Eastern Section Meeting

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Leasing Issues Associated With the Concurrent Development of Multiple Horizons

Abstract

As more shale resources are found to be economically productive, there are opportunities to develop multiple strata in the same vertical column. In addition, conventional development of shallow strata continues within many of these same columns. This presentation will explore the emerging issues operators face when acquiring leases in these environments. For background, we will look at geographic areas where there is both conventional and unconventional development, as well as areas where there is unconventional development of multiple strata. This will include a look at stratigraphic maps for these areas. Next, we will discuss the difference in rental and bonus values when leasing all or part of the column, and the impact on rights of the associated surface area. Then specific lease clauses will be reviewed, with a focus on clauses that impact the operators, but also clauses that affect the owners of the surface, oil and/or gas rights. In some cases, there may be a separate owner for each of these three rights. Lastly, a practical approach to landowners will be discussed, with some tips on what to include and what to avoid.