Replies to This Discussion

Permalink Reply by Utica Shale on November 5, 2011 at 7:28am

Robin,

 One Horizontal Bore, one Vertical Bore and one Gas Meter is given one Well Number and in this case it is Well # 007-20303. I think, when they drill a second Horizontal Bore they will need to also drill another Vertical Bore and add another gas meter and it will be given a new well #. I also think that each well will have its own unique Drilling Unit acreage and unique royalties payout to just those landowners.

Permalink Reply by craig on November 5, 2011 at 9:56am

I'm not convinced that the unit will get bigger as they add more wells to the same pad. If you measure the distance between possible laterals you can get 3 headed SSE and 3 headed NNW without increasing the unit size as they have this well. There are 6 wells planned on the original filing, but only one permitted. Attached is the original filing for the permit.

Hope this helps.

Attachments:

• thompsonwell.jpeg, 235 KB

Permalink Reply by Utica Shale on November 7, 2011 at 4:10am

Craig,

 Yes, I now see and I agree. The Thompson Drilling Unit is unlike any Drilling Unit that I have seen in Ohio (so far). It appears that this 841 acre Drilling Unit will always include all of the Royalties from all of the 6 horizontal wells - very interesting. This cannot be done (as easily) when Ohio Leases have a 640 Acre Drilling Unit limit.

 If each Horizontal Bore can last 10 years then the Thompson Well could last 60 years? Many of the landowners will be dead before they even see the 6th well drilled.

Permalink Reply by Utica Shale on November 7, 2011 at 5:07am

Craig,

 

 Here is a link to the Hoppel well in Ohio ...

 

 http://www.alov.us/images/Hoppel_well_Columbiana.pdf

 

 Quite a difference in the size of the Drilling Units ...

 Hoppel Well = 230 acre Drilling Unit in Ohio

 Thompson Well = 841 acre Drilling Unit in PA 

 

 The Hoppel Well horizontal is 8,500' long.

 The Thompson Well horizontal is 4,322' long.

 

Drilling Units  in Ohio vs PA are being created very differently.

 

My question is - At the Hoppel Well Pad in Ohio, will the original Drilling Unit be modified (increased) to include the second well at Hoppel or will a completely new and different Drilling Unit be created just around the second well?

 

 

Permalink Reply by Robin Hood on November 7, 2011 at 1:05pm

Looking at the drawing the footprint for this well would be 5 acres wide by 46 acres long. If one's property is square, Ownership of 40 acres would result in approx. 32 acres being part of this unit.

80 square acres results in 44.7acres as part of the unit

160 results in 63.2acres

320 results in 89.4 acres

So if only part of the owners property is part of the unit when the lease expires is the remainder eligible for release? Is this negotiable during the leasing process?

Permalink Reply by Robin Hood on November 8, 2011 at 5:08am

Great information, I was ready to ask what a Pugh clause is, but it's already answered.

Permalink Reply by craig on November 7, 2011 at 5:16pm

This is negotiable during the leasing process, however most of these leases are old ones. Which means horizontal drilling wasn't even thought of by anyone at that time.

No, the whole parcel is held by production.

So the answer, at least in my brother's case and a few others, is that 4/10ths of one acre is going to hold by production my brothers total 168 acres. How do you think he feels?  Some of the leases have held by production wording something like " as long as units are formed to economically and feasibly develop ....." So there maybe room for some court time, especially since most of these large landowners already have large amounts of money to pay for some lawyer time. I suspect that CHK is hoping that once the royalty checks start rolling in it won't be a problem, we'll see.   

Permalink Reply by Utica Shale on November 8, 2011 at 2:35am

Craig,

 You said, " ... This is negotiable during the leasing process, however most of these leases are old ones. Which means horizontal drilling wasn't even thought of by anyone at that time ..."

 

 What difference does it make if your land is included in Horizontal Well Drilling Unit or a Vertical Well Drilling Unit?

 

 According to my Lease and my Pugh Clause, only land included in an active Drilling Unit is Held-By-Production when my lease term expires.

 

" ... No, the whole parcel is held by production ..."

 According to my Lease and my Pugh Clause that is not true.  Are you saying that your brother does not have a Pugh Clause in his lease?

 

Pugh Clause

" ... The solution to this problem is a Pugh Clause. Usually added to the lease as an addendum, the Pugh Clause provides that at the end of the term the lease will terminate as to any acreage outside of a Drilling Unit. This allows the landowner to sign a new lease for the property not included in the Drilling Unit at the end of the five year primary term. The cash bonus received for signing the new lease provides compensation to the landowner for the property not included in the Drilling Unit ..."

 

 

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