Replies to This Discussion

Permalink Reply by RGV AG on September 24, 2014 at 10:51

Skip:

Thanks for posting this, I tried using the MSOGB website, but it is Aggie proof, to look at several things. Question I have for you, or anyone really, regarding this is in the original Docket application and such HK was listed as the operator, or at least HK applied for the unit, on the Neyland well.  I don't remember seeing GDP associated with the Neyland well.  Why would the change and this action take place? 

Permalink Reply by Skip Peel - Mineral Consultant on September 24, 2014 at 11:09

Yep, the subject wells were listed in the docket ( I have a June date for all three) as HK.  There is a lot of this redundant, seemingly useless protocol involved in the Board's process.  Of course MS has had few historic wells compared to the top producing states and has remained comfortably ensconced in the past.  Well those days are over.  There is somewhat of a crisis at the moment as the Board is circulating a draft entitled, SUGGESTED TMS POLICIES.  The board has allowed the TMS operators to ignore the rules in their competition to lock up TMS positions and give an inch and they will take a mile has lead to big problems for MS mineral owners.  One can deduce from the draft that operators have not been meeting requirements for notice to mineral interests pooled in units, not making a good faith effort to offer all mineral interests a lease and applying to form larger and larger units.  If you have a list of all the TMS well permits, like I do, you will notice a lot of units formed and wells permitted that have not been drilled.  Some TMS well permits (effective for one year) have already expired and a lot more are likely to expire over the coming weeks.  The pace of drilling is far behind the pace of unitization.  The problems have gotten so critical that they Board is having to put their foot down.  They should have done it months ago.  Anyone following close enough could see this coming.

Permalink Reply by RGV AG on September 24, 2014 at 11:20

Thanks for the information, I figured this had something to do with all that is going on.  But it is still odd to me as to why GDP would be considered the operator when HK applied for the permit?  That makes no sense. 

And then why flip it back to HK now all of a sudden.  I would agree that the operating companies are not doing near the amount of due diligence in tracking down all of the mineral owners.  I also agree that at the pace the drilling is going that many of these permitted units will lapse at some point in the near future.  I have not understood the rush to unitize when the pace of drilling is so very slow.  

Permalink Reply by Skip Peel - Mineral Consultant on September 24, 2014 at 11:35

HK applies for a new permit so they get 12 more months to drill the wells.  The original permits were to GDP.  The race to unitize is about tying up as much rock as possible.

Permalink Reply by RGV AG on September 24, 2014 at 16:09

But on the Neyland unit the original permit was from HK?  No?  How did it switch over to GDP?  That is what I am not understanding? 

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2014 at 3:15

When I cut and pasted the COPs yesterday I inadvertently missed the column headings.  That resulted in me getting the original operator and the new operator reversed.  I discovered that when I got time to go back and check today.  I am therefore changing the discussion title.  Sorry for the confusion.

Permalink Reply by RGV AG on September 25, 2014 at 3:31

Ahhh, now this makes sense........Completely understand. 

Interesting that GDP is taking over those wells.  From what I understood, at least in the Neyland area, EnCana had most of the land around there leased or was the largest lease holder in those particular sections.   The eastern boundary of the Neyland unit is the Washington meridian, and supposedly EnCana was going to keep everything to the east of that line and to the west HK was going to take over and drill with EnCana remaining in a WI position or something like that.  

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2014 at 3:42

Feel better?!  LOL!  Yes, I recall the same regarding where HK would operate and where ECA would operate.  We may see more of this kind of horse trading as the O&G Board forces operators to do things by the book.  And straighten out the mess they have created to date.