wellbore easement

We are being asked to sign this anyone have any advice on what to look for?

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Permalink Reply by pat on July 19, 2014 at 5:14am

make sure you have an attorney look at it first.

Permalink Reply by Mark Mijavec on July 19, 2014 at 5:58am

We are thanks

Permalink Reply by Jack Straw on July 19, 2014 at 7:18am

Check these out:

http://en.allexperts.com/q/Oil-Gas-3147/2010/11/Horizonal-drilling.htm

http://www.gohaynesvilleshale.com/forum/topics/2117179:Topic:123494?commentId=2117179%3AComment%3A127437

Simply do a Google Search on ‘wellbore easement”:

https://www.google.com/search?as_q=wellbore+easement&as_epq=&as_oq=&as_eq=&as_nlo=&as_nhi=&lr=&cr=&as_qdr=all&as_sitesearch=&as_occt=any&safe=images&tbs=&as_filetype=&as_rights=&gws_rd=ssl

 

The well bore easement implies that they will locate a portion of the wellbore beneath your property which will have no perforations (no perforations, no production from that portion of the wellbore - no production from that portion of the wellbore, no royalties for you from what is produced up that wellbore).

It is likely they intend to put the pad on you, and drill the vertical and/or portion where they transition from vertical to horizontal.

You neighbors get the royalties and you get the shaft (wellbore).

The job of the Landman is to get you to ‘give up’ as much as possible; while you receive as little as possible in return …. All while trying to make it look like he is doing YOU a favor.

Read the agreement very carefully and note any questions or portions that you do not understand …. then take it to an Attorney with O&G experience for his review, explanation and advice.

Do not be pressured to sign anything until you are satisfied that it is in your best interests (financial and otherwise). Do not agree to anything unless you are generously compensated (including compensation for your Attorney's fees).

 

All IMHO,

                        JS

Permalink Reply by Mark Mijavec on July 19, 2014 at 7:30am

thanks

Permalink Reply by Tree Farmer on July 19, 2014 at 7:38am

My ALOV lease pays me $30k for a well pad and something like $10k per pond and would include the royalties. IF they are asking for a well pad with NO royalties then i would get an annual ongoing fee on top of the pad fee. All of this is pure speculation based on what little info we have here.

Permalink Reply by Mark Mijavec on July 19, 2014 at 8:02am

There are two units and the pad is on one and not the other.  Most of our land is in the unit with the pad, just a few acres in the other unit.   

Permalink Reply by Finnbear on July 19, 2014 at 7:58am

Any chance we can see the details of what they are actually asking for?

"Wellbore Easement" is pretty vague.

Permalink Reply by Mark Mijavec on July 19, 2014 at 8:13am

It is short and the relevant language is as follows.  May drill, locate, operate and maintain one or more subsurface horizontal wellbores on, under and through the premises for the purposes of operating and producing a well for an oil and gas production and development unit in which the premise is not included. 

Permalink Reply by Jack Straw on July 19, 2014 at 9:01am

The “short and the relevant language” seems altogether too short, and not sufficiently detailed; it is a carte blanche for the O&G Operator to do essentially anything and everything that they might wish to do (now, or at any time in the future).

 

The surface owner who has a pad and any associated facilities for production (road(s), pipeline(s), pig launcher, valves, compressor station, etc., etc., etc.) suffer the greatest burden associated with the horizontal shale wells.

These facilities will be present for at least forty years; perhaps significantly longer.

 

It is in my opinion that the compensation traditionally received is insufficient for what the landowner ultimately sacrifices.

 

It will degrade the value of the land adjacent to the facilities.

It can raise insurance premiums and likely necessitate taking out substantial liability insurance.

It can make it difficult or impossible for a landowner or prospective purchaser to obtain a mortgage.

Property Taxes will continue to need to be paid on property for which the landowner has no ability to productively utilize.

 

Long after a one-time fee is paid, annual expenses will accrue and need to be paid on property for which the landowner has no ability to productively utilize.

 

I would suggest the need for clauses to protect the landowner:

Indemnification,

Termination (when land is no longer need for the intended purpose,

Restoration of the land at termination.

Escalating annual rental; to compensate for property taxes, insurance, etc.

 

Just a few things which immediately come to mind.

Good luck to you Mark, we wish you the best.

All IMHO,

                     JS

Permalink Reply by Mark Mijavec on July 19, 2014 at 9:24am

We are having our atty look at it this week as well.  Too this point, for the most point Hilcorp has addressed our concerns however we always want to be careful and cover our selves. Thanks

Mark

Permalink Reply by Finnbear on July 19, 2014 at 10:24am

It seems a bit too short and vague to me. The part about "wellbores on, under and through the premises" worries me. I would put language in the agreement that stipulates NO surface activity of any sort or ask to be included in the production unit (and collect royalties). They can include whatever acreage they want in the production unit for calculating royalties.

Permalink Reply by Philip Thackray on July 19, 2014 at 8:49am

Perhaps they want to take a wellbore from another unit under your property and your property is in the other unit.  As long as all your property is in a unit there should be no problem.

Putting more or less land in a unit is a wash to the oil and gas company.  If everybody's royalty is say 15%, the O&G company will send 15% of what comes out the ground to the people in the unit.  If there are more or less acres in the unit that doesn't matter to the O&G company.

Phil

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