Horizontal vs vertical

Good morning,

I have been approached by two companies...Western Chief and Terrace Energy. In talking with Terrace they are talking vertical drilling vs horizontal...so they are looking more for 40 mineral acre plots vs building the 640 needed for vertical. He said their geologist, Casey Patterson, was very interested in the area. Does this sound right?

Western seems to be doing the leasing in the area and they seem to have a good reputation..are they the drillers?

I don't want to get into any "hop scotching" or "lease busting" because it sure would be nice if somebody actually did some drilling!!

Has anybody heard of Western Chief or Terrace Energy?

Mr. Krischke, Most all of the time the landmen, even the crew chiefs have absolutely no idea of what the company is going to actually do. Nearly every single company will try to make the production unit as large as possible in order to "hold the acreage" as long as possible. In Texas a company can legally hold 640 acres plus a minus a 10%.

What a lessor needs to do is have an addendum limiting the size of the units a company is allowed to form depending upon the depth of the well and if it is going to be a horizontal drilling unit. As far a lease busting is concerned it all matters about how the lessor lease is structured. I have seen filed on record in Houston County in the last few years where a company called Antares sold a lease block that they had leased on an average of a 1/6 royalty and long term to a Major company for a consideration of $1,000 per net acre and a 1/4 royalty. This was a block of less than 1,000 net acres. There are lease brokers and investors in Houston County currently buying leases and are hoping to sell them to a large company and make a big profit and get a big over ride.

If a company is willing to give you a written drilling commitment that's a different story.