Black Lake Field -- When Will the Leases End?



Started June 2, 2011 at 11:01 am by @Henry2 in Natchitoches Parish

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Henry2
06/02/11 11:01:35AM
@henry2

I looked up production for the Black Lake field today on sonris. The last reported production was in December of 2010, when 2 barrels of oil were produced -- from the 20,000-acre field. No production has been reported since then. Certainly this is not what the state calls "production in paying quantities."

The leases in this field were signed in the mid-1960's, and have been in force ever since. They were originally with Placid Oil, and have changed hands several times, and now are held by Chesapeake. Has anyone been successful in terminating these leases? Are there any efforts going on to terminate these leases for lack of production? I'd appreciate any information on this topic. Thanks, in advance.

Lrb2brnot2b
06/02/11 11:27:33AM @lrb2brnot2b:
I thought leases were held for 10 years beyond production or any attempt to produce.
Henry2
06/02/11 01:04:44PM @henry2:

Lrb2brnot2b,

I think it is a servitude that extends for 10 years beyond the end of production or any attempt to produce.

My lease in the Black Lake Field says that the lease is valid as long as long as "oil, gas, or other minerals are produced from said lands or lands with which said land is pooled hereunder."

No "oil, gas, or other minerals" have been produced in 2011. Does this constitute long enough to end the lease?


Lrb2brnot2b
06/02/11 01:27:43PM @lrb2brnot2b:
I am no expert but in the thread below this one they talked about how a drill bit could interrupt a prescription on land that has never been drilled before. I took it that they were talking about holding a lease that was about to run out. Maybe Les B or Skip Peel could answer what is going on here?
Skip Peel - Independent Landman
06/02/11 06:29:54PM @skip-peel-independent-landman:
If memory serves, Black Lake Field production is covered under a "Field Wide Pooling Order". I don't deal with fields that fall under the "stripper provisions" of the mineral code so I can't speak to any specifics. I do suspect that there is a reasonable cause of action based on production, or the lack thereof, but would leave that determination to a first rate, experienced O&G attorney. Any mineral owners contemplating legal action against Chesapeake should do so with the certainty that it will be protracted and expensive. That being said, any interested members should explore the possibility of class action status. I would think there are many mineral owners that might qualify for the definition. The question remains, how many would agree to participate and share in the cost of litigation?
Henry2
06/02/11 07:32:58PM @henry2:

Skip,

No doubt it would be a mess to try to terminate the leases. CHK would fight this to the death. On the other hand, 20,000 acres are being HBP, with no P. I was just trying to find out if anyone has tested the waters yet.


Highwayman
06/03/11 08:15:47AM @highwayman:
They have one well with an oilpumping unit running on the south side of Black lake. The gas from this well is burned at the well site and not treated and sold. It will run for a few months and then be shut down for a few months. All of the other wells with pumps in the field never run anymore, but their one well has been running steady for 2-3 months now. They P&A a well every now and again and that's about the sum total of the activity in the field. Always wondered why Chesapeake keeps it.
Les B
06/03/11 10:55:08AM @les-b:
Henry, it would seem you have a case since the last reported production was in December. See the attached for recent production history. There are only nine wells listed as Active - Producing but that is just status so no indication the wells are actually "producing".
Les B
06/03/11 10:56:45AM @les-b:
Highwayman, it could be the well is only pumping water now, or at least not enough oil in the water to recover.
Henry2
06/03/11 12:32:17PM @henry2:

Les,

You are right. I am told the water trucks are coming and going constantly to that site. Several trucks per day, sometimes. Can you explain to me why they do this?


Les B
06/03/11 01:42:07PM @les-b:
Henry, as water drive oil fields reach the end of their life thewater cut (% water in oil produced) increases to levels approaching 100%. So you may produce 90+ barrels of water for every 10 barrels of oil. Eventually the field just "waters out" or becomes uneconomic to produce.
Highwayman
06/03/11 03:02:41PM @highwayman:

Les,

They had a workover rig at the location in March and since that time it has been pumping constantly and a flare has been burning. I'm no expert, but if it was only pumping water, why keep it running? Plus, I assume, any oil produced keeps the leases held in the entire field.


Henry2
06/03/11 08:54:06PM @henry2:

Highwayman,

Can you tell me, more specifically, where this location on the southern side of Black Lake is? What is it near? I want to make sure you and I are talking about the same site.

And I'm with you, if all they are pumping is water, what's the point?


Les B
06/04/11 10:06:17AM @les-b:

Highwayman, I made my original statement assuming one or more wells were pumping in January and February which had no recorded oil production. Now that we have the additional information concerning the workover rig, we can seehow much oilwas produced in the later months and if that will be sustainable.

The pumping water is analagous to the emergency room. You try everything before walking away from the patient. So you may continue pumping for a couple of months hoping to restore oil production from the field.


Highwayman
06/04/11 05:15:03PM @highwayman:

Henry,

The well is located about 30 yards from the water on the south side of the Clear Lake part of Black Lake. It is about 1/4 mile east of Morgan Bayou, if that helps. I don't know the well name.


Henry2
06/04/11 07:22:07PM @henry2:

Highwayman,

Thanks. Yes, that is the same site I'm talking about. I'm told they are hauling water away with many trucks per day. I'm also told they are ramping up operations at the site -- adding new oil tanks, separators, etc., as if they intend to have future ops there. Any thoughts?


Highwayman
06/06/11 10:00:47AM @highwayman:

Henry,

I've only seen the location while fishing. I don't know what they are doing or have plans to do. If I hear something I will let you know.


Henry2
06/06/11 03:19:47PM @henry2:
Sonris just posted the March production data from Black Lake Field. 34 bbl of oil and condensate -- for the entire 20,000+ acres in the field. All that effort for 34 bbls. This does not look like production in paying quantities to me.
Skip Peel - Independent Landman
06/06/11 04:40:23PM @skip-peel-independent-landman:
Henry, do you know the definition of production in paying quantities as it applies to stripper wells? I would suggest that should be your next question and research. Stripper fields are a separate production category and are treated differently. You might want to ask The Baron.
Henry2
06/06/11 07:07:47PM @henry2:

Skip,

I admit to having no clue about the differences. I only know RS31:124. I'll go ask The Baron. Thanks for the tip.


The_Baron
06/07/11 12:05:06PM @the-baron:

I'll say that with what appears to be a field that is being re-worked and a partial restoration in production.. (the field has done well in the past but has fallen off for a few years), that breaking leases will be difficult. Also, CHK will fight hard to keep leases in place.

The petit unit is interesting, the large unit was established under a voluntary unit production agreement signed by most mineral owners for the "gas cycling and pressure maintenience" of the whole field. It would be hard to make any real conclution without revieing this document and the leases involved.

Also, When we talk about paying quanities... a short lapse in production is not cause for breaking a lease. As long as an operator is working to restore or enhance production they could hold the lease. YOu would have to prove that no activity was taking place. The large number of wells listed as Shut In- Future utility also concerns me, as these wells could be used to enhance production in other wells (CO2 flooding maybe) or even be re-completed.

The field produced over 3200 bbls of oil and condensate in 2010, while the royalty owners may not have seen much, the operator would have netted several hundred thousand dollars. The mineral code is very clear:

From RS31:124

It is considered to be in paying quantities when production allocable to the total original right of the lessee to share in production under the lease is sufficient to induce a reasonably prudent operator to continue production in an effort to secure a return on his investment or to minimize any loss.

125. Amount of royalties relevant to reasonableness of lessee's expectation

In applying Article 124, the amount of the royalties being paid may be considered only insofar as it may show the reasonableness of the lessee's expectation in continuing production. The amount need not be a serious or adequate equivalent for continuance of the lease as compared with the amount of the bonus, rentals, or other sums paid to the lessor.

Basically, you would have to prove that the operator is losing money. If you went to court and tried to prove that production was not paying quanities, you would have to show that the operator was not operating prudently. To prove this while re-working operations are going on would be difficult. CHK would throw its weigt around with big lawyers, petroleum engineers and geologists. The recent , 2005 or so, Hosston Units also imply developemnt is comming. Especially since they have already combined downhole production.

paying quanities would not really matter as to the type of well, (stripper, etc.) that is more for calculating severance taxes and fees. I would venture to say that as long as CHK is willing to show they are making a profit, or will make a prfit, then you are out of luck. The Courts traditional side with the operators here. There are wells in Caddo Pine Island that produce 1 bbl in a good month, but are still economic. One well wouldn't be, but an operator with 50 wells just like that can make a good living, especially at $100 oil.


Henry2
06/07/11 12:37:59PM @henry2:

Baron,

Thanks for your insights. They are very helpful.


The_Baron
06/07/11 03:24:37PM @the-baron:

I am in no way saying that it shouldn't be tried. But that I think breaking a lease based off what is amiditly a very quick look, would be difficult.

Personally, I would rather try to force CHK to further develop the acreage. Maybe possible get the deep rights released if they refuse. It would be a long, and possibly expensive option though with little hope of near term payout.


Highwayman
06/07/11 03:52:51PM @highwayman:
How could you force them to further develop the acreage?
BirdDawg, plain ole' idiot
06/07/11 08:18:50PM @birddawg-plain-ole-idiot:

Baron,

If CHK did further development in the Black Field to a different formation than the current production, do you think they would probably have to apply for new units?

Probably reasonable units based on the formations they would be attempting to produce from. It is obvious that the field wide unit they are producing from is basically depleted. May not be an option to get them to release any deep rights, but maybe form new units to develop other formations.


The_Baron
06/08/11 10:58:40AM @the-baron:

I would assume any additional formations would have to be unitized. I would find it hard to believe that any deeper formations would have feildwide units. This is why I think CHK would work to restore production as much as possible to maintain their leasehold.

and to Highwayman,

YOu could issue a formal demand letter to CHK requesting that they develop the acreage. They would have a choice of doing so, or issueing a statement of why they will not at this time. If you are lucky they will ignore you. If they refuse, you go to court and request that the deep rights be released, you would have to show that a prudent operator could economicly develop you acreage, which is a hard thing to prove. If you are lucky CHK will ignore you and you can show that they are unwilling to work with you in the interest of developing the minerals.


Highwayman
06/16/11 01:21:19PM @highwayman:
Wagner Oil Co. has applied for additional Petit Units in the Black Lake Field. I don't know if they have purchased the existing leases or have leased additional property. I've never heard of them.
Skip Peel - Independent Landman
06/16/11 01:30:30PM @skip-peel-independent-landman:

Wagner is listed as the operator of 207 LA. wells of which 27 are status code 10 (producing).

Org ID Name
W137 WAGNER OIL COMPANY

Address Information

Oper Type Addr1 Addr2 Add Type City, State Zip ATTN Name Contact Name Phone Num Phone Type
01 500 COMMERCE STREET SUITE 600 01 FORT WORTH, TX 76102-0000 SABRINA BONNER (817)335-2222 OFFICE
(817)332-3876 FAX-OFFICE
01 500 COMMERCE STREET SUITE 600 03 FORT WORTH, TX 76102-0000 SABRINA BONNER (817)335-2222 OFFICE
(817)332-3876 FAX-OFFICE
01 500 COMMERCE STREET SUITE 600 05 FORT WORTH, TX 76102-0000 PAM WAGNER (817)335-2222 OFFICE
(817)332-3876 FAX-OFFICE
01 500 COMMERCE STREET SUITE 600 06 FORT WORTH, TX 76102-0000 SABRINA BONNER (817)335-2222 OFFICE
(817)332-3876 FAX-OFFICE
01 500 COMMERCE STREET SUITE 600 09 FORT WORTH, TX 76102-0000 PAM WAGNER SABRINA BONNER
01 500 COMMERCE STREET SUITE 600 11 FORT WORTH, TX 76102-0000 SABRINA BONNER (817)335-2222 OFFICE
(817)332-3876 FAX-OFFICE
01 500 COMMERCE SUITE 600 13 FORT WORTH, TX 76102-0000 PAM WAGNER PAM WAGNER (817)335-2222 OFFICE
(817)332-3876 FAX-OFFICE
01 500 COMMERCE SUITE 500 14 FORT WORTH, TX 76102-0000 PAM WAGNER PAM WAGNER (817)335-2222 OFFICE
(817)332-3876 FAX-OFFICE

Organization Officers

Officer Name Title
BRYAN WAGNER PRESIDENT
H. E. PATTERSON VICE PRESIDENT/SECRETARY
WILLIAM W. LESIKAR SR. VICE PRESIDENT, TREASURY ASSISTANT SECRETARY

Organization Red Flags

Effective Date End Date Warning Status Warning Description
05/03/2000 05/09/2000 S FORM R-4 SUSPENDED FOR PRODUCTION AUDIT DISCREPANCIES

Henry2
06/16/11 02:15:21PM @henry2:
Highwayman,Where did you see that Wagner Oil applied for these additional Petit Units? I could not find it in the list DNR Hearings.
Highwayman
06/16/11 02:54:19PM @highwayman:

Henry,

I received a letter in the mail today from an attorney representing them. It may take a day or so to show up in the DNR website. I'm not sure why it's not there.


Skip Peel - Independent Landman
06/16/11 03:23:07PM @skip-peel-independent-landman:
Henry and Highwayman, the letter received is a "pre-conference notice letter". They go to all the individuals and business entities on the Interested Party List. The letter offers a local meeting (conference) to cover the details of the unit application. If a request is received, the applicant must hold the meeting. They are held in Shreveport for District 6. After that meeting or after the required period when no Interested Party has request the meeting, the application will be added to the Commissioner's Public Hearing schedule and it will then appear in the database.
Highwayman
06/16/11 09:59:47PM @highwayman:
They are proposing a Pettit unit & a Hosston unit in an odd shape equaling 1,000 acres just outside the limits of the original Pettit unit for the Black Lake Field. It is a very short distance from where Chesapeake drilled and P&A'd a Pettit well a few years ago in one of their new units close to Saline Lake.
Skip Peel - Independent Landman
06/16/11 10:10:28PM @skip-peel-independent-landman:
I suggest that you scan and post the plat that is included with the notice letter. If anyone wishes to contest the application, time is short. And any mineral owners wishing to oppose the application need to get qualified professional representation ASAP!
Henry2
06/17/11 06:40:16AM @henry2:

Skip,

I haven't seen the application. But can you explain why a mineral owner would want to oppose or contest this?


Skip Peel - Independent Landman
06/17/11 09:10:26AM @skip-peel-independent-landman:
I haven't seen it either Henry. There could be many reasons. From the size and boundaries of the unit to any specifics of the application such as permission to co-mingle production from different zones speaking generally. In this particular case or discussion there appears to be suspicions concerning maintaining leases which are not producing significant quantities of oil or gas. If there are no operators or lessees objecting based on development rights that usually leaves land and mineral owners who must base their objections on geological issues. Obviously that's a tough job as the industry typically has all the geological expertise on their side. I have yet to be involved in supporting or opposing a unit application however there are O&G attorneys with experience in such. I suspect it would take a very compelling and straight forward reason for the LOC to deny an application.
The_Baron
06/20/11 05:10:47PM @the-baron:
I agree with Skip, without a Geologist and or detailed seismic or other data it would be hard to oppose an application. It is important to realize that a big unit is not nessarliy a bad thing either.
Highwayman
06/21/11 09:00:32AM @highwayman:
Here's the information from Wagner Oil Co.
Skip Peel - Independent Landman
06/21/11 09:16:48AM @skip-peel-independent-landman:

Thanks, Highwayman. I received a copy from a client on the IP list and reviewed the application. Here is a list of the leases Wagner acquired for this unit.

WAGNER OIL COMPANY

File Date:

5/3/2010

LA BOKAY CORPORATION

Cancel Date:

MEMORANDUM OF LEASE

Book:

321

OG 332471

Page:

163

NE/4 OF SE/4 OF S36 T11N R6W

Pages:

5

View Image

Direct (1)

Indirect (1)


WAGNER OIL COMPANY

File Date:

6/9/2010

PAVILLION LAND DEVELOPMENT- LLC

Cancel Date:

MEMORANDUM OF LEASE

Book:

321

OG 333612

Page:

335

320 ACRES IN S25 & 35 T11N R6W

Pages:

3

View Image

Direct (2)

Indirect (1)


WAGNER OIL COMPANY

File Date:

6/16/2010

PLUM CREEK SOUTHERN TIMBER- LLC

Cancel Date:

OIL & GAS LEASE

Book:

321

OG 333814

Page:

347

146.18 ACRES IN SW/4 OF S25 T11N R6W

Pages:

18

View Image

Direct (2)

Indirect (1)


WAGNER OIL COMPANY

File Date:

6/21/2010

CASON, EDGAR

Cancel Date:

MEMORANDUM OF LEASE

Book:

321

OG 333990

Page:

466

117.50 ACRES MORE OR LESS IN S36 T11N R6W

Pages:

2

View Image

Direct (3)

Indirect (1)


WAGNER OIL COMPANY

File Date:

6/24/2010

COVAL LEASING COMPANY- LLC

Cancel Date:

MEMORANDUM OF LEASE

Book:

321

OG 334145

Page:

498

40 ACRES MORE OR LESS IN S36 T11N R6W

Pages:

3

View Image

Direct (2)

Indirect (1)


WAGNER OIL COMPANY

File Date:

10/14/2010

GHK COMPANY- LLC

Cancel Date:

MEMORANDUM OF LEASE

Book:

322

OG 337284

Page:

252

1200.00 ACRES MORE OR LESS IN S36 T11N R6W

Pages:

4

View Image

Direct (9)

Indirect (1)


WAGNER OIL COMPANY

File Date:

10/14/2010

SCE PETROLEUM- LLC

Cancel Date:

MEMORANDUM OF LEASE

Book:

322

OG 337286

Page:

256

120.00 ACRES MORE OR LESS IN S36 T11N R6W

Pages:

2

View Image

Direct (2)

Indirect (1)


WAGNER OIL COMPANY

File Date:

10/14/2010

HEFNER COMPANY- INC

Cancel Date:

MEMORANDUM OF LEASE

Book:

322

OG 337287

Page:

258

120.00 ACRES MORE OR LESS IN S36 T11N R6W

Pages:

2

View Image

Direct (1)

Indirect (1)


WAGNER OIL COMPANY

File Date:

11/3/2010

JIL EXPLORATION- INC

Cancel Date:

ASSIGNMENT OF OIL & GAS LEASE

Book:

322

OG 337759

Page:

303

SEE ORIGINAL

Pages:

7

View Image

Direct (1)

Indirect (1)


WAGNER OIL COMPANY

File Date:

2/18/2011

RAY, WILLIAM L

Cancel Date:

OIL & GAS LEASE

Book:

323

OG 340316

Page:

7

10.20 ACRES MORE OR LESS IN S36 T11N R6W

Pages:

3

View Image

Direct (2)

Indirect (1)


WAGNER OIL COMPANY

File Date:

4/25/2011

POLAND MINERAL TRUST

Cancel Date:

MEMORANDUM OF LEASE

Book:

323

OG 341901

Page:

570

120.00 ACRES MORE OR LESS IN S36 T11N R6W

Pages:

2

View Image

Direct (2)

Indirect (1)


WAGNER OIL COMPANY

File Date:

5/6/2011

JIL EXPLORATION- INC

Cancel Date:

ASSIGNMENT OF LEASE

Book:

323

OG 342232

Page:

577

ENTRY #341288 (32.48 ACRES MORE OR LESS)

Pages:

4

View Image

Direct (1)

Indirect (1)



Highwayman
06/21/11 09:24:20AM @highwayman:
I wish them luck.
The_Baron
06/21/11 10:34:01AM @the-baron:

The only problem I see is that this coiuld effectivly cut out some landowners in between the new unit an d the large existing unit.


Henry2
01/10/16 08:21:34AM @henry2:

Finally! Chesapeake is providing releases to the lease holders in the Black Lake Field in Natchitoches Parish. These leases were signed in the mid-1960's. If you hold these leases (they are so old, you likely inherited them), contact Chesapeake and get your release.


The Shadow
04/13/17 03:56:48PM @the-shadow:

Henry, I hope you get this reply from me.  Not computer savvy but this is my question.  Have you received a release of minerals in the Black Lake Field?  If so exactly how did you do it, what did you received from Chesapeake, and how long did it take.  Do you know if other people with minerals in Black Lake Field received a release of mineral from Chesapeake.  I appreciate any information and help with this matter.  Than You in advance.


Henry2
04/14/17 07:43:10AM @henry2:

I received my release last year.  I wrote CHK a letter (certified mail), and noted that no production had occurred on the land for ages.  I then asked them to release me, and provide a written release, and file it in the courthouse.  They did all that.  

The biggest problem now, from my perspective, is getting them to clean up my land.  They had a drilling site on my land, which included tanks, fences, sheds, power lines, oil spills, etc.  It has not been cleaned up and restored.  I am not happy.  It is not clear how long it will take for complete remediation.


The Shadow
04/14/17 03:27:00PM @the-shadow:

Thank you for your reply.  Concerning clean up on your land!  When was the last time you check on the clean up?  The reason I ask is that in the last two years there has been a lot of dismantling and removal at the old Placid site.  Not sure if all has been removed, but might want to check on this, in case you had not lately, or maybe contact them about it.  Hope they will do you right.  I plan to write to Chesapeake and ask for a release of minerals.  I hope it goes as smooth as your's did.


Henry2
04/15/17 07:30:55AM @henry2:

shadow,

When you refer to the "old Placid site," what do you mean by that?  My understanding is that there are many sites on the north side of the lake and a few on the south side.  I was told that the sites on the north side have not been cleaned up.  So can you explain to me what you mean by the "old Placid site?"  


The Shadow
04/15/17 02:24:01PM @the-shadow:

My wording was not the best.  I was mainly referring to where the pumping station was located.  I called an individual who I know, very well, and he has worked extensively in the Placid field, and at this present time is working there with the clean up.  According to this individual there are approximately 60 sites, in the Placid Field left to remove and clean up.  I ask how much longer for completion and the individual made a guess of approximately two (2) years.  What the future hold for Black Lake (Placid) Field I do not know.  I hope this information is helpful.  If you have more questions don't hesitate to ask.  I am not an expert on this field, but I know people who are knowledgeable about it, since I was raised up in the town close to this field and of the people who have worked there since the founding and now the end.


Skip Peel - Independent Landman
01/10/16 10:12:32AM @skip-peel-independent-landman:

Good news, Henry. Congratulations. Considering the age of this discussion thread, I suggest that you start a new one so that those who have joined the group since the last reply will get a notice email. In addition to contacting CHK some might wish to discuss the future prospects for the Black Lake Field.


Henry2
01/11/16 07:09:54AM @henry2:

I think I'll open the discussion on the main board, and not in Natchitoches Parish. Because these leases are 50 years old, the current lease holders have likely moved all over Louisiana, if not all over the country.


Skip Peel - Independent Landman
01/11/16 08:15:25AM @skip-peel-independent-landman:

The only drawback to posting on the Main Page is the lack of a notice email. Considering that these are old leases, what are the chances that someone with an interest in the Black Lake Field is occasionally coming to the site? And will they come before a main page discussion rotates off? Regardless of where they live and when they joined GHS, if they joined the Natchitoches group they would still get an email notice. Even if they hadn't been on the site in years.


The Shadow
01/13/16 11:00:25PM @the-shadow:

Skip what happens if a release of minerals is not requested? Some may not ask because they no longer own the land and if the minerals are released then they will loose all their mineral rights. Another question is if the minerals are released then does the 10 year period apply as it does when production stops before the minerals come back to the land owner? Please explain. Thank You.


Skip Peel - Independent Landman
01/14/16 08:41:12AM @skip-peel-independent-landman:

If no release of lease is filed in the public record then it would be up to a landman researching mineral ownership to determine that the minerals were unencumbered and available for a new lease. A release on file in the public records makes the process of any future lease offers more straight forward, more simple. Mineral owners should request a release be filed in writing or by email.

I believe that the prescriptive period is defined by production, not by the existence of a lease. Lacking some circumstance that would suspend prescription, once production ceases the ten year period begins. Prior to the CHK announcement were you receiving payment of royalties?


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