Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 2, 2016 at 15:42

It's good to see continued interest in exploring the CV/LCV Sands in 18N-2W by Nadel & Gussman Ruston and Linn Operating.  Since announcement of the Range/MRD merger that has been little activity to the east of the Terryville Complex although MRD continues with it's three Jackson Parish wells.

The Woodard 13H completion report is a good example of the long and inexplicable delays in reporting by MRD.  The well reached total depth 6/15/14, was completed and then potential tested 8/17/14, reported Shut-In 4/22/16 and finally reported as complete(by Wildhorse although this is an MRD well) 7/16/16.  See cut-and-paste from SONRIS Well File, Scout Info section below.

SCOUT INFO

REPORT DATE	WELL STATUS	MEASURED DEPTH	TRUE VERT DEPTH	DETAIL
07/26/2016	10	15113		COMPLETED 7/29/14; GAS; LCV; 260 MCFD; 48/64 CHOKE; 135# FP; 135# CP; PERF 10460-14965' MD
04/22/2016	31	15113		SHUT IN
02/10/2015	09	15113		WELL POTENTIALED 8/7/14
06/25/2014	09	15113		SET 7 5/8 TO 10470' W/ 1310 SX TD 6/15/14

Permalink Reply by Skip Peel - Mineral Consultant on August 2, 2016 at 15:42

 The fact that this well was approved for severance tax exemption under the state's horizontal well incentive program in November of 2014 is also curious.  Should operating companies receive the benefit of the program without the requirement to timely file a WH-1 completion form? As of this date (two years after completion), there is still no WH-1 entered in the well file.

http://ucmwww.dnr.state.la.us/ucmsearch/UCMRedir.aspx?url=http%3a%2...

Permalink Reply by Chris on August 3, 2016 at 7:29

These examples are all over the field. I hope Range doesn't use the excuse that MRD used for over a year about getting caught up with the transition.   They need to get on top of all the issues asap or in another 1.5 years Range will punt the problems to the next operator and the mineral/royalty owners are left holding the bag. 

Skip, to your example above on the Woodard 13H, have they been stealing? Or do you believe the well has actually been shut-in for two years. At 260MCF it's not an economic well. 

Permalink Reply by Skip Peel - Mineral Consultant on August 3, 2016 at 7:51

Chris, MRD has some "reasons" for delay that the Office of Conservation would likely back up as far as reporting goes on HC wells, however not the Woodard 13H.  So be careful about assuming too much.  As long as producing wells are paying royalties the reporting issues probably don't amount to much for royalty interests.  And seeing that the state has approved the severance tax abatement (effective for two years unless the well payouts out earlier), they probably have little reason at this point in time to be pursuing MRD for not being up to date.   Also keep in mind that the Shreveport District OOC office is short staffed and only the squeaky wheels get the grease. The more important questions are the payment of royalty and the associated deductions.  That will have to wait for litigation to be resolved.

I wouldn't worry too about Range and any continuing problems with reporting.  I think MRD will get 99% of their backlog cleared up before the merger scheduled for September.  Keep in mind that much of this problem began with the advent of cross unit lateral wells (HC) and how their production was gathered, measured, allocated and reported to the state.  The rules in place prior to that evolution of drilling did not cover all the bases outside of existing regs for commingling production.  HC wells are a whole different situation and it took the state and operators some time to work out the way to handle the production.  Some operators are just taking a little longer than some others.

With no knowledge of royalty possibly paid on this well, I can't speak to your cheating concerns.  Royalty interests under the Woodard 13H should be able to get some information from MRD regarding the well over the period from completion to reported Shut-In.

Permalink Reply by Chris on August 3, 2016 at 10:26

You are right. I shouldn't assume the worst, however I don't trust MRD at all. I look forward to getting off to a good start with Range. 

Permalink Reply by Max on August 3, 2016 at 2:14

Skip, how would prescription be handled with a shut in well?

Example: You bought a tract of land 10 years ago on 6-26-2004 and the minerals were reserved by the seller of that property.  The mineral owner then leased his reserved minerals rights and a well was drilled to total depth on 6-25-2014, one day before the prescription of 10 years have passed.  Would a shut in change anything? 

Permalink Reply by Skip Peel - Mineral Consultant on August 3, 2016 at 2:22

Max, the drilling of a LA well, whether productive or not, resets the 10 year prescriptive period.  The date TD was reached is immaterial.  The day the well was spud (if on the subject tract or in a unit including the tract), the 10 year period was reset.  The Shut-In period is governed by the terms of the lease in force and has no relevance regarding prescription.