Replies to This Discussion

Permalink Reply by grayhairedgrandpa on December 15, 2009 at 11:27am

There is definitely no guarantee of you being included in an active well unit. But, take a look out your window...the closer an existing gas well or existing pipe line is to your property, the better your chance of getting a well in the very near future. By your post, I assume you signed with Fortuna and you are located in eastern Bradford County...as far as I know, Fortuna (Talisman US next year) has not started any seismic testing in this area (but it shouldn't be too long). If you have children or grandchildren, you should do some basic financial and estate planning prior to getting a well on your property. Hopefully, you had the foresight to split your lease payment between 2009 and 2010 to minimize tax liability.

Permalink Reply by Tracy Packer on December 15, 2009 at 11:33am

You need to get a drilling commitment written into your lease.

Permalink Reply by Frank Walker on December 15, 2009 at 11:47am

Really I think you're asking whether you will be included in a drilling unit. The drilling units can run 640 acres, so you might or might not have the well located actually on your land. But whether you have the well or not, so long as your land is included within an active, producing, drilling unit you will receive royalties.

Your chances of being included within a drilling unit are very good, especially considering the size of your bonus. Fortuna does not want to lose that bonus money. The only way they can avoid loss is to include your land within a drilling unit and to drill a well somewhere on that unit before your lease expires.

Most of the companies right now are focused on not losing their bonuses. What they will do is spud the well and then drill and frac perhaps only one or two of the laterals. Then they pull out and move on to the next drilling unit in order to hold that one by production. They will come back later and finish out the original well with the remaining laterals, perhaps six or seven more.

The result of this is that your royalty payments become very, very stretched out in time, way into the distant future. And the gas company's lease will remain in force for years into the future, too, so long as there is gas production within your drilling unit.

Permalink Reply by daniel cohen on December 15, 2009 at 1:14pm

Robert, the first thing you ought to be doing is to get a good water analysis of your well water, and any other bodies of water you may have on your property. You need to be very alert for aquifer contamination as a function of any drilling activity in your area. There are some horror stories out there about aquifer damage, so be prepared to monitor your area as a protection for the long range view of keeping your property value where it should be. Once the aquifer is damaged, values tend to fall.
Dan

Permalink Reply by Pam S on December 15, 2009 at 11:56pm

Hi Robert,
Glad to see that it worked out for you! Good Luck.

Permalink Reply by Austin Eudaly on December 16, 2009 at 4:20am

If I was a gambling man....in that county, that bonus & acreage size... I would say a 4 out of 5 chance. Pretty good. Just my opinion though. Best of luck Robert!