Anybody ever seen this in a lease?

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Permalink Reply by JODI on July 26, 2012 at 10:29am
I'm referring to the part that says they can drill trough the Utica/PP but can't produce from it. This topic was brought up sometime ago by me and I was told they can't plug back to the Clinton. I will assure you that Knox/Devon Energy are filing these leases and are drilling through the Utica and then plugging back to the Clinton. I was just curious if anyone had seen this type of lease.
2pwt9ru4672sqPermalink Reply by 2pwt9ru4672sq on July 26, 2012 at 10:30am

That's not "a lease", its a memorandum of lease agreement which is what producers file "of record" in the recorder's offices.  It puts affected parties on notice of the existence of an oil and gas lease covering your property but it doesn't disclose the terms of the lease (bonus and royalty).

Permalink Reply by Marcus Grayson on July 26, 2012 at 11:15am

What he said.  Likely that the lease specifies how each strata can be utilized, ie plugging back to the Clinton.  This gives Knox Energy the right to drill and produce all strata that are not the Utica/Point Pleasant

Permalink Reply by JODI on July 26, 2012 at 11:34am
So they are going through the Utica/pp and taking samples and then plugging back a 1000' or so to the Clinton? Why else would you do it? Black river?
2pwt9ru4672sqPermalink Reply by 2pwt9ru4672sq on July 26, 2012 at 11:25am

What I know about geology would fit on the head of a pin (with some room left over) but I was under the impression that the Clinton was a shallower zone than the Utica/PP.  Thus you would never be presented with the potential to drill through those formations in order to reach the Clinton.  Maybe I have my facts mixed up.

But, as Marcus stated, this memorandum merely discloses that Knox has no rights to produce from the Utica/PP intervals.

Permalink Reply by JODI on July 26, 2012 at 11:52am
Exactly! Why drill through the Utica/pp( 3800-4000') to get production from the Clinton(2500')? My guess is to get samples of the Utica/pp.
2pwt9ru4672sqPermalink Reply by 2pwt9ru4672sq on July 26, 2012 at 11:59am

Jodi,

It doesn't make much sense to me to obtain Utica/PP "samples" when you have no rights to produce from those intervals.  It does however make sense to drill through the Utica/PP formation if there is a prospect of finding deeper productive intervals.  By the wording of the lease memorandum Knox would have the ability to drill to and produce from all formations below the Utica/PP. 

Permalink Reply by Marcus Grayson on July 26, 2012 at 12:16pm

Trenton/Black River Group, Trempealeau and Rose Run are all available below the base of the PP, though the PP is actually intermixed with the top of the Trenton.

Permalink Reply by JODI on July 26, 2012 at 12:30pm
All these wells drilled end up as Clinton wells approximately(2500') Clinton's are Knox's bread and butter. They arent using there regular smaller rigs that the use for Clinton's. I'm not sure, but the rig might be from out of state.
Permalink Reply by JODI on July 26, 2012 at 12:41pm
Sorry, bad info there. I just spoke with the landowner and Kilbarger from Logan is drilling these wells with there large rig. He did confirm that they went down to 3700' and will be back in a month or so to plug back to the Clinton(2500')
Permalink Reply by Marcus Grayson on July 27, 2012 at 10:19am

Perhaps they're coring the Utica/PP and selling the data to Devon.  Otherwise there's no reason to drill 50% deeper than the formation that you're after.

Permalink Reply by JODI on July 27, 2012 at 10:52am
That was my conspiracy theory, but I didn't want to say it.

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