242-2009-04 - arkansas oil and gas commission applications archive/2009... · 2013-05-22 · resume...

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)

April 7, 2009

Arkansas Oil and Gas Commission301 Natural Resources Drive, Suite 102Little Rock, Arkansas 72205

Re: ORDER REFERENCE NO. 242-2009-04

Application of Highland Oil & Gas, LLC for Integration of All Unleased MineralInterests and Non-consenting Working Interests in a unit described as Section 6,Township 6 North, Range 31 West, Sebastian County, Arkansas

Commissioners:

Highland Oil & Gas, LLC, P.O. Box 1503, Fort Smith, AR 72902-1503, hereby applies tothe Arkansas Oil and Gas Commission for the integration of all unleased mineralinterests and non-consenting working interests in its proposed drilling unit which isdescribed above.

1. The proposed drilling unit is an established unit as defined in paragraph (f) ofArkansas Oil and Gas Commission General Rule B-44. Applicant proposes to drill adirectional well from a surface location which is 1,503 feet from the South Line and 715from the East line Southeast down to a bottom hole location which is 560 feet from theSouth Line and 560 feet from the East line of the above-described unit. The proposedwell will be drilled to a total measured depth of 6,600 feet to test the Middle Atoka Formation and any intervening formations. Applicant has obtained one or more oil andgas leases 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 in

the 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 gas

lease, on an AAPL lease form, for a bonus consideration of$300.00 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 a 1/4royalty 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 $300.00 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 1/4.

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

RESPONDENTS LIST

Integration Application Section 6 – 6N – 31W Sebastian County, Arkansas Leasehold Owner: Chesapeake Exploration, LLC Unleased Mineral Owner:

Arkoma Basin Minerals Clark, Bobby and Pennie, h&w Clifton, Barbara Edwards, Janice S., Trustee of the Joe Edwards Revocable Trust Fisher, Floyd and Angela Fisher Fitzsimons, Pamela and Joseph Barwise Carrigan Fitzsimons, Trustees Fritsche, Glen D. and Susie E. Fritsche, h&w Keck, Ray H. and Bonnie B. Keck, h&w Nelms, Kenneth J. and Anita Nelms, h&w Sidwell, Reid, Stacy Sidwell, his wife Timmons, Rick E. Oil & Gas Consultants, Inc.

RESUME OF EFFORTS

SECTION 6, TOWNSHIP 6 NORTH, RANGE 31 WEST SEBASTIAN COUNTY, ARKANSAS

Chesapeake Exploration, LLC

• 2/27/09 - Mark Wilson sent letter to Chesapeake, ATTN: Bhavin Naik, proposing well. Letter included AFE and Letter, whereby Chesapeake could elect to participate and return letter to Highland.

• 3/9/09 - Mark Wilson sent letter to Chesapeake, attn: Bhavin Naik asking Chesapeake to either participate or sell interest to Highland for $300.00/acre.

• 3/12/09 - Bhavin Naik with Chesapeake called Mark Wilson and told him he would try to get an answer.

• 3/20/09 - Mark Wilson sent Chesapeake a proposal with AFE, Plat showing well location and Letter giving Chesapeake the right to participate and right to execute JOA.

• 3/31/09 - Mark Wilson spoke with Bhavin Naik at Chesapeake and he said to go ahead and integrate Chesapeake due to the fact that he had not heard back from management.

RESUME OF EFFORTS

SECTION 6, TOWNSHIP 6 NORTH, RANGE 31 WEST

SEBASTIAN COUNTY, ARKANSAS

Arkoma Basin Minerals, Inc

• 1/12/09 - Searched public records for contact info… called left message.

• 1/14/09 - Sent letter asking for return call.

• 1/23/09 - No answer, but got a fax tone, so faxed letter.

• 2/12/09 - Left message for Mark Keldorf.

• 2/24/09 - Re-faxed letter and left message for Mr. Keldorf.

• 3/4/09 - Left message for Mr. Keldorf.

RESUME OF EFFORTS



Clark, Bobby and Pennie, h&w


• 10/21/08 - She doesn’t think they will lease, but send lease and they will look at it, if interested they’ll call me.

• 10/27/08 - Left message.


• 11/7/08 - Not interested in leasing.


• 12/3/08 - Mr. Clarks wants a “no drill” & “no pipelines” clauses added to lease or he isn’t interested in talking.


• 1/12/09 - Left message with son asking for a return call.

• 2/19/09 - Left message and sent 2nd lease packet.

• 3/24/09 - Went to Clark home with lease packet. They will sign and return as soon as possible.

RESUME OF EFFORTS



Clifton, Barbara

• 10/20/08 - Spoke with Mr. Clifton. Delivered lease to his office, he will call and I can pick up signed lease.

• 10/24/08 - Spoke with Mr. Clifton, he had forgotten to get his wife to sign. He will get it in the mail to me.

• 11/6/08 - Left message for Mr. Clifton.

• 11/19/08 - Went by business, he was out. Left message for Mr. Clifton.

• 12/10/08 - Agent went to business.

• 12/18/08 - Called and left message.


• 1/12/09 - Not interested… don’t call anymore.

• 1/14/09 - Sent lease packet to home address in public records.

• 1/21/09 - Lease packet returned as “Undeliverable – no forward”

• 2/6/09 - Called, Mr. Clifton was too busy to talk.


• 3/22/09 - Left messages for Mr. Clifton at 3 different times.

RESUME OF EFFORTS



Edwards, Janice S., Trustee of the Joe Edwards Revocable Trust


• 1/12/09 - Janice called. Send lease packet, but she thinks they own more land than what we show.






• 3/16/09 - Sent 2nd lease packet.

• 3/23/09 - Left a message with Secretary asking for a return call.

RESUME OF EFFORTS



Fisher, Floyd and Angela Fisher


• 1/14/09 - Sent lease packet.


• 2/23/09 - Left message and sent 2nd lease packet.

• 2/28/09 - Cheryl White went to property. No one was home, left business card.



• 3/22/09 - Mailed 3rd lease packet.

RESUME OF EFFORTS



Fitzsimons, Pamela and Joseph Barwise Carrigan Fitzsimons, Trustees

• 1/12/09 - Searched public records for contact info… called left message with accountant.

• 1/13/09 - Faxed lease packet to Joseph Fitzsimons.

• 1/15/09 - Found business phone number and email address. Emailed lease packet to Mr. Collie, the Accountant.



• 3/3/09 - Emailed 2nd lease packet to Mr. Collie.

• 3/16/09 - They are “reviewing” our offer.


RESUME OF EFFORTS



Fritsche, Glen D. and Susie E. Fritsche, h&w

• 1/12/09 - Found contact number and left message.

• 1/14/09 - Spoke with Mr. Fritsche. After offering our terms, he stated that he would either participate or lease at the very last moment.

• 1/21/09 - Left lease packet at home for consideration.




• 3/24/09 - Left message at home phone and also called Mr. Fritsche at work left message asking for return call.

RESUME OF EFFORTS



Keck, Ray H. and Bonnie B. Keck, h&w

• 10/18/08 - Called, but no answering machine.

• 10/19/08 - Called.

• 10/21/08 - Took lease to house, spoke with Mrs. Keck. She asked me to get off her property. They will never lease and we can’t make them.

• 10/28/08 - Mailed Lease packet.

• 11/08/08 - Called, no answer.

• 12/29/08 - Sent letter with lease terms.


• 1/15/09 - Sent 2nd lease packet.



• 3/16/09 - Sent a 3rd letter asking for return call.

RESUME OF EFFORTS



Nelms, Kenneth J. and Anita Nelms, h&w

• 1/12/09 - Called, left message. Call was returned as wrong number.

• 1/13/09 - Sent lease packet to address of record.

• 1/21/09 - Lease packet returned as undeliverable.

• 1/24/09 - Checked Public Records and WhoWhere for address or phone number. Same information as already been provided.

• 2/28/09 - Went to address. Appears that no one lives there. Checked with neighbors. No information provided.

• 3/16/09 - No change.

RESUME OF EFFORTS



Sidwell, Reid, Stacy Sidwell, his wife


• 11/12/08 - Emailed lease for signature.

• 11/13/08 - He emailed asking for added provisions.

• 12/1/09 - He called, is getting a divorce and can’t sign until divorce is final sometime in Feb.-March.

• 1/14/09 - Left message and sent email. He’s out until 1/19/09.

• 1/21/09 - Man answered, but would not take message, told Agent to call back next week. Sent another email to Reid.

• 2/3/09 - Left message with Secretary.

• 3/13/09 - Divorce still isn’t final. Reid will talk with Stacy and see if she will sign a lease. He will call.


• 3/24/09 - Reid called. Stacy refuses to sign lease.

RESUME OF EFFORTS



Timmons, Rick E. Oil & Gas Consultants, Inc.

• 1/12/09 - Searched public records for contact info. Called left message.


• 1/15/09 - Found business phone number and email address. Emailed lease packet

• 1/23/09 - Letter returned as undeliverable.


• 2/24/09 - Left message and sent follow-up email.

• 2/25/09 - Mr. Timmons emailed asking for the lease packet to be re-sent, he had accidently deleted the previous email.



• 3/23/09 - Left message and emailed Mr. Timmons asking for status of lease.

242-2009-04 - arkansas oil and gas commission applications archive/2009... · 2013-05-22 · resume...

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