Our (McMullen County and Live Oak County) Oil & Gas lessee has asked us for permission to use our deep water well (and our frac tank, I assume) to drill and frac our neighbor's property. Has anyone else ever run into this? Any tips (including current water price info) as to what might go into our side-agreement with the oil company would be helpful. (We want to be a good drilling partner -- and a good neighbor -- but we're leery of having our own drilling program consequently delayed and we're concerned as to where the neighbor's recovered frac water and fluids will eventually be going.) Any helpful tips will be gladly received....
Andy,
I understand that water is pretty scarce in south Texas. So it has value, probably higher then usual value to them. So you have an income opportunity for use of water. Was the deep water well already there or something the gas/oil company put in? Because I'm thinking if they put a frack tank on your property and a deep well then they have a plan and/or are in process to drill your property. In that case, I wouldn't want to derail your well progress either. They might drill the neighbor and then decide not to drill you, who knows. Perhaps you could structure a water lease deal, but under the condition that your well is drill first. I am not from your area so can't give you specifics, but water value in the eagle ford is likely higher then other locations so keep that in mind as you get additional input from people. Good luck.
Wilson
Thanks, Wilson, for the quick reply. Our Oil & Gas Lease required the drilling of the deep water well and it provided for the installation of the frac tank. It states that while the water is intended only for use within our property, the water may -- if the owners' permission is granted -- be utilized off-premises via a side agreement. I think they are under some drilling deadlines and thus wish to drill the neighbor first. All the best, and thanks again, Andy