units in Tyler Cty. WV

Antero has approached us wanting to put a pad on our farm. We received a map from them showing

the units coming off this pad, Our unit is half the size of the other units, they told us we would have

approx. 2 wells & the other units would have 3 but we would have a share in the other units. My

question is why is our unit the smallest unit when the pad will be on our farm? Thank you,Connie

Views: 798

▶ Reply to This

Replies to This Discussion

Permalink Reply by Tyler James on November 10, 2015 at 11:45am
There is good and bad about being in a small unit. William is right about your percentage of ownership within the unit. However, smaller unit sizes, usually mean shorter laterals. The longer the lateral, the larger the production, the larger the check.

Battling with Antero for the past year may have been a blessing in disguise. If you had signed a year ago, they may be putting these wells into production right about now. No one wants their well going into production right now. Your flush production will be wasted by terrible gas prices. Hopefully you get this deal worked out soon and they begin to operate end of 2016. Production by late 2017 may be perfect.
Permalink Reply by Suzy on November 10, 2015 at 1:13pm
Thank you too Tyler. We have a small 25 acre parcel that we need to sign up with Antero. Doing the Heirships now. Triad missed us when they were doing the Leases 3 years ago and messed up with all of our other acreages with the buy-out to Antero. It does seem like we are in a "lull" right now and will have more leverage in negotiations with Antero in 2016?
Permalink Reply by William Dotson on November 10, 2015 at 1:18pm

James you do have a point. Larger units do mean a longer lateral.

Also, just FYI, the unit does not determine the lateral. The shale depth is the first consideration and the second consideration is the continuous land under lease. The well stops and the unit size is adjusted down, if they drill down through the shale before the proposed lateral length. By the same token, as long as is feasibly possible, they will continue a well past the unit boundaries and adjust the unit size to fit the final lateral length, as long as they continue in the shale and have available land under lease.

That's why they retain the right to adjust the unit size at any time in the pooling clause up to 640 acres for gas wells.

And, while I'm thinking about it (I try not to do too much thinking anymore), an unencumbered lease in an area of production is worth a lot more than you think. Most of the leases that are being picked up from other O&G companies have been assigned 3-4 times and only come with a 70% working interest. That's 70% of 7/8. Virtually every time a lease is assigned the company that had the lease retains a piece of the working interest. This means that mostly the companies that are new to this area are drilling these new wells with only about a 61% interest in the well. Remember that the next time someone offers you 15 or even 18% royalty on a lease that you have that is not leased. Because they are drooling at the thought of getting an 82-85% working interest. And, obviously, you get the best offers from the company that is actually going to be doing the drilling.

Permalink Reply by Suzy on November 10, 2015 at 3:29pm
Thank you William. You confirmed my gut thinking.
I figured we might have time until things started to really
get cranking. What is your background? Are you an Attorney by chance?
We need a good Attorney in Tyler County to go up against Waco and kind.
After losing part interest in 225 acres from invalid notification from Tyler County. We've owned the rights since the mid 1880's. Family Farms.
Here is my email: suzy@suzybuck.com
Much appreciated.

Suzy
Permalink Reply by William Dotson on November 10, 2015 at 3:58pm

No not an attorney. I was a completion superintendent during the last big boom in the area in the late 70's & early 80's, so I am very familiar with what goes on. I've seen a lot. From hot tapping a continuous loop on a gas meter to resell the same gas time and again, selling 200% of a well, moving oil out of a tank on one lease and putting it into a tank on a lease where the operator had a large percent interest, and a lot more. And their still out there. Not all of them, but their still out there. And I find myself wondering if this lot is really better or have they simply come up with a better mousetrap. 

Permalink Reply by Suzy on November 10, 2015 at 6:08pm
Thank you William. Please email me ... You would be a fabulous resource and I would love to chat once in awhile.
Permalink Reply by Tyler James on November 10, 2015 at 11:46am
Best of luck with it all.

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service