Friday, August 27, 2010

Why Even Small Acreage Is Important To Eagle Ford Operators

The presentation of slides below was presented to a group of landowners on Nov. 18th at the Geosouther landman meeting with landowners at the DeWitt sale barn.  The meeting was apparently held to scare landowners into signing unfavorable leases under the threat that their land would not be leased if they held out for better terms. In my opinion, the oil company threat to you that they will bypass, go around, or not lease your land is just yet another attempt by the oil company to lease your land for less than fair market value. Some of us believe this meeting was an attempt to short change and confuse the landowner. Your land is important to the operator and you should demand he pay you a fair price. Don't believe the oil company propaganda. Fair is fair, and if you are in a good area, demand a fair price for your minerals. 

     Due to the fact that the Eagle Ford Shale is rather evenly distributed throughout the trend, all acreage regardless of size is important to the operator.  For the oil company to develop a successful and commercial exploration and production program in any given unit, all acreage in a direct line with any horizontal well has to be leased. The operator cannot drill under your land without committing trespass, and it quite simply is NOT feasible for them to exclude you or to drill around you.

      The manner and way in which small acreage is incorporated into larger Eagle Ford Shale tracts is illustrated in a news story I found on the internet today regarding a  43.291 acre tract at and

Global Petroleum Limited ("Global") is pleased to advise that it has signed an amendment to the Participation Agreement with Texon Petroleum Ltd (ASX: TXN) expanding the contract area of the Leighton Prospect to 1,651 acres for all depths beneath the Olmos Formation by cross-assigning its 15% working interest in the existing 873.691 acres, with 777.059 acres in which Texon holds an average 96% working interest.  Global will now own an undivided 7.939% working interest across the expanded area including the Eagle Ford Shale (131.05 nett acres).
 The 777.059 acres to be included in the expanded contract area is adjacent to and in the vicinity of the existing contract area of the Leighton Prospect and is comprised of 457.059 acres in Leighton Prospect lying outside the existing contract area and 320 acres in the adjacent Mandurah Prospect with depths from 7,100 feet down to 100 feet below the base of the Edwards Limestone Formation.
Following a recent survey, the acreage within the original contract area has increased by an additional 43.291 acres from 830.4 to 873.691 acres.  Under the amended Participation Agreement, Global retains its 15% working interest (11.25% net revenue interest) in the expanded 873.961 acres from the surface down to the stratigraphic equivalent of the base of the Olmos Formation.
Texon have advised that the rig for the first Leighton Eagle Ford horizontal well is scheduled to arrive in 2 - 3 weeks.  The first well will drill vertically to 10,500ft and then laterally 4,500ft.
The amendment to the Participation Agreement will enable a more efficient development of the Eagle Ford reservoir with horizontal wells.

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