Happy New Year. G-3 / Halcon planned to spud a well first quarter 2013. I just got an e-mail saying plans had changed and that they want to work to save their leases that are expiring soon. I know leases have gone up since 2010 and wondered if I should see what G3 has to offer and then shop around. I am seeing activity in the area and want to work with whatever company is drilling rather than waiting another three years. Thoughts? I’d hoped something would be going on by now.
Is your lease coming up? It sounds like it isn't and they want to go to other places where the leases are expiring?? This being said, I'm completely in Montana so dont' know what the leases are like in ND!! Good Luck!!
Nd raised rate to start drill new wells so areas of not so good turn out being put on hold. Chesapeake energy took huge loss on wells s of Dickinson
David, My lease is expiring in March. Company got well/wells permitted and are on the confidential list. Company rep said they are going to be working in Ft. Berthold and still plan to drill my section, “if they can save the leases.” We shall see!
I had the chance to talk (via radio show) with an oil company exec a few months ago asking the specifics of whether a lease is "saved" because they have "spudded" or whether actual "production" has taken place. The person mentioned that his understanding is that the lease is fulfilled (saved) when the well is spudded...although I sense it best to read through the lease carefully to see if this pertains to your lease. Obviously, this gives the oil company a huge advantage in not having to have production take place in order to "save the lease"!! Perhaps worth a checking into the fine print of your lease!! Good Luck.
Dave
How often does it happen that a company will start to drill and spud it rather than take it to completion? Is that not a foolish waste of resource?
David Peterson said:
I had the chance to talk (via radio show) with an oil company exec a few months ago asking the specifics of whether a lease is "saved" because they have "spudded" or whether actual "production" has taken place. The person mentioned that his understanding is that the lease is fulfilled (saved) when the well is spudded...although I sense it best to read through the lease carefully to see if this pertains to your lease. Obviously, this gives the oil company a huge advantage in not having to have production take place in order to "save the lease"!! Perhaps worth a checking into the fine print of your lease!! Good Luck.
Dave
That would be also be my sense...however...if they are trying to tie up leases, etc... to spud and not produce does buy them time...as it would allow them to spud on the last day of the lease...and in doing so "save the lease" and many thousands of dollars.
This is whathappened on one of the sections we have rights to. They renewed and renewed and renewed their permit to drill several times over the past months...and then, as the lease was set to expire at the end of December...they spudded in the middle of December...thus I do not anticipate production until late January or so...and perhaps we will then start to see royalties whenever (this is a company we have not had any contact with what-so-ever).
Frakin Andy, when they spud and run they are usually spudding with a rig you wouldn't want to, or couldn't drill the horizontal with. They are making the best use of resources, saving wear and tear on a better rig. Also saving leases, that saves money.
David, if it was the operators lease form that you signed, you can be pretty sure that spudding the well would be considered continuing operations to extend the primary term of the lease.
Depending on what area and the amount of leased acres that are about to expire, saving the leases can save hundreds of thousands of dollars.
There are other companies that would like to participate in someone elses well that is going to be drilled very soon, as opposed to having their money tied up for years leasing acres that may not be drilled in the life of their lease, which would be waiting for years just to see if you lost your investment. Participating in a well to be drilled immediately would be much preferred.
Remember that the operator makes almost nothing off your acres if someone else leases them and participates. The operator would get a slightly cheaper well, but that isn't what they drill wells for, the operator wants to make the money off your acres and he must lease or buy them to do so.
I had an operator drill two wells on my minerals and they didn't frack them for 9 months after. I realize that fracking crews were at a premium at the time, but they were not 9 months behind.
I have a well on the Ft. Berthold Reservation that has produced 187k bbl oil in 16 months, it's a popular area, it's going to get drilled, probably sooner rather than later. I also have Bakken and Three forks wells in the same area, so you may have multiple pay zones also. Too good to not tie up.
Deborah Haug said:
David, My lease is expiring in March. Company got well/wells permitted and are on the confidential list. Company rep said they are going to be working in Ft. Berthold and still plan to drill my section, "if they can save the leases." We shall see!
ND did raise the rate, but the industry did it to themselves. Remember the 100 inches of snow? The state warned the operators to secure their pits against flooding. Of course the polution was spread far and wide because the operators didn't listen. There was a token levy of $20 million in fines, but the true punishment was the $400k per new well. I had also heard that they were going to require that the contents of the pits were to be hauled away for disposal before the pits were covered but I am still seeing reports of the pits being stabilized with flyash and covered up, don't know what happened with that.
The operators also know where the sweet spots are and most of them have been drilled or are still being drilled at a fairly rapid pace. I think there is plenty of commercially viable spacings to be drilled but operators aren't in a great hurry to tie down spacings where the payout will be now 4 to 5 years. They know where it is and it will be waiting for them when they think it's worthwhile.
Elli said:
Nd raised rate to start drill new wells so areas of not so good turn out being put on hold. Chesapeake energy took huge loss on wells s of Dickinson