Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2017 at 5:58

Goldco operates a CV well named VUA;City of Shreveport #4 that is producing and likely holding the area covered in that voluntary unit.  Unit wells have been drilled in Sections 19, 29 and 33 - 17N - 14W.  There is also a VUA;Airport but it is some miles to the NE from Shreveport Regional Airport.

It is difficult to comment further with the very general directional description, "south of the airport".  There is increasing interest in Haynesville Shale development west of the airport by Comstock and at least one other operating company.

• ▶ Reply

Permalink Reply by David on December 12, 2017 at 14:42

Goldsberry, if you recall, leased Airport property through the State Lease bidding and got all that acreage for around $1 per acre.  They then drilled a Cotton Valley and made a ridiculously large VUA in which the City agreed to.  Just below this (Sect.32 T17N R14W) Goldsberry did more leasing, which included now inherited property.  He drilled a CV which didn't do much and started producing the Paluxy (I think) on a lease basis per property he had 100% mineral interest.  After sucking most of the oil out he tried to create another 1000+ acre unit for this Paluxy.  Long story short, killed the voluntary unit &  had to start the filing of a compulsory unit to get back a few of us deep rights, etc....  There, at the end, is when the HS came into the picture, in which Goldsberry subleased all of airport, etc.... to Encana.  Been sitting since, now GEPH wants to drill????

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2017 at 15:05

David, thanks for the detail.  Any idea how much acreage remains HBP?  Was the large VUA dissolved?  Congratulations on being unleased and good luck getting a good lease.

• ▶ Reply

Permalink Reply by David on December 13, 2017 at 5:23

City of Shreveport, at one time, had an attorney looking at trying to dissolve their VUA.  I told him that they would have to do what I did but they are dealing with a CV well, which would hold more acreage.  API #'s:  17-017-34025 & 17-017-34353.

PETTET was the formation, not Paluxy.

• ▶ Reply

Permalink Reply by Billy Random on January 11, 2018 at 8:01

There's no reason to believe that a well of a differently targeted formation would hold more acreage than another.  Unitized sections are almost always on a per section basis so whether it's a CV unit or a HA unit or any other, you'll still have the 640 acre unit HBP.  I say that unitized section HBP trying not to convolute my answer with the ability to have pugh clauses involved.

• ▶ Reply

Permalink Reply by David on December 13, 2017 at 12:51

Skip,  I know that there are alot of factors for these next questions, but wanted to know if there's a general rule of thumb on them:

How many unleased acres would make a CUL unfeasible on a 1.5 Section CUL or a 2 Section?

With the same number of Sections involved in a CUL, how much bonus would justify taking a 2.5% cut in royalty, in other words - landman bouncing 2 options one with higher bonus lower royalty and the other has lower bonus higher royalty.  I know the general rule would be take the royalty but with so much acreage is there a break on this?

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on December 13, 2017 at 13:14

I've never run across sufficient inside information to get a handle on the maximum open acreage that would still render a unit profitable.  Each instance is a unique equation.   Most companies seem to want a minimum of a 75% Net Royalty Interest.   Although an operator gets to use the production from unleased acreage to recover that percentage of the well cost, they get no profit.  So I guess you could do some back of the envelope math if you know the total unit acres. 

The highest percentage of unleased acreage in a Haynesville Shale unit that I have ever run across is ~10% but I think that is an outlier.  The majority of unleased mineral interests in drilling units are quite small.

I always go for the highest royalty unless there is some critical financial need involved.  Average bonuses these days don't amount to much unless someone owns hundreds of acres.  If a mineral owner wishes to monetize their mineral interest, I suggest getting the highest royalty as that increases the value of a sale of the mineral right.  And that sale often has significant tax advantages over royalty taxed as regular income.

• ▶ Reply

Permalink Reply by Billy Random on January 11, 2018 at 7:58

I would add removing transportation costs deductions from RI as well.  If you want to maximize the value of your leased acreage.

• ▶ Reply

Permalink Reply by JHH on December 13, 2017 at 4:38

Who is GEPH and what is a CLU.  thanks from us less technical.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on December 13, 2017 at 5:16

GEP Haynesville is an operating company, successor to Encana.  CLU is, I think, meant to be CUL and, if so, stands for Cross Unit Lateral.

• ▶ Reply

Permalink Reply by JHH on December 14, 2017 at 4:01

muchos gracias thanks to be redundant

• ▶ Reply

Permalink Reply by Billy Random on January 11, 2018 at 8:03

I was confused by what he was meaning by CLU as well.  GEP is EnCana's successor as is Vine is Shell's successor in like properties.

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page