170-2009-03 Applications Archive/2009...RESUME OF EFFORTS SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST...
Transcript of 170-2009-03 Applications Archive/2009...RESUME OF EFFORTS SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST...
JERRY L . CANFIELD, P .A .
THOMAS A. DAILY, P .A .
WYMAN R. WADE, JR . , P .A .
DOUGLAS M. CARSON, P .A .
ROBERT R . BRIGGS, P.A. † *
C . MICHAEL DAILY †
COBY W. LOGAN
L. MAT THEW DAV IS
* Fayetteville Office
† Al so L icensed in Oklahoma
DAILY & WOODSA PROFESSIONAL LIMITED LIABILITY COMPANY
ATTORNEYS AT LAW
KMW BUILDING58 SOUTH SIXTH STREET
P.O. BOX 1446FORT SM ITH, AR 72902
TELEPHON E (479) 782-0361FAX (479) 782-6160
______________
3538 N. HIGHWA Y 112, SUITE 200FAYETTEV ILLE, AR 72703TELEPHON E (479) 582-0361
FAX (479) 251-8111
JAMES E. WEST
PHILLIP J . NORVELL *
DALE CARLTON *
OF COUNSEL
_______
HARRY P . DAILY (1886-1965)
JOHN P. WO ODS (1886-1976)
JOHN S. DAILY (1912-1987)
March 3, 2009
Arkansas Oil and Gas Commission301 Natural Resources Drive, Suite 102Little Rock, Arkansas 72205
Re: ORDER REFERENCE NO. 170-2009-03
Application of XTO Energy Inc. for Integration of All Unleased Mineral Interestsand Non-consenting Working Interests in a unit described as Section 7,Township 10 North, Range 5 West, Jackson County, Arkansas
Commissioners:
XTO Energy Inc., 810 Houston Street, Fort Worth, TX 76102, hereby applies to theArkansas Oil and Gas Commission for the integration of all unleased mineral interestsand non-consenting working interests in its proposed drilling unit which is describedabove.
1. The proposed drilling unit is an established unit as defined in paragraph (f) ofArkansas Oil and Gas Commission General Rule B-43. Applicant proposes to drill ahorizontal well from a non-exceptional surface location in the Southwest Quarter downto a non-exceptional bottom hole location in the Northwest Quarter of the above-described unit. The proposed well will be drilled to a total vertical depth of 2,236 feet totest the Fayetteville Shale Formation. Applicant has obtained one or more oil and gasleases covering its proposed drill site.
2. Applicant owns oil and gas leases covering a substantial part of the proposedunit. Applicant should be named as operator of the well. The person or persons to beintegrated are shown in Exhibit "A" attached hereto and made a part hereof.
3. Applicant has made diligent efforts to negotiate with the non-participatingleasehold working interest owners, each of said parties owning an oil and gas leaseholdinterest in the proposed unit, but applicant has been unable to secure an assignment ofthe leasehold interest on an equitable basis or to secure participation by said parties inthe drilling of the proposed well.
4. Applicant states that it has made repeated efforts to negotiate with the owners ofthe unleased mineral interests in order to agree on a plan of development of said drillingunit; that those owners have been offered an opportunity to participate in the proposedwell; that they have been offered a fair and reasonable bonus consideration for theexecution of an oil and gas lease covering their interests; that they have been furnishedwith a proposed oil and gas lease and a copy of the AAPL operating agreement formwhich applicant proposes to use in connection with the drilling of said well; but that all ofthe efforts of the applicant have produced no agreement by said parties.
5. Applicant states that it is in the best interest of conservation and the protection ofcorrelative rights of all interested parties that the proposed unit be developed for oil andgas production without undue delay.
6. In order that applicant may proceed with the orderly development of said unit,applicant hereby requests that the Arkansas Oil and Gas Commission issue its order, inthe alternative, that:
(a) The owners of non-consenting oil and gas leasehold workinginterests indicated above shall participate in the cost of drilling,testing and completion of the test well to be drilled by applicant onthe captioned unit, subject to the terms of an Operating Agreementwhich substantially employs the terms of the AAPL Operatingagreement, with a COPAS attached.
(b) All of the non-consenting oil and gas leasehold working interestswithin the proposed unit shall be force pooled and integrated intosaid unit, and a reasonable risk factor shall be established andassessed as a penalty against said integrated interest.
7. Applicant further states that due to the risks and costs inherent in the drilling ofthe proposed well, the Commission should fix a reasonable risk factor to be assessedas a penalty against the integrated interests within the unit. The risk factor should beapplied to the proportionate cost and expense of drilling, completing and equipping thewell, which would have been borne by the interest of said parties had they participated. Applicant requests that if the integrated parties do not elect within 15 days afterissuance of the Commission's order as between alternatives (a) and (b), it shall beassumed that the integrated parties elected alternative (b) in lieu of the right toparticipate in the working interest in said unit.
8. Applicant requests that the Arkansas Oil and Gas Commission set this matter forpublic hearing, and after same, issue its order, in the alternative, that:
(a) Each of the owners of the unleased mineral interests indicatedabove execute and deliver to applicant a one year oil and gaslease, on an AAPL lease form, for a bonus consideration of
$850.00 per net mineral acre to be paid as fair and reasonablecompensation in lieu of the right to participate in the workinginterest in said unit, and that said oil and gas lease provide for a3/16 royalty on oil and gas.
(b) Each of the owners of unleased mineral interests indicated abovebe force pooled and integrated into the captioned unit withassessment of a reasonable risk factor penalty against theirinterest.
(c) The owners of unleased mineral interests shall participate in thecost of drilling, testing and completion of the test well to be drilledby applicant on the captioned unit, subject to the terms of anoperating agreement which substantially employs the terms of theAAPL Operating Agreement.
Applicant further requests that said mineral owners be required to elect within fifteen(15) days after issuance of the Commission's order which method will be pursued in thedevelopment of the above described unit, and, in the event no election is made, that itshall be assumed that the owner of said unleased mineral interest has elected to accepta bonus of $850.00 per net mineral acre as compensation in lieu of the right toparticipate in the working interest in said unit, and with the royalty to be 3/16.
9. Applicant further states that due to the risks and costs inherent in the drilling ofthe proposed well, the Commission should fix a reasonable risk factor to be assessedas a penalty against the integrated interests within the unit. The risk factor should beapplied to the proportionate cost and expenses of drilling, completing and equipping thewell, which would have been borne by the interest of said parties had they participated.
10. Applicant further requests that this Commission's order specifically provide thatany party electing either to participate or be force pooled subject to recoupment of a riskfactor penalty be bound by the terms of the attached AAPL Operating Agreement for thelife of commercial production within the unit so that all future unit operations might beproposed pursuant to the provisions of such agreement without the necessity of futureaction by this Commission.
11. Applicant also requests that said order be made applicable to any unknownspouse, heir, devisee, personal representative, successor or assign of said parties.
12. The names and addresses of parties interested in this proceeding are set forth inExhibit "A" attached hereto and made a part hereof.
13. Please note the appearance of Thomas A. Daily of Daily & Woods, P.L.L.C., P.O.Box 1446, Fort Smith, Arkansas, 72902, on behalf of applicant.
Very truly yours,
Thomas A. Dailyjmt
Resondent Listing
Integration Application Section 7-10N-5W Jackson County, Arkansas
Mineral Owners: Thomas D Ervin & Julia P Ervin Fred McCauley & Deborah McCauley, h/w S. Joyce McCauley James E Robertson & Mary Louise Robertson, h/w Leasehold Owners: Chesapeake Exploration LLC CEU Fayetteville, LLC Pathfinder Exploration, LLC Petroquest Energy. LLC Underdog Holdings LLC
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Mineral Owner: James E. Robertson & Mary Louise Robertson, h/w 1/9/09 Spoke to Mary Louise inquiring as to whether she had leased this interest.
They’d be interested in leasing. 1/12/09 Landman verbally offered $500, 5+5 and 3/16ths. Said they’d think about
it and return the call. 1/20/09 Mailed proposal of $500, 5 + 5 and 3/16ths.
1/28/09 James Robertson returned landman’s call 1/29/09 Landman spoke to James. He and Mary want at least $1,000/nma and will
not lease for anything less. XTO was currently unable to come to terms at this point in time.
2/23/09 Mailed final letter offering $850, 5 + 5 and 3/16ths
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Mineral Owner: Thomas D. Ervin and Julia P. Ervin, h/w 11/27/07 Called several numbers- either disconnected or wrong number 11/28/07 Mailed proposal of $850, 5 years and 3/16 1/20/09 Called several numbers. Did not reach landowners. Mailed proposal of $500,
5 + 5 and 3/16ths. 1/29/09 Called several numbers either being no answers, no answering machines or
disconnected 2/23/09 Mailed final letter offering $850, 5 + 5 and 3/16ths
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Mineral Owner: Fred McCauley and his wife, Deborah McCauley 1/13/09 Spoke to Fred McCauley. Became very short and curt after explaining he still
had ownership with his ex wife in a tract of land. Said that it was our problem to figure out and hung up the phone
1/20/09 Mailed proposal of $500, 5 + 5 and 3/16ths. 1/29/09 Called; Left Message 2/23/09 Mailed final letter offering $850, 5 + 5 and 3/16ths
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Mineral Owner: Shirley Joyce McCauley 1/13/09 Researched internet for numbers. Called several numbers, all being either
disconnected, wrong number or no answer
1/20/09 Called several more numbers. No results. 1/29/09 Researched internet for more numbers and/or addresses. Called more
numbers, all of which were disconnected. 2/23/09 Researched internet for more numbers and/or addresses. Mailed final offer of
$850, 5 + 5 and 3/16ths to last known address
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Leasehold Owner: Chesapeake Exploration, LLC 2/24/09 Mailed proposal and AFE
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Leasehold Owner: CEU Fayetteville, LLC 2/24/09 Mailed proposal and AFE
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Leasehold Owner: Pathfinder Exploration, LLC 2/24/09 Mailed proposal and AFE
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Leasehold Owner: Petroquest Energy, LLC 2/24/09 Mailed proposal and AFE
RESUME OF EFFORTS
SECTION 7, TOWNSHIP 10 NORTH, RANGE 5 WEST JACKSON COUNTY, ARKANSAS
Leasehold Owner: Underdog Holdings LLC 2/24/09 Mailed proposal and AFE
EXHIBIT “C”Applicant’s statement regarding Operating Agreement
The applicant requests incorporation of the Model Form Joint Operating Agreement
approved by the Arkansas Oil and Gas Commission on October 24, 2006, with Paragraph
III.1.A.(1) of the COPAS providing for a drilling well rate of $7,500.00 and a producing
well rate of $750.00 , and with the following proposed revisions, deletions and/or
insertions, if applicable:
NONE
UPPER FAYETTEVILLE SHALE STRUCTURE MAP
Contour Interval: 100’
Geologist: F. BasesDate: February 2009Exhibit E
Section 7 –
T10N R5W
McAdams 1-7H
Jackson County,
Arkansas
Non-Exceptional Location in the SW1/4
- 1400
- 900
- 900
- 800
0011-
0001-
0021-
0031-
1718
56
7 8
1
12
13 1718
56
7 8
1
12
13
Hickmon 1-17H-1,371
McAdams 1-7H PLAN
FEET
0 3,000
PETRA 2/20/2009 4:30:14 PM
FAYETTEVILLE SHALE ISOPACH MAP
Contour Interval: 50’
Exhibit FGeologist: F. BasesDate: February 2009
Section 7 –
T10N R5W
McAdams 1-7H
Jackson County,
Arkansas
Non-Exceptional Location in the SW1/4
1718
56
7 8
1
12
13 1718
56
7 8
1
12
13
400
400
450
500
550
600
650
700
750
800
800
850
850
Be
Hickmon 1-17H424
McAdams 1-7H PLAN
FEET
0 3,000
PETRA 2/23/2009 10:12:47 AM
Unit PlatSect 7 10N 5W
Exhibit GGeologist: F. BASESDate: February 2009
Section 7 –
T10N R5W
McAdams 1-7H
Jackson County,
Arkansas
Non-Exceptional Location in the SW1/4
1718
56
7 8
1
12
13 1718
56
7 8
1
12
13
Hickmon 1-17H-1,371
McAdams 1-7H PLAN
FEET
0 3,000
PETRA 2/20/2009 4:30:39 PM