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Permalink Reply by Skip Peel - Mineral Consultant on February 24, 2022 at 3:53

It is always a good idea to have an experienced O&G attorney review a purchase and sale agreement and a mineral deed.  It is also a good idea to get more than one offer to make sure that a seller isn't accepting less than the current fair market value.  Here are a few things to consider.  Section 13 has only one Haynesville well and has both proven Haynesville and Bossier shale reserves.  This means there are eleven wells to be drilled before the section is fully developed.  Comstock is in the process of drilling four of those wells which means a buyer would get a significant and quick return on their investment. Don't let a buyer rush your process of exploring the best price and then making sure you have professional legal assistance in the transaction.

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Permalink Reply by Gayila B on February 24, 2022 at 6:00

Thank you for your quick reply.  I am currently receiving royalty payments from Comstock If I sell some of my mineral rights to this company that has contacted me, will I still have opportunity to benefit(continue to receive royalty payments from Comstock? The company rep that contacted me wanting to purchase my mineral rights stated that my present royalty payments from Comstock are from a Cotton Valley drilling, and will not be affected by selling them some of my mineral rights because of the depth clause included in the purchase agreement, which states:  Limited to the depths below the deepest producing depth of the Cotton Valley Formation to 100 feet below the deepest producing depths of the Haynesville Shale Formation. What do you think about this depth clause?

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Permalink Reply by Skip Peel - Mineral Consultant on February 24, 2022 at 6:28

I would like to know the company making the offer....so I can avoid doing any business with them.  They are dishonest or incapable of performing basic research.  As to the Comstock royalties only coming from their CV production, ask them about this Haynesville well.

WELLS

SERIAL	WELL NAME	WELL NUM	ORG ID	FIELD	PARISH	PROD TYPE	SEC	TWN	RGE	EFFECTIVE DATE	API NUM
243626	HA RA SU57;J D SAMPLE 13 H	001	C332	6156	16	20	013	12N	16W	11/01/2019	17031257970000

Here is the latest production for this well that Comstock reported to the state.

LEASE\UNIT\WELL PRODUCTION

RPT DATE	LUW CODE	STORAGE FAC	DOC USE	WELL CNT	OPENING STK	OIL PROD(BBL)	GAS PROD(MCF)	DISPOSITION	CLOSING STK	PARISH
12/01/2021	617270			1	0	0	8426	0	0	DE SOTO

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Permalink Reply by Gayila B on February 24, 2022 at 9:52

Skip, Are you saying that it is probably not correct that my Comstock royalties are only coming from the CV production? 

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Permalink Reply by Skip Peel - Mineral Consultant on February 24, 2022 at 10:07

Do you have a copy of your lease?  Unless it has a depth limitation clause, you are getting production from the CV and the Haynesville.  Look on your royalty statement.  Do you see the J D Sample 13H #1?  It would be a somewhat unusual case in 12N-16W to have a lease that didn't include the Haynesville (HA).

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Permalink Reply by Gayila B on February 24, 2022 at 10:20

I reviewed the royalty statement and I see the Sample J D 13H 1 and Wilson ET AL 13 H #1.

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Permalink Reply by Skip Peel - Mineral Consultant on February 24, 2022 at 10:44

Here is a cut-and-paste copy from the O&G database, SONRIS.  The J D Sample is a Haynesville Well (HA) drilled prior to the Wilson Etal 13 H which is a Cotton Valley well (CV).  If both appear on your statement, then your lease doesn't contain a depth limitation clause.  It is an "all depths" lease. 

Those last two wells, JM Pace 13-24-25 HC 1-Alt and JM Pace 13-24 HC 1-Alt are HA wells permitted but not yet drilling.  From a Section 12 surface location, there are two more wells permitted that will include your section 13.  The Fields 13-24-25 HC #1-Alt and Fields 13-24-25 HC #2-Alt.

Are you aware of these facts?

243626	HA RA SU57;J D SAMPLE 13 H	001	6156	C332	16	11466	16017	16050	1	617270	2	10
246923	CV RA SUP;WILSON ETAL 13 H	001	6156	C332	16	10044	14091	14114	1	617713	2	10
253206	HA RA SU57;JM PACE 13-24-25 HC	001-ALT	6156	C332	16			28000	1			01
253207	HA RA SU57;JM PACE 13-24 HC	001-ALT	6156	C332	16			20000	1			01

253204	HA RA SU57;FIELDS 13-24-25 HC	001-ALT	6156	C332	16			28000	1			01
253205	HA RA SU57;FIELDS 13-24-25 HC	002-ALT	6156	C332	16			29000	1			01

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Permalink Reply by Gayila B on February 24, 2022 at 11:15

Thank you for all the information you have provided. No, I was not aware of those facts.    

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Permalink Reply by Skip Peel - Mineral Consultant on February 24, 2022 at 11:19

Gayila, I have no problem with someone who chooses to sell all or a portion of their minerals as long as they do their homework and get what I consider a fair market price.  Each mineral interest is different and unique.  Yours just happens to have CV, Bossier and Haynesville reserves with four new wells on the way.  A buyer should pay a premium for any of your minerals you choose to sell.  The company making the offer has already caused me to distrust them as they were not truthful with you.

Permalink Reply by OLDDOG2020 on March 2, 2022 at 9:57

This was a phone call from a MESA representative and I laughed at them.  The rep started telling me how much more I could make if I took their money and put it into a fund rather than minerals.  I told them they should do that and forget my number.  

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Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2022 at 10:02

LOL!  Good response.  I find that a lot of these really big dollar offer letters are coming from companies new to the Louisiana Haynesville.  Many have been active in Texas particularly the Permian Basin.  Now that natural gas is in vogue again and mcf prices have spiked, they are attempting to acquire some Haynesville mineral rights.  Seller beware.  Many of these companies have no experience with Louisiana's unique mineral codes and regulatory requirements. 

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