366-2009-05 applications archive/2009/may/366-2… · douglas m. cars on, p.a. robert r . briggs,...
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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
HOLLY ADEE *
DALE CARLTON *
OF COUNSEL
_______
HARRY P . DAILY (1886-1965)
JOHN P. WO ODS (1886-1976)
JOHN S. DAILY (1912-1987)
May 6, 2009
Arkansas Oil and Gas Commission301 Natural Resources Drive, Suite 102Little Rock, Arkansas 72205
Re: ORDER REFERENCE NO. 366-2009-05
Application of SEECO, Inc. for authority to drill and produce the proposedNicholson, Ben 08-16 #1-08H well, pursuant to Arkansas Oil and GasCommission General Rule B-43 (o), and to share the costs of such well and thenatural gas produced therefrom between the working interest owners and royaltyowners of the existing units composed of Sections 8 and 17, Township 8 North,Range 16 West, Conway County, based upon the sharing formula agreed uponby the Applicant, as operator, and the leasehold working interest owners in bothsuch units as set out in detail below:
Commissioners:
SEECO, Inc., 2350 N. Sam Houston Parkway E, Houston, TX 77032, hereby applies tothe Arkansas Oil and Gas Commission as follows:
1. The Applicant is the operator and 71.34114063% leasehold working interestowner in Section 8, Township 8 North, Range 16 West and the operator and95.32492188% leasehold working interest owner in Section 17, Township 8 North,Range 16 West. The Applicant proposes the drilling of a cross unit horizontal well borefrom a surface location in the Northwest Quarter of Section 8 with a proposed bottomhole location in the Southwest Quarter of Section 8, with a measured depth ofapproximately 8,616 feet (4,556 feet total vertical depth) in the Fayetteville ShaleFormation. The well is projected to have a perforated horizontal section ofapproximately 3,400 feet. The proposed allocation of cost, expense and production isdepicted on Exhibit “B”. Geological maps depicting the Fayetteville structure andthickness are enclosed with this application as Exhibits “D” and “E”, respectively.
2. The Applicant proposes to make an initial allocation of cost for the proposed wellbetween Section 8 and Section 17 based upon an area in acres (“allocation area”)defined by an exterior boundary 560 feet perpendicular to both sides of the estimated
perforated well bore and a radius extending 560 feet from the estimated first perforation(toe) and last perforation (heel) of the well bore. The Applicant estimates that the totalallocation area encompassing the perforated well bore is approximately 110.02 acres. Approximately 102.29 acres or 92.98% of the total area is within Section 8 and 7.73acres or 7.02% of the total area is within Section 17.
3. The Applicant proposes that the above allocation of 92.98% to Section 8 and7.02% to Section 17 be applicable to all actual costs for the drilling of the well throughand including the setting of production casing. A detailed estimate of cost (“AFE”) isenclosed with this application as Exhibit “C”. Operations will be conducted under theterms of an Arkansas Oil and Gas Commission model form operating agreement. Theagreement the will provide for a 400% penalty for a non-consent election for the drillingof the proposed well. The following terms will also govern the drilling and completion ofthe proposed well:
a. After the setting of production casing, but before a completion attempt ismade, drilling costs will be reallocated, based upon the actual perforatedinterval (distance between first and last perforations) available forcompletion in the as-drilled well bore. This re-allocation may result in arevision to working interest and all costs paid to that point will be adjusted.
b. If a well bore is lost during the drilling or completion operation and a newwell bore is proposed with an alternate azimuth that will result in a furtherre-allocation of working interest participation or in the allocation ofproduction, the replacement well will be treated as a new well proposalunder the operating agreement with revised interests. All parties thatparticipated in the drilling and completion attempt in the initial well will beliable for their proportionate share of the actual cost of operations to thepoint of setting a plug for side-track operations, based on their originalinterest.
c. Should any party that elected to participate in the initial well elect to notparticipate in the replacement well, the penalty for a non-consent electionin the replacement well will be imposed on only the replacement wellcosts. A non-participating party in the initial well will not be afforded anopportunity to participate in the replacement well and the penalty will beimposed on the cumulative cost of the initial well and the replacementwell.
d. Any re-allocation after the setting of production casing will be final for thecompletion attempt and for the ultimate allocation of production from thewell between the respective units.
4. The Applicant states that the granting of this application will be protective of thecorrelative right of all interested parties and will prevent waste of the natural gas bypermitting the most efficient method of developing the resource within the twogovernmental section which are the subject of this application.
5. The parties listed on Exhibit “A” are the interested parties in this proceeding and
are the parties who should be given notice. Applicant requests that the Arkansas Oiland Gas Commission issue an order to the mineral leasehold working interest owners to (a) join as a working interest owner in the drilling of the proposed well based upon theallocation proposed above or, in the alternative, (b) elect to be a non-consentingworking interest owner under the terms of the operating agreement which governs theunit in which their leasehold or mineral interest is located. Any owner of leaseholdworking interest who fails to timely elect either alternative should be deemed to haveelected alternative (b) above.
6. The names and addresses of parties interested in this proceeding are set forth inExhibit "A" attached hereto and made a part hereof.
7. 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
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES SECTION 8 – T8N – R16W MINERAL OWNERS
Bird, Dorothy, L., Heirs
Bird, H. Bradley
Bird, Robert E.
Boyer, Hurl Dean and Margaret Jane Boyer
Boyer, Hurl Dean and Margaret Jane Boyer Revocable Trust
Boyer, Larry Boyer, Margaret Jane, Trustee of the Hurl Dean Boyer and Margaret Jane Boyer Revocable Trust dated June 2, 1999
Boyer, Ricky
Callihan, Sally, L., Heirs
Callihan, Samuel W.
Chisum, Howard, Harold Harris and Wesley Bryant, Trustees for the Vinson Chapel Community Cemetery
Collins, Wendy R., a/k/a Wendy Luan Collins
Page 1 of 8
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES
Compton and Dunlap Properties, LLC
Conway County Regional Water Distribution District
DB Barnett LP
Earl, John Charles
Harris, Bruce Edward
Harris, Charles and Tilda E. Harris, a/k/a Emogene T. Harris
Harris, Gary Steven
Harris, J. V. and Bertha W. Harris
Harris, Jacky Neal
Harris, Jeff and Sandra Harris
Harris, Randy Allan Hollister, Alvin Ann Boyd, a/k/a Alvin Ann Boyd Hollister McDaniel MAP2004-OK Nalley, Cynthia L.
Page 2 of 8
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES Nicholson, Ben E. and Bette J. Nicholson Rainey, Jerry L. Rainey, Linda Rainey, Robert Alan School District 21, Nicholas Township Conway County Steele, Vicki Regina Teague Revocable Trust Vance, Robert L.
Vinson Chapel Congregation of the Cumberland Presbyterian Church, Now the Vinson Chapel Community Center WORKING INTEREST OWNERS: BP America Production Company
Carrizo Oil & Gas, Inc.
Chesapeake Exploration, L. L. C.
Page 3 of 8
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES
SECTION 17 – T8N – R16W
MINERAL OWNERS
Baker, Marion Edgar and Lottie B. Baker
Bane, Melvin and Virginia Bane
Cambiano, George J. and Betty June Cambiano
Chism, Alan
Chism, Betty Ruth
Chism, Billy George
Chism, Carl E.
Chism, Howard
Chism, Kenny
Chism, Mary Joyce
Chism, Rose M.
Clariday, Brenda Lou Halbrook (now Tyler)
Drew, Angelique L.
Dufford, Deborah M. Hartman
Page 4 of 8
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES
Earl, John Charles
Ehemann Revocable Trust
Ehemann, Anita Scharf
Gadberry, Emmet and Carolyn Gadberry
Gangluff, John and Dolores Gangluff
Gangluff, Paul and Tonya Gangluff
Gunderman, Harold and Willette Hartman Gunderman
Gunther, Joseph L. and Marily G. Gunther
Halbrook, Joe
Halbrook, Joe, Trustee of the Revocable Trust Agreement of Joe Halbrook, dated January 10, 2008
Hamling, Charles and Theresa Hamling
Harris, J. V. and Bertha W. Harris
Harris, Randy Allan
Hartman, Clarence W., Heirs
Hartman, Clarence, Jr.
Hartman, Gerald
Page 5 of 8
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES
Hartman, James S.
Hartman, Robert A.
Hartman, Ronald W.
Burns, Hattie P. Martin, Heirs
Lasater, Ava R. fka Ava Scroggins, fka Ava Norwood
Martin, Dovie, Heirs
Martin, George R.
Martin, George W., Heirs
Martin, Hal W.
Martin, James L., Heirs
Martin, Myra W.
Martin, Shirley Ann
Martin, Wendell R., Heirs
Maynard, Rebecca M.
McDaniel, Alvin Ann Boyd Hollister
Nicholson, Ben and Bette Nicholson
Page 6 of 8
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES
Norwood, James M.
Norwood, Rosemary
Paladino, Marinell Halbrook Bowie
Parrish, Robin K. Martin
Resecker, Jimmy and Judy Resecker
Sells, Bari Martin
Sensebaugh, Joseph E. and Lisa D. Sensabaugh
Shewmake, Billy Wayne and Carol Shewmake
Shewmake, Carol
Shipp, Tammy
Standridge, Lori Martin
Tomlinson, Lynne M.
Ward, C. Brad
Ward, Doylene
Ward, Kenny and Yuzanda Ward
Weis, Mike A. and Marsha D. Weis
Page 7 of 8
Nicholson, Ben 8-16 #1-8H Section 8 – T8N – R16W Section 17 – T8N – R16W Conway County, Arkansas
EXHIBIT A
INTERESTED PARTIES
Page 8 of 8
Wells, John Michael aka John Wells
Wells, Joseph Doyle aka Joseph Wells
Wells, Leon Doyle, Jr., Heirs
Wells, Mary Ann Sponer aka Mary Ann Wells
Whitbey, Rita
Whitebey, William E., Jr. and Rita Whitbey
Widner, Martha WORKING INTEREST OWNERS:
BP America Production Company
Chesapeake Exploration, L. L. C.
Petrohawk Properties, LP