Caution on Landowner Groups for HBPd land

Alan Wenger of the law firm of Harrington, Hoppe, and Mitchell, Ltd., wrote a blog on their company website.  He said that some people are organizing groups of landowners that are HBPd y old wells/leases. These need to be re-negotiated to allow for larger units, as we all know.  The issue is that some organizers are asking people to assign their lease rights to the broker....definitely a bad idea.

http://hhmlaw.com/blog/unit-size-amendments-watch-out-brokers-askin...

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Permalink Reply by JR on April 24, 2013 at 3:14pm

I have to say--and not in a braggard way--but I've been dealing with this scenario for two full years now.  I'm educated, open minded and want the best for everyone.  But now that I have enough distance from our original experience in a traditional landowner's group (before we realized we're HBP).  I'm leaning toward going my own way with my own consultants.  One, because anytime you join a group, you're only as strong as your weakest link (and can any of us afford to be associated with the weakest link???), two, I HATE decision by committee--kinda goes back to weakest link... It frustrates the hell out of me.  3) I'm skeptical of landowner leaders.  They have a LOT to gain by representing a group of weakest links, but always, always make out like bandits in the end. in this business everyone has their hand out. I'm going my own way from here.    

Permalink Reply by Paul Martinelli on April 25, 2013 at 1:26am

"These need to be re-negotiated to allow for larger units, as we all know"

 

I'm not so sure about this anymore.....seems they may be moving towards laterals that are spaced closer, which may allow for smaller units.

 

Anyone have any insight on this?

Permalink Reply by Jim Litwinowicz on April 25, 2013 at 1:48am

Paul  some of the old leases have unitization limits of 60-80 acres.  Some are at 160 acres. Those need to be amended to allow for HVHF wells.  Some of the HPB parcels allow for 640 acres/unit.  Those may not be amended.

Permalink Reply by Paul Martinelli on April 25, 2013 at 1:53am

Thanks...I understand.......it is a mess.....This isn't Texas, where parcels are 1000s of acres.

 

and I don't think the HBP   land will be on the top of the list to be drilled....so time is on thier side.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on April 25, 2013 at 3:00am

If you have a 160 or larger they will likely not pay you anything to amend the old lease.  Pretty much all of the new units are being drilled in much smaller units than was originally assumed.  160 is plenty of space to lay out a unit and drill a lateral.  Watch how they drill six wells from one location and yet don't go over that 160 number per unit.

Permalink Reply by Inchworm antenna on April 25, 2013 at 11:16am

If there's no unitization clause in the old HBP lease and if ODNR says unitization and pooling are identical, then why would the lessee even need to bother with amending an old lease?

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