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Permalink Reply by Two Dogs, Pirate on December 10, 2008 at 14:56

Watch Sonris. They will contact you when they start producing the product and send you paperwork defining your interest, you can either sign and send back or contest. Hope you had a Pugh Clause attached to your lease.

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Permalink Reply by zzblues on December 11, 2008 at 4:56

Thanks folks for the replys. What is a Pugh Clause? I probably don't have one,as I don't know what it is.
Land is Sec.5,T21,R7. Unit is, CV RA SUT; ; cotton valley RA. Don't know if it is to be vertical only or horizonal. Depth is supposed to be 10,000ft. when completed.

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Permalink Reply by Two Dogs, Pirate on December 11, 2008 at 13:06

ZZ, the Pugh Clause releases anything that is not in the unit at the end of the primary term of the lease. So if 40 acres of your lease was in Section 1 and 40 acres was in Section 2 and they drilled and hit in Section 1 and not in Section 2 then the Section 2 acres are released back to you to lease again.

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Permalink Reply by The_Baron on December 11, 2008 at 17:20

KB is refering to a vertical pugh, two dogs to a horizontal pugh....

a good lease will always have a vertical pugh. A horizontal is probally not nesasary on a few acres, but very inportant on a larger tract, especially if it crosses section boundrys in north LA.

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Permalink Reply by zzblues on December 11, 2008 at 15:31

Thanks for the info. I will have to check and see if the other acreage laesed is in another unit. I KNOW it is NOT in the unit where they are drilling. I have seen a map of the unit. Only the my north 80 acres of that tract are included in the unit I mentioned in earlier email. I don't believe I have a "pugh clause". However the ajoining 100 acres were not leased at the time the 80 were. They were leased the next year. Hopefully they won't be "held by production" or otherwise tied up,past the term of current lease.

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Permalink Reply by Skip Peel - Mineral Consultant on December 10, 2008 at 14:58

zzb. Congrats. As you are included in the unit, you should receive a substantial royalty as you have one eighth of the acres included in the unit (if it is a 640 acre unit). Based on your royalty percentage of course. And the production of the well. It doesn't matter whether the well is on your land or not. If the operator is drilling the HS, it will be a producer. If you would like to know more about "your unit well", you may choose to share the section/township/range. There are many members who would be interested and probably willing to share what they know.

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Permalink Reply by Bobi Carr ("parker") on December 10, 2008 at 15:12

zzb,
Two Dogs is referring to a "division order". The gas company will ask that you sign this document to verify that you agree with the amount of acreage and the percentage of royalties that they will be paying you.

I sure hope that it is a horizontal well instead of a vertical. If it is a vertical well, you may be extremely disappointed at the royalty checks that you will receive.

But even if the initial production is less than hoped for, they can still later come back and make it a horizontal completion.

GOOD LUCK

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