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Permalink Reply by jim weyland on September 22, 2013 at 12:04

skip, thank you, sir. jim weyland

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Permalink Reply by dbob on September 22, 2013 at 12:09

Comstock really going to drill those?

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Permalink Reply by Skip Peel - Mineral Consultant on September 22, 2013 at 13:33

Only Comstock knows for sure.  However my guess would be, yes.  The whole story would require some research of the subject leases.  It is unusual to see this many unit wells so late in the history of the HS.  All of the units covering these sections were formed by others, namely BHP(Petrohawk) for the first and last and BP America for the others.  Those original unit operators permitted wells that were never drilled in 2010.  In 2011 Comstock permitted wells that were never drilled.  So all these are repermits of earlier Comstock well permits.  I suspect that Comstock has delayed development until late in the lease terms for economic reasons.  However they must see sufficient long term value and are willing to commit to their portion of the ~$100 Million to HBP this rock.  That is a pretty big vote of confidence.  I imagine many lessors under these units had just about given up the hope of getting a well.  For all involved we'll hope they are good wells.

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Permalink Reply by Steve P on September 22, 2013 at 15:14

i am one of those mineral owners. not one of the lessors because many of them are likely now deceased. the units have been HBP for decades. all 1/8 leases. sad

another potential explanation as to why Comstock is permitting these wells is that Comstock has a commitment to BP to drill or lose their farm-out. there are many (marginally) producing Hosston wells in this area now owned by Wildhorse.

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Permalink Reply by Skip Peel - Mineral Consultant on September 22, 2013 at 15:41

That would fit, Steve.  Thanks for the explanation.  Has anyone ever reviewed the production history of those Hosston wells?  Many gas wells with marginal production no longer meet the Production In Paying Quantity standard under the LA State Mineral Code owing to depressed natural gas prices.

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Permalink Reply by Steve P on September 22, 2013 at 17:53

Skip:  I only get a check every second or third month from Wildhorse since my interest is small and the production is small.  Several of the wells are still producing, but none produce much.  I bought the land in the mid 80's, sold the land but retained the minerals.  back then, there was a well or 2 that produced some liquids with the gas, but even then the total production was marginal. 

In short, I don't know if the current production meets the "paying quantities" test. I had prepared a demand letter to BP a few years ago, but the market dropped about that time and I didn't think I could make the case that a prudent operator would drill a HS well at that time, so I didn't send it. BP sold the shallow rights to Wildhorse about that time, and a year or 2 later sold the deep rights (presumably) to Comstock.

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Permalink Reply by Skip Peel - Mineral Consultant on September 23, 2013 at 2:01

If you will give me the section-township-range, I'll look at the production history.  However if you are receiving a check every few months for a small proportional interest in the well or unit it is likely that there is sufficient production to meet that test.  Then it becomes a question of any gaps in monthly production for the life of the well.

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Permalink Reply by Steve P on September 23, 2013 at 9:09

It's 2 - 11 - 15.  There are 3 or 4 wells that still produce gas, so I think that the lease is producing in paying quantities.

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Permalink Reply by Skip Peel - Mineral Consultant on September 23, 2013 at 9:17

Both the Pettit and the Hosston wells have production sufficient to meet the test.  There have been no gaps in production which would invalidate the lease. 

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