Fayette County, TX - Oil & Gas Lease

Well that was pretty fast, it hit my account today just 8 days after the statement.

Thought this was interesting, which follows up after Aubrey McClendon’s indictment and apparent suicide. Those who are long time followers of the Fayette County mineral blogs will know that Aubrey McClendon used to be brought up a lot—usually in vain. The article notes the power of sticking together, at least from an industry standpoint, as follows:

Michigan charged Chesapeake and Encana Corp. in 2014 with dividing up counties in which each would seek drilling rights before a May 2010 auction, driving bid prices down from $1,510 per acre for that auction to $40 in October.

http://www.rigzone.com/news/oil_gas/a/143372/McClendons_Actions_Arent_Uncommon_Across_US_Shale_Patch

What happens if a drilling company starts drilling a well, but does not complete it or bring it under production before the lease runs out?

Dusty:

There are potentially lots of answers here depending on how the lease is written; but, for the most part my understanding is that once they start drilling, even if it is the last day before the lease runs out, then they have met the obligations of most leases and they just keep on drilling and trying to produce just like they had already drilled and completed a producing well. Where it becomes sticky is when they start a well and just don't complete it or just keep playing around with it forever and ever. Again, that would take us back to the original lease agreement and most leases aren't written well enough to address all these issues. Under these circumstances, they might try to use the shut-in clause and most shut-in clauses "suck" unless the lease was written by someone that really understands all the pitfalls of this clause.

Good luck!

Now this is where it pays to have a good lease form (attorney). Great question by the way. What defines HBP ( held by production)? I recently had to pay minerals owners $2,000 per acre to extend their current leases an additional two years in Atascosa County because their lease expirations were coming due, meanwhile the operator drilled 3 wells and unitized the entire acreage back in August of 2015. You’d think that would hold the lease right? Wrong! In this lease, production or “operations” was defined not by a (bit turning to the right or simply building a pad site on location, it was defined by completion). The wells were drilled but never fracked (due to $30 oil). The shut in operations meant nothing since the wells werent “fracked or completed” yet. Rather then pull oil out of the ground at these prices, it made more sense to just extend these leases at a fair price since the company has already drilled 3 wells and had infrastructure in place. Again, “drilling” doesnt always mean the lease is held by production (depending on how your lease is styled). “Drilled and Producing in paying quantities” is the term you might see in many leases that defines an operator actually holding the lease. Some leases are written so poorly that I’ve seen operators park a bulldozer on site to hold the lease because this was defined as “operations, or at least an attempt at operations” to hold the lease. Again, it all depends on your attorney and how your lease is written. I’m no attorney just a landman by trade so I hope this helps.

No new news for now; but, one of our regular participants just sent me an e-mail saying he had evidently been dropped from the forum since he couldn't get on. Since there haven't been any messages, I am just trying to verify that the forum is still functioning or if his computer has locked him out for some reason.

Are we still working?

No reason to think Forum is not active. Just been quiet

Very quiet, no one has brought up Argent filing for bankruptcy. My Argent well hasn't produced for months but I bet it has affected some others here in Muldoon.

Guys, thanks for the replies. I guess our friend just has computer or a server problem specific to him. Will try to see If we can get him back in operation before everything in the oil patch breaks open again! Yes, things are quiet and I had not heard or read that Argent had filed for bankruptcy. A couple of days ago, I did see a monster list of different companies that had filed; but, didn't actually see Argent's name on the list. Maybe I just missed it.

Let us know if you hear or see anything else.

Thanks again for the replies.

Darrell:

As best I can tell, Argent wasn't on the list of bankruptcies I saw; but, it only lists 2015. Two of the ones on this list were very active in our area. Magnum Hunter and Sabine Oil and Gas.

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Latest I could find on Argent:

http://www.argentenergytrust.com/news_release/516

Bankruptcy link failed! Couldn't get the 2015 Bankruptcy's to print out. Will try later.

This could be good news for Fayette County

Looks like this was done about 100 miles away towards Karnes City--but who knows, maybe this is the next big thing.

EOG Enhancing Eagle Ford Oil Recovery Using Novel NatGas Injection System

I was speaking with someone at Petromax because I was dealing with extending a lease for another two years in Burleson County and I shot some questions at him about what the deal was concerning the big engines running natural gas pumps at some of their wells. He said that was for the natural gas injection and described it in about the same was as EOG explained it in that article. He also said they would not drill until oil would reach $60 again. Had partial acreage in one of those wells and from what I could get out of the conversation the rest was planned for another well unit.

Not much new here; but, interesting none the less. Since it looks like the forum police have mor time to make sure we are saying or doing the right thing, I guess it is alright and legal to post this link. Anyway, here goes!

http://www.oil-price.net/en/articles/six-reasons-why-oil-prices-reached-new-highs.php?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Oil-pricenet-OilPriceTodayAndTomorrow+%28Oil-price.net+-+Oil+Price%2C+Today+and+Tomorrow%29

No disrespect to anyone. I thought LRJ’s article was interesting and may very well be applicable to our area. It took me a Google search to figure out where these wells were located as the locations were not stated in the article—so I thought I would help out anyone who had the same question.

Well..I was going to send a message yesterday about some news I heard about Penn virginia filing bankruptcy this Friday ot Monday...but decided not to...and I would have been wrong if I did, they filed Today !! However...if this DEAL goes through, they will remain Penn Virginia, and will keep all of their holdings. They have pre-authorized agreements with 100% of the secured creditors, mostly Wells Fargo, to continue to run the company, while unloading over $1 billion in debt. Penn has also secured cash to run their business while in Chapter 11, and secured about 100 million more after the bankruptcy exit (as well as keeping all cash inflows during this entire process)...So, Penn will still be operating very close to FAyette county since they have operations by the Gonzales/Lavaca/FAyette border. Bad news if you own stock in it....it will be worthless, but today you can still get 2 cents per share if you hurry. Amazing how they were able to secure such agreements...so no fire sale here on Penn's assets..as long as the court approves the DEAL...but word has it...it is going to happen.

I think they will come out of this fine - just like Swift Energy

Thanks Gary, I post in this Fayette Co forum because I mainly live here and the vast majority of my mineral interest is here most held by some old chalk wells still producing. The Burleson Co. forum is not very active despite lots of activity in the Chalk and EF there.

I saw this information concerning enhanced recovery method, the gas injection, and the person explaining EOG using this method and kind of fine tuning it. Here is the podcast, it is interesting to hear: EOG enhanced recovery gas injection