224-2009-04 Applications Archive/2009... · 2009-04-06 · 224-2009-04 Application of SEECO, Inc. for Integration of All Unleased Mineral Interests and Non-consenting Working Interests

JERRY L. CANFIELD, P.A.

THOMAS A. DAILY, P.A.

WYMAN R. WAD E, JR. , P.A.

DOUGLAS M. CARSON, P.A.

ROBERT R. BRIGGS, P.A. † *

C . MICHAEL DAILY †

COBY W. LOGAN

L. MA TTHEW DAV IS

* Fayetteville Office

† Also Licensed in Oklahoma

DAILY & WOODSA PROFESSIONAL LIMITED LIABILITY COMPANY

ATTORNEYS AT LAW

KMW BUILDING58 SOUTH SIXTH STREET

P.O. BOX 1446FORT SMITH, AR 72902

TELEPHONE (479) 782-0361FAX (479) 782-6160

______________

3538 N. HIGHWAY 112, SUITE 200FAYETTEVILLE, AR 72703TELEPHONE (479) 582-0361

FAX (479) 251-8111

JAMES E. WEST

PHILLIP J. NORV ELL *

DALE CARLTON *

OF COUNSEL

_______

HARRY P. DA ILY (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. 224-2009-04

Application of SEECO, Inc. for Integration of All Unleased Mineral Interests andNon-consenting Working Interests in a unit described as Section 20, Township 9North, Range 16 West, Conway County, Arkansas

Commissioners:

SEECO, Inc., 2350 N. Sam Houston Parkway E, Houston, TX 77032, 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-43. Applicant proposes to drill ahorizontal well from a non-exceptional surface location in the Northwest Quarter downto a non-exceptional bottom hole location in the Northeast Quarter of the above-described unit. The proposed well will be drilled to a total vertical depth of 2,801 feet totest the Fayetteville Shale Formation. Applicant has obtained one or more oil and gasleases 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 inthe 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 saiddrilling unit; that those owners have been offered an opportunity to participate in theproposed well; that they have been offered a fair and reasonable bonus considerationfor the execution of an oil and gas lease covering their interests; that they have beenfurnished with a proposed oil and gas lease and a copy of the AAPL operatingagreement form which applicant proposes to use in connection with the drilling of saidwell; but that all of the efforts of the applicant have produced no agreement by saidparties.

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$1,000.00 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 a1/8 royalty on oil and gas.

(b) Each of the owners of the unleased mineral interests indicatedabove execute and deliver to applicant a one year oil and gaslease, on an AAPL lease form, for a bonus consideration of$850.00 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 a3/16 royalty on oil and gas.

(c) 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.

(d) 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 $1,000.00 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 1/8.

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 arisk factor penalty be bound by the terms of the attached AAPL Operating Agreementfor the life of commercial production within the unit so that all future unit operationsmight be proposed pursuant to the provisions of such agreement without the necessityof future action 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

Thompson 09-16 #1-20H Section 20 – T9N – R16W Conway County, Arkansas

EXHIBIT A

INTERESTED PARTIES

Page 1 of 2

MINERAL OWNERS

Bradford, Kent See Page 1 of Exhibit B

Bradford, Minnie Lou See Page 2 of Exhibit B

Bradford, Pauline, Heirs See Page 3 of Exhibit B

Bradford, W. F., Jr., Heirs See Page 4 of Exhibit B

Brents, Guerin R., Jr. and Ann Brents See Page 5 of Exhibit B

Bryant, Junior See Page 6 of Exhibit B

Bynum, Hazel Marie, Heirs See Page 7 of Exhibit B Gotovac, Robert, Jr. and Debra Marie Gotovac, Trustees of the Alice P. Johnson Testamentary Trust See Page 8 of Exhibit B Gotovac, Robert, Jr. and Debra Marie Gotovac, Trustees of the Ann P. Dubbs Testamentary Trust See Page 9 of Exhibit B Knighten, M. B., as Trustee of the G. H. Bradford Trust or its successors See Page 10 of Exhibit B

Wallace, Earline aka Earlean Sullivan See Page 11 of Exhibit B

XTO Energy, Inc. See Page 15 of Exhibit B

WORKING INTEREST OWNERS:

BP America Production Company See Page 12 of Exhibit B

Chesapeake Exploration, L. L. C. See Page 13 of Exhibit B


EXHIBIT A

INTERESTED PARTIES

Page 2 of 2

Petrohawk Properties, LP See Page 14 of Exhibit B

XTO Energy, Inc. See Page 15 of Exhibit B


EXHIBIT B

RESUME OF EFFORTS TO LEASE

Kent Bradford February 15, 2009 Searched office records for owner’s contact information. Located an

address in care of Bradford Leasing Co. Searched internet for phone listing. Nothing found. Mailed lease proposal letter.

February 28, 2009 Expanded internet search. Found a possible phone listing. Called, left a

message. March 3, 2009 Spoke with Kent Bradford. He handles all mineral interest for the

Bradford family through his company Bradford Leasing. He will check his records and call back.

March 4, 2009 Spoke with Mr. Bradford. He agreed to lease for the family through

Bradford Leasing Co. Leases and related documents being prepared. March 11, 2009 During documents preparation, a title issue was noticed. In 1981, all

family minerals were conveyed to Bradford Leasing. However, this section was not included in that conveyance. Spoke with Kent Bradford, who said he would do some research and decide how to resolve this problem.

March 16, 2009 Called Mr. Bradford, left message after several tries. March 21, 2009 Spoke with Mr. Bradford. He has not had time to re-file the partnership

documents to include this section. He said to send leases individually for him and his mother, Minnie Lou Bradford (See page 2 of Exhibit B). Leases and related documents being prepared.

March 30, 2009 Lease and related documents mailed. April 7, 2009 Well proposal letter and AFE mailed.

Page 1 of 15


EXHIBIT B


Minnie Lou Bradford February 15, 2009 Searched office records for owner’s contact information. Located an



message. March 3, 2009 Spoke with Kent Bradford (See Page 1 of Exhibit B), Minnie Lou

Bradford’s son. He handles all mineral interest for the Bradford family through his company Bradford Leasing. He will check his records and call back.



family minerals were conveyed to Bradford Leasing. However, this section was not included in that conveyance. Spoke with Kent Bradford, who said he would do some research and decide how to resolve this problem.


documents to include this section. He said to send leases individually for him and his mother, Minnie Lou Bradford. Leases and related documents being prepared.

March 30, 2009 Lease and related documents mailed. April 7, 2009 Well proposal letter and AFE mailed.

Page 2 of 15


EXHIBIT B


Pauline Bradford, Heirs Kent Bradford See Page 1 of Exhibit B Minnie Lou Bradford See Page 2 of Exhibit B

Page 3 of 15


EXHIBIT B


W. F. Bradford, Jr., Heirs Kent Bradford See Page 1 of Exhibit B Minnie Lou Bradford See Page 2 of Exhibit B

Page 4 of 15


EXHIBIT B


Guerin R. Brents, Jr. and Ann Brents January 16, 2009 Located a phone number for owner from office files. Called owner, left a

message. January 19, 2009 Called, spoke with Mrs. Brents. She said she will speak with her husband. January 27, 2009 Called, spoke with Mr. Brents. Discussed lease terms. He will consider

offer. February 2, 2009 Called owner, no answer. No voice mail or answering machine. February 9, 2009 Called again, still no answer. February 11, 2009 Called again, still no answer. February 13, 2009 Spoke with Kenneth Brents, owner’s brother. He will ask Guerin to call. February 25, 2009 Called again, still no answer. Mailed lease proposal letter. March 5, 2009 Spoke with owner. He agreed to lease. Lease and related documents

being prepared. March 9, 2009 Lease and related documents mailed. March 16, 2009 Spoke with Mr. Brents regarding the lease documents. He received them

and will execute them soon. March 23, 2009 No executed documents received to date. Called Mr. Brents, no answer. April 7, 2009 Well proposal letter and AFE mailed.

Page 5 of 15


EXHIBIT B


Junior Bryant Junior Bryant obtained both the surface and minerals by instrument recorded in Book 237 at page 141 and also in Book 240 at page 586. The instrument was dated May 24, 1999 but was not recorded until November 4, 2006 and re-recorded at a date in 2007. J. C. Williams, the former owner of the surface and minerals leased this interest to David H. Arrington Oil and Gas, Inc. (see Pages 12 and 13 of Exhibit B) on October 10, 2006. Since it is obvious that the conveyance between Williams and Bryant was recorded after the Oil and Gas lease, the lease stands as valid. Therefore, this interest is being named for protection purposes. February 15, 2009 Located a phone number for owner. Called, discussed lease terms with

Mr. Bryant. He said our terms were unacceptable. February 23, 2009 Called owner, left message after several attempts. February 26, 2009 Spoke with owner. Increased terms. He will consider offer. March 2, 2009 Received title opinion from attorney and discovered the above mentioned

title problem. Spoke with Junior Bryant about the title issue. He stated that he was unaware of the lease between J. C. Williams and David H. Arrington Oil & Gas, Inc.

April 7, 2009 Well proposal letter and AFE mailed.

Page 6 of 15


EXHIBIT B


Hazel Marie Bynum, Heirs All the known heirs of Hazel Marie Bynum have leased their interest to Chesapeake Exploration, L. L. C.(See pages 12 and 13 of Exhibit B), who assigned an undivided interest to BP America Production Company. Heirship has not been confirmed by heirship affidavit or judicial probate. Therefore, this interest is being named for protection purposes. April 7, 2009 Well proposal letter and AFE mailed to Hazel Marie Bynum, Heirs in care

of Brent Bynum.

Page 7 of 15


EXHIBIT B


Robert Gotovac, Jr. and Debra Marie Gotovac, Trustees of the Alice P. Johnson Testamentary Trust February 10, 2009 Owners have leased with us in the past. Obtained contact information

from office files. Called and left a message for Robert Gotovac, Jr. to call. Mailed lease proposal letter.

February 19, 2009 Called again and left a message for Robert Gotovac, Jr. March 2, 2009 Received an email from Robert Gotovac, Jr. asking that we please call

Debra Gotovac. He thought she had received a higher offer from a third party. Called Debra and left a message after several attempts.

March 5, 2009 Spoke with Debra Gotovac. She said she had received a higher offer and

would probably take that offer. Explained to her that our offer could not be increased. She will speak with her brother, Robert, and will call back.

March 19, 2009 Tried to call Debra Gotovac. Left a message for her to call. March 25, 2009 Spoke with Debra. They have agreed to lease. Lease and related

documents being prepared. March 26, 2009 Lease and related documents mailed. April 7, 2009 Well proposal letter and AFE mailed.

Page 8 of 15


EXHIBIT B


Robert Gotovac, Jr. and Debra Marie Gotovac, Trustees of the Ann P. Dubbs Testamentary Trust February 10, 2009 Owners have leased with us in the past. Obtained contact information

from office files. Called and left a message for Robert Gotovac, Jr. to call. Mailed lease proposal letter.

February 19, 2009 Called again and left a message for Robert Gotovac, Jr. March 2, 2009 Received an email from Robert Gotovac, Jr. asking that we please call

Debra Gotovac. He thought she had received a higher offer from a third party. Called Debra and left a message after several attempts.

March 5, 2009 Spoke with Debra Gotovac. She said she had received a higher offer and

would probably take that offer. Explained to her that our offer could not be increased. She will speak with her brother, Robert, and will call back.

March 19, 2009 Tried to call Debra Gotovac. Left a message for her to call. March 25, 2009 Spoke with Debra. They have agreed to lease. Lease and related

documents being prepared. March 26, 2009 Lease and related documents mailed. April 7, 2009 Well proposal letter and AFE mailed.

Page 9 of 15


EXHIBIT B


M. B. Knighten, as Trustee of the G. H. Bradford Trust or its successors February 15, 2009 Searched office records for owner’s contact information. Located an



message. March 3, 2009 Spoke with Kent Bradford. G. H. Bradford was his uncle. He handles all

mineral interest for the Bradford family through his company Bradford Leasing. He will check his records and call back.



family minerals were conveyed to Bradford Leasing. However, this section was not included in that conveyance. Spoke with Kent Bradford, who said he would do some research and decided how to resolve this problem.


documents to include this section. He said he was trying to find the paperwork extinguishing the trust, but had not found it yet. According to G. H. Bradford’s will, all of Mr. Bradford’s estate went into his trust to take care of his wife and his son, Eugene Hubert Bradford. After the death of his wife and son, the interest went to M. B. Knighten or his heirs if he was deceased. According to Kent Bradford, Mr. Knighten is deceased. It appears that the heirs of M. B. Knighten now own this interest. He will try to locate heirship information for Mr. Knighten and proof of death information for Eugene Hubert Bradford.

April 7, 2009 Well proposal letter and AFE mailed in care of Kent Bradford.

Page 10 of 15


EXHIBIT B


Earline Wallace aka Earlean Sullivan February 15, 2009 Located contact information from office records. Called, left message

after several tries. February 19, 2009 Spoke with owner’s husband. He said he would leave a message for his

wife to call. February 21, 2009 No return call from owner. Called again, left message after several tries. February 23, 2009 Spoke with owner. She asked for the offer in writing. Mailed lease

proposal letter. March 3, 2009 Spoke with Mr. Sullivan. They received the proposal letter. They need a

few days to discuss it. March 7, 2009 Called owner, left message. March 9, 2009 Spoke with Mrs. Sullivan. She wants to speak with an attorney. She is

unsure about leasing. March 16, 2009 Called owner, left message after several attempts. March 18, 2009 Called owner again, left message after several attempts. March 26, 2009 Status unchanged. Still no return call from owner. Called again and left a

message. Unable to communicate with owner. April 7, 2009 Well proposal letter and AFE mailed.

Page 11 of 15


EXHIBIT B


BP America Production Company BP America Production Company owns a working interest in the following Oil & Gas leases recorded in Conway County, Arkansas:

1) Panhandle Royalty Company to Chesapeake Exploration Limited Partnership dated June 1, 2005 and recorded in Oil & Gas book 117 at page 48.

2) J. C. Williams to David H. Arrington Oil & Gas, Inc. dated October 10, 2006 and

recorded in Oil & Gas book 135 at page 316. 3) James Lynn Wells aka James L. Wells and Belinda E. Wells aka Belinda Wells to

Chesapeake Exploration Limited Partnership dated April 26, 2007 and recorded in Oil & Gas book 149 at page 357.

4) Brents Bynum to SKH Energy Fund, L. P. dated December 14, 2004 and recorded in

Oil & Gas book 99 at page 183. (Extended January 21, 2008 and recorded in Oil & Gas Book 158 at page 444)

5) Carl R. Brents to SKH Energy Fund, L. P. dated December 15, 2004 and recorded in


6) Sharon Marie Erwin to SKH Energy Fund, L. P. dated December 14, 2004 and

recorded in Oil & Gas book 99 at page 174. (Extended January 21, 2008 and recorded in Oil & Gas Book 158 at page 444.)

7) Loyd R. and Joyce Irene Brents Revocable Trust #1 to SKH Energy Fund, L. P. dated

December 13, 2004 and recorded in Oil & Gas book 99 at page 177. (Extended January 21, 2008 and recorded in Oil & Gas Book 158 at page 444.)

Chesapeake Exploration, L. L. C. assigned an undivided interest to BP America Production Company. Said assignment is effective July 1, 2008 and recorded in Oil & Gas book 171 at page 610. March 27, 2009 Well proposal letter and AFE mailed.

Page 12 of 15


EXHIBIT B


Chesapeake Exploration, L. L. C. Chesapeake Exploration, L. L. C. owns a working interest in the following Oil & Gas leases recorded in Conway County, Arkansas:

1) Panhandle Royalty Company to Chesapeake Exploration Limited Partnership dated June 1, 2005 and recorded in Oil & Gas book 117 at page 48.

2) J. C. Williams to David H. Arrington Oil & Gas, Inc. dated October 10, 2006 and

recorded in Oil & Gas book 135 at page 316. 3) James Lynn Wells aka James L. Wells and Belinda E. Wells aka Belinda Wells to

Chesapeake Exploration Limited Partnership dated April 26, 2007 and recorded in Oil & Gas book 149 at page 357.

4) Brents Bynum to SKH Energy Fund, L. P. dated December 14, 2004 and recorded in


5) Carl R. Brents to SKH Energy Fund, L. P. dated December 15, 2004 and recorded in


6) Sharon Marie Erwin to SKH Energy Fund, L. P. dated December 14, 2004 and

recorded in Oil & Gas book 99 at page 174. (Extended January 21, 2008 and recorded in Oil & Gas Book 158 at page 444)

7) Loyd R. and Joyce Irene Brents Revocable Trust #1 to SKH Energy Fund, L. P. dated

December 13, 2004 and recorded in Oil & Gas book 99 at page 177. (Extended January 21, 2008 and recorded in Oil & Gas Book 158 at page 444)

Chesapeake Exploration Limited Partnership, by Affidavit of Identity and Corporate Successorship, is now Chesapeake Exploration, L. L. C. effective August 6, 2007 and recorded in Oil & Gas book 151 at page 239. Through various assignments, Chesapeake owns an undivided interest in the above leases. March 27, 2009 Well proposal letter and AFE mailed.

Page 13 of 15


EXHIBIT B


Petrohawk Properties, LP Petrohawk Properties, LP owns a working interest in the following Oil & Gas leases recorded in Conway County, Arkansas:

1) Bill and Janice Jordan to Griffith Land Services, Inc. dated July 15, 2005 and recorded in Oil & Gas book 106 at page 1.

2) Charles Ezell to Griffith Land Services, Inc. dated July 20, 2005 and recorded in Oil

& Gas book 106 at page 90. 3) Larry Ezell to Griffith Land Services, Inc. dated July 25, 2005 and recorded in Oil &

Gas book 106 at page 101. 4) Robert Hoyt and Vivian Hoyt to Griffith Land Services, Inc. dated July 22, 2005 and

recorded in Oil & Gas book 106 at page 123. Through various assignments, these leases are now owned by Petrohawk Properties, LP. March 27, 2009 Well proposal letter and AFE mailed.

Page 14 of 15


EXHIBIT B


Page 15 of 15

XTO Energy, Inc. XTO Energy, Inc. owns a working interest in the following Oil & Gas lease recorded in Conway County:

1) Farmers Union Cooperative Royalty Company to Pathfinder Exploration, L. L. C. dated June 16, 2005 and recorded in Oil & Gas book 104 at page 84.

Through various assignments, this lease is now owned by XTO Energy, Inc. March 27, 2009 Well proposal letter and AFE mailed.

EXHIBIT “C”Applicant’s statement regarding Operating Agreement

The applicant requests incorporation of the Model Form Joint Operating Agreement

approved by the Arkansas Oil and Gas Commission on October 24, 2006, with Paragraph

III.1.A.(1) of the COPAS providing for a drilling well rate of $7,500.00 and a producing

well rate of $750.00 , and with the following proposed revisions, deletions and/or

insertions, if applicable:

NONE

Documents

224-2009-04 Applications Archive/2009... · 2009-04-06 · 224-2009-04 Application of SEECO, Inc. for Integration of All Unleased Mineral Interests and Non-consenting Working Interests