Lease help for 2 single family properties plus Carrizo Oil exception to rule 37

Oil and Gas Leasing Help
#1

I have been approached by leasing companies to sign leases on 2 single family properties I have in the Fort Worth area. One leasing company is “Petrocasa Energy” and the other is “Eagle Land Services”.

Having read enough to understand the pitfalls of negotiating a lease myself, I’m looking for recommended lawyers or a landman that can handle a small lease like mine.

Also, I received a note from the Railroad Commission of Texas that Carrizo Oil is looking for an exception to the Lease Line requirement (rule 37). Thoughts on that would be appreciated too.

#2

Mr. Skaggs,

The two leasing companies are not oil companies, simply contractors for the oil company. You can draw the conclusion based your other information that they likely are contracted to Carrizo to acquire leases.

If Carrizo is looking for a Rule 37, then the wellbore is within 467’ from one of the lots. Tell Carrizo to lease your lands and have them guarantee that your lots will be in the unit.

#3

Mr. Cotton, I noticed you mentioned 467’ distance. I have understood it would be 330’. Am I wrong? Thanks, Joel

Buddy Cotten said:

Mr. Skaggs,

The two leasing companies are not oil companies, simply contractors for the oil company. You can draw the conclusion based your other information that they likely are contracted to Carrizo to acquire leases.

If Carrizo is looking for a Rule 37, then the wellbore is within 467’ from one of the lots. Tell Carrizo to lease your lands and have them guarantee that your lots will be in the unit.

Buddy Cotten
www.cottenoilproperties.com
#4

Thank you for your help.

With your help and some research on the RRC’s website (status number 677014), the company is looking to amend the acerage, bottom hole location and secure R37.

Looks like the reason I’ve been contacted is that my property is touching their leased land, 69ft from their pipeline and about 300ft from their bottom hole.

After briefly reading Rule 37, it looks like I can ask the operator to confirm that this isn’t going to affect my property, etc. Is there a reason to do this or not to do this(beyond cost and wasting everyone’s time)?

Following Mr. Cotten’s forumla (alternative question), I conservatively expect a max of $2.00 to $3.00 a day from this property, which then drops off to $0.35 a day within a year.

Definitely not worth the hassle from the financial side, and thus I wonder about other issues (environmental, health, etc). Thoughts to share?

#5

Mr. King,

Statewide spacing is 467’ from a lease line and 1200’ between wells on the same tract or farm. Field rules can be whatever the RRC sets.

Joel King said:

Mr. Cotton, I noticed you mentioned 467’ distance. I have understood it would be 330’. Am I wrong?
Thanks, Joel

Buddy Cotten said:
Mr. Skaggs,

The two leasing companies are not oil companies, simply contractors for the oil company. You can draw the conclusion based your other information that they likely are contracted to Carrizo to acquire leases.

If Carrizo is looking for a Rule 37, then the wellbore is within 467’ from one of the lots. Tell Carrizo to lease your lands and have them guarantee that your lots will be in the unit.

Buddy Cotten
www.cottenoilproperties.com
#6

Mark, Petrocasa Energy and Eagle Land Services are brokerage companies that are competing for leases in Tarrant County for their clients. I have a good friend in Fort Worth who represents a number of mineral owners in the Barnett Shale. He is familiar with both of these brokerage companies and who they represent. If you would like his contact information, you can email me at greg@travispm.com.

#7

If Carrizo is granted a rule 37 execrption by the Railroad Commission then Carrizo will be draining your land even though you are not leased. This is because with the fraccing proceedure, your gas will migrate because of the fraccing .That is why there is a rule 37. It is to stop your land from being drained. You need to file a protest with the Railkroad Commission to stop Carrizo getting the exemption.

There are been rule 37 applications in my area(TCU) and we have protested them.

What area are you in? If you belong to a neighborhood association you should contact them.

Also, the oil companies are using rule 37 as a leasing “tool”. They will tell you that if you do not lease (on their terms which will not be good) that they will take the gas anyway. That is what getting an exemption rule 37 if all about - taking your gas.

Mark Skaggs said:

Thank you for your help.

With your help and some research on the RRC’s website (status number 677014), the company is looking to amend the acerage, bottom hole location and secure R37.

Looks like the reason I’ve been contacted is that my property is touching their leased land, 69ft from their pipeline and about 300ft from their bottom hole.

After briefly reading Rule 37, it looks like I can ask the operator to confirm that this isn’t going to affect my property, etc. Is there a reason to do this or not to do this(beyond cost and wasting everyone’s time)?

Following Mr. Cotten’s forumla (alternative question), I conservatively expect a max of $2.00 to $3.00 a day from this property, which then drops off to $0.35 a day within a year.

Definitely not worth the hassle from the financial side, and thus I wonder about other issues (environmental, health, etc). Thoughts to share?
#8

The letter you got from the Railroad Commission should have named other of your neighbor that are within 330 ft of the same bore as you that are also not leased. The letter will have their names and addresses. You should contact them and see that they also file protests. The more protests that are filed, the better your chances of stopping Carrizo from getting the exemption.

If you can stop Carrizo from getting the exemption, this will put you and the others in a position to bargain for a good lease with Carrizo.

If you belong to a neighborhood association would you please say which one it is.

Mary Butler said:

If Carrizo is granted a rule 37 execrption by the Railroad Commission then Carrizo will be draining your land even though you are not leased. This is because with the fraccing proceedure, your gas will migrate because of the fraccing .That is why there is a rule 37. It is to stop your land from being drained. You need to file a protest with the Railkroad Commission to stop Carrizo getting the exemption.

There are been rule 37 applications in my area(TCU) and we have protested them.

What area are you in? If you belong to a neighborhood association you should contact them.

Also, the oil companies are using rule 37 as a leasing “tool”. They will tell you that if you do not lease (on their terms which will not be good) that they will take the gas anyway. That is what getting an exemption rule 37 if all about - taking your gas.



Mark Skaggs said:
Thank you for your help.

With your help and some research on the RRC’s website (status number 677014), the company is looking to amend the acerage, bottom hole location and secure R37.

Looks like the reason I’ve been contacted is that my property is touching their leased land, 69ft from their pipeline and about 300ft from their bottom hole.

After briefly reading Rule 37, it looks like I can ask the operator to confirm that this isn’t going to affect my property, etc. Is there a reason to do this or not to do this(beyond cost and wasting everyone’s time)?

Following Mr. Cotten’s forumla (alternative question), I conservatively expect a max of $2.00 to $3.00 a day from this property, which then drops off to $0.35 a day within a year.

Definitely not worth the hassle from the financial side, and thus I wonder about other issues (environmental, health, etc). Thoughts to share?
#9