The Hurdles in Oklahoma Oil and Gas Leases and HBP Properties.
The following is an exercise that every petroleum landman should be able to answer as regards to oil and gas wells holding oil and gas leases (HBP) in properties located in Oklahoma. The following parameters covered 640 acres of leases located in Section 28-T12N-R10W – Oklahoma, in which VisTerra was the Lessee.
- One of the leases covered both the NW/4 and the NW/4 SW/4, no restrictions – (no depth or Pugh Clause).
- Another lease covered the E/2 (no restrictions – no Depth or Pugh Clause).
- VisTerra drilled a well (Johnson 28A) in the SW/4 to the base of the Hunton Lime Formation at 4,520’, which was spaced on 640 acres. There were 15 people who decided to be Forced Pooled of which 5 elected to participate for ½ of their Mineral Interest which amounted to 1.5 NMA in the NE/4 SW/4 and 5 others that could not be found who were Forced Pooled in the S/2 SW/4 which amounted to 10 NMA.
- All the leases (not subject to the Forced Pooling) in the NE/4 SW/4 had a Depth Clause that stated deepest producing formation, while the leases (interest that was not Forced Pooled) in the S/2 SW/4 had a depth clause that stated the deepest depth drilled.
- Formations that were Forced Pooled were the Red Fork, Bartlesville, Gilcrease, Dutcher, Cromwell, Mississippi Lime, and Hunton Lime.
- The Cromwell Formation was spaced on Stand-up 80-acre Spacings and the Hunton Lime was spaced on 640 acres.
- The Hunton Lime Formation was found not to be productive.
- The Johnson 28A well was completed on January 23, 1977, and the Johnson 28B well was completed on May 1, 1977, in Seminole County, Oklahoma.
- NOTE: Why are those dates important?
- The wells are still producing today.
Explain what acreage and formations are Held by Production.
- Give the legal description and number of acres associated with each well’s HBP acreage.
- Can VisTerra drill another Cromwell Formation well in the SW/4 and if so If so, explain the steps they would have to take; if not, why?
- Can VisTerra drill a Viola Formation Well (which is spaced on 320 acres) in the SW/4?
- If so, explain the steps they would have to take; if not, why?
- NOTE: The Viola Formation is below the base of the Hunton Lime Formation.
See if you Agree