be a two units encompassing 40 acres each, another unit for 320 acres and a unit covering the entire 640 acres all different formations at different depths. Let's say you had 20 acres and were in three units. You'd have 50% of the unit acres in the 40 acre unit, 6.25% of the 320 acre unit and 3.125% of the 640 acre unit. Whether a particular well can effectively drain an area larger than it's unit size is difficult to ascertain. Many standard lease forms require a lessee to drill a protection well when a new well is drilled within a certain distance of a lease or unit line. This is because it is difficult, and expensive, to try to prove drainage beyond unit or lease boundaries.

Here is a recent unit application for Pettet Reservoir B units which are 160 acres.
http://dnr.louisiana.gov/cons/CONSEREN/hearings/2010/04APR/10-411ap...

http://dnr.louisiana.gov/cons/CONSEREN/hearings/2010/04APR/10-373ap...

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Permalink Reply by Robert Griffin R on March 12, 2010 at 9:14

Thanks Skip. Great explanation.

So in the cases of the Haynesville and Bossier shale plays are there now or do you think there will ever be any units less than a full section size or as small as the 80 acre drain area for one horizontal well?

Have a great weekend.

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Permalink Reply by Skip Peel - Mineral Consultant on March 12, 2010 at 9:32

I do not recall seeing any less than a section but I suspect that there will be circumstances that may create a smaller unit or even a lease well. The challenge is that the 80 acres must be in the correct shape to also meet the LOC requirement of no lateral well bore perforations closer than 330 to a unit or lease line. You're welcome. I hope you have one too Robert.

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Permalink Reply by J B Nabors on July 14, 2012 at 6:39

I queried the LA DNR about the permitting of the Briarwood well, SN239705, in S25-T12N-R13W, asking how could the well be permitted (SONRIS) on April 22, 2009, when the Section was not unitized until the hearing on May 12, 2012.

DNR responded that the well was permitted as a "lease well", and was not made the unit well until the permit was amended on August 12, 2011.   

We own minerals in S25, but the well is not on our land.  Regardless of when the well was permitted or redesignated a Unit Well, it was after the expiration of the primary term of any lease.  Can anyone shed light on our status -- unitized, Unleased Mineral Owner, etc., or direct me to the regulations which apply?  TIA

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Permalink Reply by Skip Peel - Mineral Consultant on July 14, 2012 at 10:06

Forming a unit or permitting a well does not hold a lease in force.  The spudding of a well prior to the expiration date would hold the lease as might operations other than drilling of a well if specifically defined in the lease.  Building a pad for example.  If no operations definition in your lease you are unleased.

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