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Permalink Reply by DrWAVeSport Cd1 on July 30, 2008 at 9:59

Scott W. A1,

Great Questions. This is a heads up to all Haynesville Shalers! You can contact the Office of Conservation... Send them an e-mail or fax per your questions. Hopefully they will respond with a meaningful answer.

You can find fax and e-mail numbers from Sonris lite, or you can call the District office in Shreveport.

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Permalink Reply by Jaybird on July 30, 2008 at 10:01

What company is doing this shameless act and what Section, township and Range is the well in?

Jaybird

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Permalink Reply by insomniacnla on July 30, 2008 at 10:30

Scott,

The meaning of this term in leases is vague and the o/g companies like it that way.

O/G companies usually take the position that any production amount whatsoever is enough to "hold by production" and therefore keep the lease alive.

Attorneys and landowners feel that "commercial production" should mean that the well produces enough money to pay for the costs and upkeep of the well and for all future work performed on the well. Every well has to be checked by the pumpers, staff and personnel must prepare accounting information and various reports regularly and those costs would also be viewed as "upkeep".

When a well is a low producer, the landowner/s write the o/g company and state that because the well is not producing in commerical and/or paying quantities that they should be let out of their lease. The o/g company will usually respond "No" Then the landowner's attorney writes the o/g company and makes a legal demand upon the o/g company to release the landowner's property from the lease within, say 30 days, or else a lawsuit will be filed asking a judge to release the land from the lease. The attorney usually includes a draft of the proposed lawsuit with the demand letter. Sometimes that alone is enough and the o/g company will release the property from the lease, but only that property owned by the group that the attorney represents and not a blanket release of all the property in the unit.

If the o/g company does nothing, then the attorney files suit, most of the time, the suit never has to get filed and both parties settle. With the Haynesville Shale money out there, I bet that suits will have to be filed in order to get the land released from the o/g company's lease.

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Permalink Reply by Tedford Williamson on July 30, 2008 at 11:29

I'm in a similar boat with Cypress Operating Company. I just got my annual royalty check of $11.00. My land is in the Blanchard-Latex Road/Hwy. 169 area. They have held this land under production since 1985. Cypress just finalized a 5-year agreement with Chesapeake giving them drilling rights. Unfortunately, if and when the well is drilled, our compensation through the old lease is at a 1/6 royalty.

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Permalink Reply by Scott W. on July 31, 2008 at 3:25

Jaybird: Samson Contour Energy (with minor help from Houston American Energy). Well is in sec 19, T17 R9W (southwest webster parish). Current lease (like Teddford T) is for 1/6 royalty. Thought to be good at the time of signing - pre Shale announcement...they all knew it was there!

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Permalink Reply by Keith Mauck (Site Publisher) on July 31, 2008 at 4:00

Attorneys I have spoken with seem to point to a definition that states that commercial production results when the company drills to sufficient depth so that production is likely..and not necessarily actual.

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