Replies to This Discussion

Permalink Reply by Joe Aldridge on October 6, 2013 at 13:39

Thanks Dion for posting this thread. I really wish that "we could all get along". I have personal cases that show that there is an intent to take advantage of the landowner in a lease negotiation. At least this is what has happened to me.

Jay,

As you state in your post neither of those are the case with me. And yes I do have a problem with the industry as a whole. To be specific: I have a piece of property with a 3200 ft 10 3/4" surface pipe on it. I know for a fact that this property is on a syncline and is not producible in WX and probably not in TUSC. though we are in close vicinity to the Port Hudson TUSC field. So my only hope is AC and/or EF/TMS.  I signed a 5 yr. lease with Amoco because their landman told me that they were interested in drilling AC. That was in the mid 90's. About 3 yrs later CHK wanted to lease and re-enter the hole and drill AC. Since I was under lease to Amoco and had 2 years remaining that did not happen. Now in the past couple of years someone that worked for Amoco at that time in this area tells me that Amoco never had any plans to drill AC. So my problem is: I leased in good faith to a lying landman and a lying company for a very nominal amount. Now I'm skeptical of anyone that wants to lease unless there is a bonus that is worth while to lock my property up for 3 to 5 years or they have specific plans to develop my property. In a case like this how else can I protect myself and my property from someone that is "bold face" lying to me?

Bobi,

To go farther with my distrust of the industry: The TMS play map has recently been re-drawn. The area that I have property in has been drawn out of the play. Yet, I have logs of the area wells that were drilled to TUSC and they show high resistivity in the TMS far South of the new boundary that is being circulated. In actuality the older maps of the play were very close to what I consider to be the "play". So what is the purpose of the new play map? Why should I believe anything that an industry person tells me about anything regarding the EF/TMS especially since I have good logs that show something that is contrary to what is being posted? Can you understand why I would have a problem with the industry as a whole? As far as drilling my own well; that's not my job. All I want is to be dealt with fairly. I have no expectation of getting 10's of thousands of dollars bonus. That I agree probably will never happen again. 

And yes, I would hope that there would be a "win win outcome" in the dealings. That has not been the case with me and my dealings. So Dion; its hard to get along when so many in the industry try to take advantage of the land/mineral owners. 

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Permalink Reply by Two Dogs, Pirate on October 6, 2013 at 14:44

As we can see from the Macondo well, doesn't Amoco/BP look somewhat like the English/Brittish version of CHK? Joe would you lease to CHK? I have said all along that Amelia has a dog in this hunt, so you can't blame them for trying to get the best position that they can for their interest in the play. As for telling the story a different way, that is all up to the reader of the story. You read the story one way and base your opinion on well logs but others may read it a complete different way. I have read many of your posts and you may be valid in some of your thinking but I am not a scientist like Jay. I would really like to see the Austin Chalk and TMS work out at some time in the future and I feel that the TMS is going to be the next big deal.

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Permalink Reply by Dion Warr, CPL on October 7, 2013 at 11:01

Joe:

I can understand your apprehension in taking "the pitch" with anything other than a grain of salt, but 15 - 20 years seems a long time to hold a grudge.  I am not sure who you talked to at Amoco, but I had started working on an Amoco project across the river from the area you're mentioning.  It was my understanding at the time (albeit limited, I was a cub landman) that Amoco was interested in developing Austin Chalk rights in areas where they were leasing or had leases, but wanted a partner experienced with AC - enter UPRC.  We ended up doing work for both companies for a time in the mid to late 90's, generally in competition with CHK in most areas, until the whole play imploded on itself with the crash in 1998-1999.  No one seemed to have more than transient success in AC completions past western and central Louisiana - I'd be hard pressed to think of a AC well that anyone would have dubbed "successful" east of Moncrief Field.  Once the money started to run out and leverage on credit revolvers started going south, drilling activity dried up.  As far as I know, Amoco wanted AC rights in all of their acreage prospective for TUSC at that time.  Were they going to drill their own wells (no partners) - I don't think so.  Did they have an active JV in place at the time with a legit AC driller / operator?  Yes.

 

I can understand the frustration and disappointment in not getting a well drilled for you, and feeling like "the other guy" would have, if only...  I can never promise someone that my client will drill a well for them, but I can promise that I cannot get a well drilled for them if enough owners in a prospect hold out on leasing.  On an broad basis, three years is about as short as it gets on PT.  An operator with a particular prospect, a reentry, a sidetrack, a workover, even an "updip" test based upon prior well analysis...  those terms can be shorter - but they are fairly small prospects or specific in scope.  At this point, an EF / TMS, Eutaw, or AC order isn't going to be a "one-shot" well proposition, IMO, so short-term leases (<3 yr. PT) aren't forthcoming.

 

As far as the "redraws" of plats: some of them are pure G&G driven (ie., "It's just not there"), others are G&G and economics driven (ie., "It makes no sense to [us] at this time to consider anything outside this area").  Still others (as we have seen over the last few years for HS fairway) are even partially biased for spin (ie., "Look at all the choice acreage that [we] have locked up").  In my experience, without real world well control, there is nothing concrete (although the quality of picture has improved significantly).  To the landowner / mineral owner, I would say "If you're in the prospect, you'll know; someone will come find you."  Specifically, no one has come further south of Lane (yet?), at least as to any unconventional TUSC.  So, until the offer comes along, wait with cautious optimism, and if it comes, negotiate with experience and sage counsel as your guides.

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Permalink Reply by Craig Cooper on October 7, 2013 at 13:29

Joe,

I worked my entire 36 career at Amoco - BP, was involved in Amoco's AC efforts and can assure you that we were very interested in pursuing the play.

At the time, the sweet spots / economic portions within the Chalk were associated with the presence of (dense zones of) natural fractures. The dense fracture zones were / are not located everywhere within the Chalk and were / are best identified via seismic data. So, it is entirely possible and perhaps highly likely that the seismic data covering your property showed no / little indication of the presence of a dense natural fracture system. If so, then there would have been no point in drilling since any / all wells would have been uneconomic.

However, keep in mind that horizontal drilling + multi-stage frac'ing wasn't really possible during the '90's so the AC in your area may experience renewed interest and you may yet have it drilled on your property.

WRT the TMS, there are many good geologic reasons why the interpreted best part of the play may no longer include your acreage. The industry has learned a great deal about what makes a good / bad shale play during the past 8 years and, in general, the TMS has been more problematic than many of the others. Its depth and non-brittle nature are two issues.

However, exploration of the TMS play is at a very early stage so it is also very possible that play boundaries will be re-drawn as additional drilling occurs, new knowledge is gained and new innovations are created. So, TMS drilling may yet take place on your property.

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Permalink Reply by Joe Aldridge on October 7, 2013 at 14:15

Craig,

That is simply not the case. The well with the surface pipe was drilled by Serria in 85. It was a WX wildcat to 10,500 ft.and was "washed". Of all locations for them to pick this was in a syncline created by a lateral fault out of a major regional fault. So it should be VERY fractured. It should be a gravel pit in Chalk. Serria ran a dip meter in the wellbore at the time they logged it and that's what they found. When the landman from CHK contacted me in 95 he told me that they were interested in re-entering that wellbore and I was the first one that he was to contact. I was somewhat skeptical. I learned later that he was being truthful with me. I was the first person he contacted. That wellbore was that important at that time to them. When they could not lease my land at that time they called the next year to check and see if the rental had been paid. It had. In the mean time CHK leased everything South of me and even took over operation of the Irene field from SLAPCO and First  Energy. So they built a sizeable block in the area. Then 98 - 99 came and everything in the industry changed. So sometime we have a very limited time period to make a deal and be dealt with in a fair and upfront manner. Since then no has come back with any interest. So because I leased for a very nominal amount and tried to get some exploration going I got nothing other than $35.00 per acre and was held out of the play.

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Permalink Reply by Craig Cooper on October 7, 2013 at 15:22

Joe,

When you say: "That is simply not the case", what are you referring to, Amoco's pursuit of the AC or the presence of a dense fracture system?

I assume you're referring to the fracture system. Keep in mind that not all fracture systems are effective conduits to fluid flow. Syncline-related fractures tend to be 'closed' while anticline-related fractures which tend to be 'open' (to fluid flow).

Fracture systems generated by lateral movement along a fault are more complex and could be either open or closed depending on the effective stress regimes along the fault. 

Regardless, Amoco was serious about pursuing the Chalk.

If seismic indicated your acreage to be synclinal then, at that time, it would have been downgraded since hydrocarbons migrating from the underlying Eagleford would have continued moving up dip out of the syncline (and past your acreage). 

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Permalink Reply by Joe Aldridge on October 7, 2013 at 16:48

You are correct. I am referring to a "dense fracture system" that connects two major Northwest Southeast faults that are about 1 mile to 1 1/2 miles apart. At this location the Chalk is over a 1000 ft thick and the syncline or lateral fault has less than 100 ft. of dip. Amoco had done 3-D seismic across my property and knew what the structure looked like before they leased. That's why I leased cheaply. However, if as you state Amoco deemed the fracture system closed then they should not have leased or should have dropped my lease and let me lease to someone that had intentions to drill. Also while you may have the opinion that the oil has migrated and the fracture system is closed no one knows for sure until the well is drilled. In actually this syncline or lateral fault could be a "tear or a chasm" between the two major faults. That would make the area very fractured and open. I'm simply stating that for all intents and purposes I leased to someone that told me they had intentions to drill and that did not happen. Then when I had someone that seemed truly interested in drilling Amoco began playing a keep away game because they had a very cheap lease and they could keep CHK off of my location. That is an opportunity lost for me and may never come back. That's why I now take everything that is said by know-it-all industry people with a "grain of salt". Things like this make it very hard to "get along".

As for your statement that Amoco had intentions to drill AC in the Port Hudson area that is not correct. I was told by a ranking person that worked for Amoco at that time in the Port Hudson area that they NEVER had any intention of drilling AC. All they were interested in was in-field drilling around the dome.

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Permalink Reply by Craig Cooper on October 8, 2013 at 4:58

Joe,

Understand about the frustration associated with your lease. I'm sorry that a reasonable solution wasn't reached.

WRT the Chalk in that area, I think you correctly identified one possible reason why the leases weren't dropped; i.e. the only way to know with certainty that an area is or isn't productive is via the drill bit. Another reason is that the area contains a number of potential reservoirs distributed vertically throughout the geologic column so even though the Chalk may have been downgraded, others may not have been.

WRT the Chalk & Port Hudson area, I can honestly say that, at that time, I was a 'ranking person' in the play and we never ruled out drilling Chalk targets or any of the other stacked targets for that matter. Economics of the primary conventional targets were so much better that it made the most sense to focus on fully developing the field first and then to selectively / opportunistically evaluate secondary or alternative potential reservoirs.

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Permalink Reply by tony allen on October 14, 2013 at 8:46

I agree, Joe!!

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Permalink Reply by Two Dogs, Pirate on October 5, 2013 at 11:01

I first came onto GHS for a bit of a greedy motive. I saw this big shale play as a threat to the mom and pop companies that have been drilling Northwest Louisiana for over 100 years. Most of my previous work had been through these smaller folks. I had only worked one big job and that was the Austin Chalk back in the 1990's. My broker wouldn't let his lease buyers come into the HS until the price stabilized so we stayed out for a year. During this time I was working in Sabine Parish and was a witness to a lot of underhanded deals that went on. It wasn't so much the shalers but the snakes that were following them. The landmen working for the shalers couldn't stop the escalation in the bonus amounts, so it wasn't their fault but they caught the blame for buying a lease from one person for $150 per acre one week then buying the next door neighbor the next week for $300. One could only imagine how mad these lessors got when the price got to $14,500 per acre. We were only leasing from the surface to 5000 feet in two areas and surface to China in another. At this point all we knew was there was some sort of concept play being developed. After Aubrey made his announcement in the spring of 2008 it became impossible to get the deep rights for the price we were paying. I saw then that the HS was going to kill the mom and pops. That is when I logged onto GHS to try to convince the folks to only lease the deep rights. I went out of my way, on my on time, to help my lessors get a decent price and lease from the shalers.

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Permalink Reply by dbob on October 5, 2013 at 14:15

Thanks!

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Permalink Reply by Bobi Carr ("parker") on October 5, 2013 at 18:23

Dion, Jay, Two Dogs,

  It is the professionals like you that have made this site a great place.  As a landowner living in the present day land of tulips, I am thankful that I have been able to come to GHS and hear the voice of reason.  

  I get tired of the rhetoric spewed by some stating the evils of the oil and gas companies stealing and pillaging the rights of the angelic land owners, yada, yada, yada.

  I have yet to see a land owner group band together and drill their own well.

  I believe there will always be things to discuss.  Some things that are in the best interest of the industry are not always in the best interest of the land owner.  That said, they are not always mutually exclusive either.  It doesn't always have to be an adversarial relationship.  It really can be a win, win situation.

  I enjoyed discussions on the site when people can slug it out and still be respectful.  

  I get quite bored with the evil gas company vs the poor hapless land owner fairy tale.

  As a landowner, I didn't get $30,000 and 30%.  If you didn't either, GET OVER IT.  If you did that is wonderful.  If you are still waiting on it, good luck with that.  Your chances of winning the lottery are probably higher. 

  ...and as for the folks who have stated ad nauseam that the gas company NEEDS them, 'cause they are the ones with the gas.  Well go look up one of the maps that show all of the shale formations.

  Some land owners are like a jilted lover, they would rather spend the rest of their life bitter and carrying on about the ex's wrong doings whether real or imagined.  At some point you have to get on with life.  You make the best deal and do what is necessary to enforce it.

  I think one lesson everyone who receives a mailbox check ought to think about every once in a while is "would they be happy with their windfall if they had no idea what someone else was receiving?"  After all, mailbox money is lagniappe.

   

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