Replies to This Discussion

Permalink Reply by Brian V. on January 28, 2011 at 4:20pm

That area should be being drilled by Seneca Resources. They have been very active in that area. It sounds like they have some fracking going on. You can see all kinds of activity over that way at night when driving on Rt. 15.

Permalink Reply by Lynn Wigglesworth on January 29, 2011 at 2:26am

When do companies normally form/assign a unit? In my area, East has declared units long before the drilling starts.

Permalink Reply by Ann Ticopa on January 29, 2011 at 3:13am

The declaration for the well I'm familiar with (because of all the traffic) was dated about the time the activity started.

 

One thing I'm never found a consistent answer for is what constitues starting a well (and the leases held).  In the draft forced pooling, the requirement was having a drilling rig set up within a year (extension possible) that was capable of drilling to the Marcellus Shale depth. 

Permalink Reply by FXEF on January 31, 2011 at 12:02pm

Ann,

The spacing units and drilling permits should be approved before the well is spud. I think maybe it is up to the operator as to when they file the declaration in the court house.

Unless PA has some exception to the rule, a lease is considered held by production (HBP) when the well is spud (when the actual drilling starts). 

 

Permalink Reply by Ann Ticopa on January 31, 2011 at 2:38pm

From a lease that was being offered in TC  last summer:

"... [this lease shall remain in force if]  Lessee is then engaged in drilling, completing, reworking, equipping or any other operation calculated to obtain production on the leased premises or lands pooled therewith ..."

The dictionary definition of "equipping" includes:  to prepare, or make ready. 

 

Yes, having the rig set up and the drilling started would likely hold the lease, but what if, say, the rig is on the trucks on the well pad?  (Granted, after waiting for almost five years, most lessors would be so glad to see something finally happening that they wouldn't object.)

 

 

 

 

Permalink Reply by FXEF on January 31, 2011 at 3:07pm

Ann,

For all practical purposes the spud date is generally used to hold a lease, however the wording that you listed could include rigging up. The rig just sitting on trucks on the pad may or may not hold the lease. I guess you could argue that the rig is just "stacked".... I don't know, I'm not a lawyer. 

Permalink Reply by Ann Ticopa on January 31, 2011 at 3:46pm

It's one of those things that only gets settled by lessors taking lessees to court and having it go up through the system.  One example is the decision that lease-specifed deductions that take the actual royalty rate below 12.5% are valid.

 

Permalink Reply by FXEF on January 31, 2011 at 4:29pm

Ann,

Here again, I'm not a lawyer, but the lease royalty clause entitles the lessor to no less than 12.5% of his proportional share of the well production volume. The lease-specifed deductions are deducted from the price paid for the gas volume. In other words... lessors 12.5% proportional share of the well production volume times price of gas less lease-specifed deductions.... lessor is receiving 12.5% royalty.

 

This may not be fair, but everything in life is not always fair. This is why when negotiating a lease always insist on cost free clause.     

Permalink Reply by Ann Ticopa on January 31, 2011 at 5:38pm

http://extension.psu.edu/naturalgas/news/2010/04/pennsylvania-supre...

 

 

Permalink Reply by paleface on January 29, 2011 at 12:04pm

Lynn I was told its entirely up to gas co. when that information is submitted to the county?