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Permalink Reply by jb379 on August 15, 2011 at 9:21am

My two cents is to make sure there is a depth severance clause that is well defined.  From what I have seen, having a shallow lease on your property should not scare anyone off from leasing the deep.  I guess you could say this way you get to have your cake and eat it too if you get some nice producing shallow wells and get to lease your deep to another company down the road.  Good luck.

 

JB

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Permalink Reply by Terry W. on August 15, 2011 at 2:33pm

My addendum is written with a dept severance clause.

The oil and gas companies are leasing to drill horizontal, not vertical.

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Permalink Reply by Jim Litwinowicz on August 15, 2011 at 3:10pm

Having different companies lease different strata can be problematic. It will mean that the different companies will construct more drilling pads instead of using the same one for different wells.  They will probably have to use more pipelines also.  That means a lot more land disturbed and permanently used for gas production.

Worse, it may have serious legal complications. If a water well gets contaminated by gas migration, which company is responsible? How can it be determined?

I would definitely have a clause that states no deep strata will be HPD'd by shallow wells or even by a deep vertical well. The lease should have a clause committing to at least on horizontal well. And perhaps have a depth severance for anything below the Utica in case a new massive gas/oil field is discovered in the future.

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