Replies to This Discussion

Permalink Reply by GM on March 9, 2015 at 1:48pm

Dave, Is your paragragh the same as Phil's posted above?

Why would you say repercussion's?

 

Permalink Reply by Dave Miller on March 10, 2015 at 3:06am

GM, The paragraph Is the same. At the bottom of the paragraph it states.If lessor elects in writing not to utilize any reserve gas, lessee agrees to make an annual cash payment of an amount equal to the annual average price per thousand cubic feet received by the lessee times the quantity of gas [4000,000 cubic feet] reserved to the lessor herein.   In the unitization clause it states. The commencement, drilling, completion of or production from a well on any portion of the unit created under the terms of this paragraph shall have the same effect on the terms of this lease as if a well were commenced, drilled,completed or producing on the land described herein.      The reason I mentioned repercussions a few years back weren't Cheasapeake lease holders penalized for questioning deductions and such. I think we have a very good argument for receiving payment.

Permalink Reply by Oliver Perry on March 10, 2015 at 10:24am

Dave,

I believe you are misinterpreting the lease language. I think Phil is correct that the well has to be on your property to get free gas or be paid instead of using the free gas.

Permalink Reply by FairMktValue on March 11, 2015 at 12:17am

Hey guys, interesting discussion.

Now let me throw a little bit of a curve ball here....

The pad and vertical part of the well are not on your property but the lateral goes directly under your property.

Part of the "well" ??? 

Permalink Reply by Philip Thackray on March 11, 2015 at 1:27am

Dave, Oliver Perry, FMV,

This is a debate for the lawyers but here is what I think.

The “Unitization” and “Reserve Gas” clause in these old leases were carryovers from the vertical well days.  Certainly, at that time, it was understood that the reserve gas was only provided to the landowner on whose property the well head resided.  However, neighboring properties could be “pooled” or “unitized” implying that hydrocarbons were being harvested from under their properties.  Relative to the wording in these old leases, I don’t see how the location of the lateral portion of a modern horizontal well would matter.  Dave is arguing that the unitization clause implies that all properties are equal in the unit.  This is a vague inference and would not (in my opinion) override the clear wording in the reserve gas paragraph.

The local “horizontal” leases that I have seen from Rex and XTO no longer have the reserve gas clause (in part because you can’t use the wet gas).  I also note that, within the unit, no distinction is made between the properties relative to the location of the well laterals.

Phil

 

Permalink Reply by FairMktValue on March 11, 2015 at 2:28am

Certainly one for the lawyers.

Dave, I do find it curious that the XTO guy that you talked to did not argue about the location and pretty much conceded that they owed the money. The "don't worry about it" is a rather strange thing to say though. 

Permalink Reply by Dave Miller on March 11, 2015 at 3:26am

Guys, thank you for all your input.This type of discussion is what I was hoping for. My question is how can you activate a clause in a lease [unitization] without using the entire clause. What if they wanted to run pipelines from the wells across my property to tie into a pipeline on my neighbors property? The language in the  unitization clause says that they can. No mention of compensation. Would I be able to say no because the well is not on my property? Thanks again guys.  Dave

Permalink Reply by GM on March 12, 2015 at 5:31am

Not to change the subject:

Have any of you been approached by Folse Land Services (on behalf of XTO)?

Wanting a "non-disturbance agreement/subordination of mortgage as to oil and gas lease" and affidavit's of possession and non-production.

Any thoughts?

Permalink Reply by Dave Miller on March 12, 2015 at 6:28am

GM, sounds like a question for Phil

Permalink Reply by Philip Thackray on March 12, 2015 at 7:59am

Sounds like a question for Phil's lawyer!!

Could XTO be using the value of the existing wells to secure a line of credit?  This could set up a conflict between whoever holds your mortgage and the XTO creditor.

Phil

Permalink Reply by GM on March 12, 2015 at 8:57am

So you have not recieved this request previously Phil?

I saw the list of landowners that Folse had to contact and the majority of them are all in this area of Forward Twp.

Permalink Reply by Philip Thackray on March 12, 2015 at 9:29am

They have not contacted me but perhaps that is because I do not have a mortgage.

Phil

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