Todd - If your acreage were further north, the target would likely be the Wolfcamp Formation, which sits under the Bone Spring Sands. To the south of your acreage is the region called the “Alpine High” that Apache recently announced. The target there is the deeper Barnett and Woodford shale formations. Since leases usually have a clause releasing rights deeper than 100’ feet of the producing formation, operators will target the deepest producing zone first and keep the right to produce the shallower targets in the future, depending on the economics of the recompletions.
our mineral rights are in Reeves county sec 74 block 13 A-1879. I occasionally read information mentioning “formations” can anyone tell me what formation this section would be considered?
Todd: I was referring to a “vertical” Pugh Clause.
There are two kinds of Pugh clauses, “vertical” and “horizontal.” The purpose of a vertical Pugh Clause is to release depths in a pooled unit below the deepest producing zone at the end of the primary term or after cessation of continuous drilling operations. A variant of the vertical Pugh Clause may also release all depths except the producing zone, even the shallower zones. This is less typical, and lessors will push back on it. They will, however, give you the version releasing deeper zones.
The horizontal Pugh Clause operates to release all lands not included in a pooled unit. It releases land at the surface as to all depths.
In theory, neither of these should affect royalties. They release acreage and zones that are not contributing to production in the pooled unit from which you receive your proportional share of royalties of production from the pooled unit acreage. The pooling, on the other hand, would affect your royalty if some of your acreage were excluded from the unit or if someone else’s happened to be included, thereby changing the shared proportions.
OIG is the client and Norwood is the leasing company. Lora
Todd,
The nearest production that I could find was approximately 6 miles to the N/E in Section 182/Block 13. The formations encountered in the drilling of this well(389-33928) are listed below…
CLICK ON FORMATION RECORD TO ENLARGE
This well(33928) is producing from the Wolfcamp formation.
Clint Liles
Todd,
The permitted location next door to the S/W in Section 60/Apache Corporation/Approved July 25, 2016/not sure if this well(389-35183) was ever drilled/was to check out the Sandbar(Bone Springs), Wolfcamp formation and also designated as a Wildcat well.
Link to approved drilling permit for well 35183:
http://webapps.rrc.state.tx.us/DP/drillDownQueryAction.do?fromPubli…
GIS Map of Reeves County Section 74/Block 13/A-1879:
CLICK ON MAP TO ENLARGE
Clint Liles
I believe you have the horizontal and vertical Pugh Clauses reversed.
A Horizontal Pugh Clause releases depths below (and / or above) a particular depth, while a Vertical Pugh Clause releases acreage outside a pooled unit. Most Pugh Clauses I’ve seen in the last twenty years have been both Horizontal and Vertical.
One analysis of Apache announcement.
http://seekingalpha.com/article/4047244-apache-corp-early-judge-alp…
My friend has 3.1 acres in Balmorea Block F. I’m trying to run some title on his minerals to see if he can drill a water well. I’m seeing zero reservations on his Deed and the Deed before him. I don’t live in that county and the online site would be costly. The acreage is close to the water and my belief is that the minerals were tied up in the RAct in the early 1900’s. Can any of you help me?
COG is the client not OIG. Lora
M A Smith, I appreciate the info but I guess I need more education…are you referring to the Pugh clause? We are in a lease that states,“from the shallowest depth covered by the lease to 100ft below the stratigraphic equivalent of the base of the deepest producing formation of any well or wells in the pool.” how does this affect royalties?
Todd/Clint – the Breithorn #2H well was drilled but not completed. I don’t know if vertical or horizontal. Later – Buzz
Thanks Buzz for the info.
Clint Liles
Bobby: It should also be noted that “Retained Acreage” clause in the standard Relinquishment Act Lease Form used by the General Land Office of the State of Texas (used for leases of mineral classified land) follows the nomenclature you described.
Bobby: Yes, there is a great deal of confusion about which is which, and there is a lot of debate about the nomenclature. The terms themselves have no legal status. They are just a description of the clauses. They often appear in a lease as “retained acreage” or some variant. One must read the actual clause to see what it entails. Yours is the older definition of how they were described. Many recent references have the reverse of that usage. That’s the direction I took.
A website following your definition:
http://www.theoilandgasreport.com/tag/pugh-clause/
Websites following my definition:
http://www.landmen.net/clausesforms/clausesforms.htm
http://pagasleaseattorney.com/oil-gas-terms/pugh-provision/
https://www.law360.com/articles/549015/top-o-g-leasing-issues-pooli…
Thanks for the references MA. I was not aware that there was any debate about the two terms. Horizontal is what you are when you are dead - parallel to the ground. When you’re walking and talking, you are vertical. That’s how my clients view it, and how I report it. I’m old and stubborn.
MA, another useful and interesting site is John B. Mcfarland’s
It is. Thanks.
Hello, lately I’ve been getting a lot of mineral companies wanting to buy my minerals. I guess my question is, is there any active activity on or around Blk 4 Tract 68 AB 1154 Sec 68 H&GNTR?
Yes they are Kimberly