Replies to This Discussion

Permalink Reply by Dave on April 20, 2013 at 2:01am

Got a 221.00 check delivered by UPS from CHK today with a explanation of $5/ AC DIM Pymt for Rainbow S BRA 2H today.  Called to find out about it and am waiting for their call back.  Anyone get a check like this?

Permalink Reply by wyalusing jim on April 20, 2013 at 8:24am

sounds more like shut-in royalties if he's hbp.

big difference between the 2.

wj

Permalink Reply by Moldyoak on April 20, 2013 at 11:55am

I'm nto sure which would qualify here.  As far as I know, CHK formed Rainbow N and Rainbow S units, but they only drilled the north leg off the pad.  I don;t believe they drilled a south leg, and given the payment you received, it looks like they have no intention to do so in the immediate future.  Rainbow ought to feed into the Yengo line, which is finished, and as the nearby wells are completed they run the feeder lines into the Yengo like they just did with the line from the Coyle site.  Now that I think about it, I'm not certain if Rainbow N was fractured and capped or not, so I'm nto sure if that was tied into the line yet.  Dave I would be very interested in clarification of what CHK is claiming that check is for.

Permalink Reply by wyalusing jim on April 20, 2013 at 12:07pm

 Reply by Dave

"Got a 221.00 check delivered by UPS from CHK today with a explanation of $5/ AC DIM Pymt for Rainbow S BRA 2H today."

DIM meaning "delay in marketing" means that there is a well capable of production which is shut in due to any number of factors allowable under the lease.

it could be awaiting pipeline, or awaiting better market conditions, lots of things, though i have no idea of any specifics in this case.

delay rental payments are the same as bonus payments, paid to maintain a lease in force during its' primary term. once the secondary term of a lease begins, with unitization usually, delay rental payments are no longer required to be made.

wj

Permalink Reply by wyalusing jim on April 20, 2013 at 12:16pm

"and given the payment you received, it looks like they have no intention to do so in the immediate future."

actually the receipt of delay rental, shut in royalty or even a second bonus for a second primary term has no bearing on future timing.

i know of one case in which a mineral owner received a second bonus payment immediately before receiving his first royalty payment. (about 2 weeks prior.)

the lease terms define when such payments must be made in order to keep a lease in force. if they cannot market gas until the day after a shut in payment must be paid, they will make the payment. they will not risk losing the lease if it is in good minerals or if their j.v. partners would not be happy about it.

wj

Permalink Reply by Moldyoak on April 20, 2013 at 12:24pm

"i know of one case in which a mineral owner received a second bonus payment immediately before receiving his first royalty payment. (about 2 weeks prior.)"

That is certainly something of a relief to hear, because what we usually hear about are the long drawn-out episodes!

Permalink Reply by wyalusing jim on April 20, 2013 at 12:35pm

what are these episodes about?

i know that some folks have to wait years for their first royalty checks, but they signed early, that's only natural.

wj

Permalink Reply by Moldyoak on April 20, 2013 at 4:41pm

Hmmm. I don't know what happened to my first reply. Anyway, I've read some commentary re: shut ins on the Haynesville board, although it typically is on the order of months. Does seem to get folks pretty rattled, especially those who have been receiving royalties and then suddenly they are cut off, replaced with shut in payments. I know I saw someone, somewhere, going on about being shut in for nearly 4 years, but I don;t recall where. So, it's good to hear that you can relay information concerning shut ins that do not drag out interminably, because obviously (especially for those whose leases may not prohibit it), that can be a looming fear.

I would like to see if there is an actual completion report on file for Rainbow S, because the last time I checked with KAtherine Schmid at DCNR - which was a while ago,to be sure - she only had information on Rainbow N. I guess my question would be, if CHK has not drilled a south bore, can a delay in marketing be invoked as opposed to shut in payments? Or possibly, they may intend to get funky with the unit designations to get around that.

Permalink Reply by wyalusing jim on April 20, 2013 at 5:09pm

delay in marketing payments are shut in royalties. they are experiencing a delay in marketing gas. gas from a well capable of production.

delay rental payments are annual bonus payments, thus the word rental.

in some plays 4 years of shut-ins has been experienced. here in the marcellus i'm sure that we could hear of a few of those too. remember that it isnt necessarily what your lease allows that will determine how long shut-ins last. that is one of those cases that the best lease will determine what everyone in a unit experiences, if it is a significant enough leasehold. in other words, if you have an acre or 10 with no limitation of shut-in clause, but a 100 acre owner has a good limitation clause, his is gonna win because they dont wanna lose him.

another aspect of where a better lease can help everyone in a unit is with development clauses.

and has everyone here considered that should they want to audit a well someday and they dont have a good audit clause, that someone else might? and further, that one audit will suffice for all in a unit for discovery purposes? instead of paying thousands apiece, all owners in a unit could pay their proportionate share of one persons' audit costs and share the information?

over the lives of wells, there are lots of shuti-ins. some wells dont go online right away due to lack of infrastructure. wells are shut in routinely for maintenance and repair. some shut-ins last hours, some days, and that is one reson you will see monthly production fluctuations both up and down. wells are also shut-in when subsequent development wells are drilled for safety.

and ya know, for folks who have never received a royalty check, a couple of months can seem like an eternity too.

wj

Permalink Reply by Wayne Miller on April 21, 2013 at 10:06am

 OK guys, I'm a little comfused (not new). Last week CHK amended Rainbow North unit now calling it Freed unit. Freed site is between Schlapfer and North Rainbow (now Freed). If they did indeed drill a north leg from Rainbow site, how can they now call it Freed?

 Schlapfer and Rainbow North (now Freed) are large units, maybe they will take a Freed West out of Schlapfer and a Freed East out of Rainbow North (now Freed) and re-establish Rainbow North as the eastern part of Rainbow North (now Freed).

Permalink Reply by Moldyoak on April 21, 2013 at 11:26am

I'm confused too.  I'm going to contact DCNR this week and get some updated info, and I'll admit I might be wrong as to which leg was drilled off Rainbow.  Last year, at the time they were building the pad, CHK told me they were going to do the north leg and Katherine Schmid from DCNR send me the plat for it.  Now, just this morning, I ran over to the site, and the only paper they have up on the white board is for Rainbow S Bra 2H, which would be the south leg.  So, it looks like things were changed up since the last time I looked into it.  I do apologize if I'm putting incorrect information up on a public board.  Maybe the OP here can clarify, since he is in Rainbow S - maybe he can fill us in on exactly what was done?

There is something really funky going on with Rainbow and Freed.  CHK originally filed for Rainbow N unit, including map, and filed for Freed unit, including map, and both were exactly the same.  Then just last week, they filed Freed unit again, and once again it is the same map.  I think if you look at the weird shape, you can see how they might break it up.  I know originally, Rainbow N was intended to be a somewhat small (@ 580 + or -) unit, and I don;t think Freed was supposed to be a big 900-1000 whopper.  In fact, CHK also was planning to put another pad in between Freed and Rainbow, up in The Haft, but I think that has been scrapped.  So somehow, it looks like CHK is doing some kind of "blanket" filing just to get it all declared and held in some way while they are drilling Freed, and maybe definitively break it all up later.  Judging by what I can see of pipeline routes all over this area, I think it would be easier to hook Freed up to pipeline than it would to hook up Rainbow, as the Yengo line runs fairly close to the Freed pad.  There is something of a mismatch of leases here in this little section, meaning there are a bunch of old CHK boilerplates, a few Wyoming Co. group leases, a couple ca. 2008-2009 transferred from Range, and one or two Friendsville leases transferred to CHK.  

Permalink Reply by wyalusing jim on April 21, 2013 at 11:45am

" There is something of a mismatch of leases here in this little section, meaning there are a bunch of old CHK boilerplates, a few Wyoming Co. group leases, a couple ca. 2008-2009 transferred from Range, and one or two Friendsville leases transferred to CHK. "

in my observations it's typical for there to be a variety of lease types in most if not all units.

not sure it could be said that any units leases, "matchup".

some of the earliest units were more homogenous leasewise, since they were drilled earlier in the leasing game, but even those have differing R%'s.

wj

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