STATE BID RESULTS - ShreveportTimes.com
Shreveport draws $4.2M for mineral leases
DeSoto awaiting results.
From Staff Reports
Shreveport officials have just learned the city drew almost $4.2 million in lease bonus payments during today’s state mineral rights auction.
Cypress Drilling bid $8,700 each for 478 acres. That's more than twice the $4,000 bonus rate the city sought. The city had 740 acres out to bid. Shreveport also got a 25 percent royalty rate for any minerals extracted.
The city expects to receive Cypress to cut a $4.2 million check within a week.
Beyond the bonus payment, Cypress agreed to pay more than $2 million per year if they don’t drill on the property in the next three years – an incentive to find natural gas. That would come out to an extra $6 million if nothing is extracted.
DeSoto Parish police jurors also hope to reap another bonus from the Haynesville Shale leases. Property in and around the Mundy Landfill on U.S. Highway 84 east of Mansfield, estimated at 147.05 acres, is up for bid.
The Police Jury set a $7,500 an acre minimum and 25 percent royalty. That could mean more than $1.1 million for the parish bank account.
The city of Mansfield had 5 acres on the bid list, but that property was removed. No minimum per acre was requested. But the minimum royalty was set at 25 percent.
The sale also could pump more revenue into the state’s coffers. Assorted state-owned land in Caddo, Bossier, Bienville, DeSoto and Red River parishes are being offered for lease.
And the Louisiana Department of Wildlife and Fisheries is seeking leasing interest in three tracts it owns in the Bayou Pierre Wildlife Management Area in east DeSoto Parish.
DeSoto awaiting results.
From Staff Reports
Shreveport officials have just learned the city drew almost $4.2 million in lease bonus payments during today’s state mineral rights auction.
Cypress Drilling bid $8,700 each for 478 acres. That's more than twice the $4,000 bonus rate the city sought. The city had 740 acres out to bid. Shreveport also got a 25 percent royalty rate for any minerals extracted.
The city expects to receive Cypress to cut a $4.2 million check within a week.
Beyond the bonus payment, Cypress agreed to pay more than $2 million per year if they don’t drill on the property in the next three years – an incentive to find natural gas. That would come out to an extra $6 million if nothing is extracted.
DeSoto Parish police jurors also hope to reap another bonus from the Haynesville Shale leases. Property in and around the Mundy Landfill on U.S. Highway 84 east of Mansfield, estimated at 147.05 acres, is up for bid.
The Police Jury set a $7,500 an acre minimum and 25 percent royalty. That could mean more than $1.1 million for the parish bank account.
The city of Mansfield had 5 acres on the bid list, but that property was removed. No minimum per acre was requested. But the minimum royalty was set at 25 percent.
The sale also could pump more revenue into the state’s coffers. Assorted state-owned land in Caddo, Bossier, Bienville, DeSoto and Red River parishes are being offered for lease.
And the Louisiana Department of Wildlife and Fisheries is seeking leasing interest in three tracts it owns in the Bayou Pierre Wildlife Management Area in east DeSoto Parish.
Views: 39
Replies to This Discussion
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Permalink Reply by E & E on -
Just to add to the write up: Highest paid per acre was $12,214.00
Tract 41122
BOSSIER 11, 12, 13, 14, 18 T16N R10W, R11W - 33 acres
$12,214.00 per acre
25%
Rental $201,531.00
Tract 41125
CADDO, RED RIVER 1, 6 T14N R11W, R12W - 3 acres
$11,214.00 per acre
25%
Rental $16,821.00
Tract 41126
BIENVILLE, BOSSIER, RED RIVER 31, 32, 33, 4, 5, 6 T14N, T15N R10W - 4 acres
$11,214.00 per acre
25%
Rental $22,428.00
DE SOTO, RED RIVER 4, 9 T14N R12W - 1 acre
$11,214.00 per acre
25%
Rental $5,607.00
Tract 41129
DE SOTO, RED RIVER 28, 29 T13N R11W - 4 acres
$11,214.00 per acre
25%
Rental $22,428.00
Tract 41130
DE SOTO, RED RIVER 32, 4, 5 T12N, T13N R11W - 1 acre $11,214.00 per acre
25%
Rental $5,607.00
Tract 41160
DE SOTO 3, 4 T12N R12W 147.050
$11,214.00 per acre
25%
Rental $824,509.35
Earlene the barefooted UMO
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Permalink Reply by Cheerleader on
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Skip,
Do I understand correctly that the Lousiana rental is mandated by law, at 1/2 the bonus and is not negotiable?
Does Texas have any law reflecting rental amounts?
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Permalink Reply by Skip Peel - Mineral Consultant on
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Sorry guys. I am unable to answer the Texas questions. Cheerleader, if memory serves you are right about the rental. And the lease is for one year. The Baron is probably the member we should look to for the answers to your questions. I didn't have time to review the individual bids. I posted the article because I felt it supported improving lease values. E & E provided the break out of the individual bids for the NW. LA. tracts and I think they support my initial impression.
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Thanks Skip
The way I understand the rental, for the LA lease, is that the rental is paid, at the end of each anniversary year if the well is not drilled, in production etc. The rental itself is mandated by law. Have you heard of any rentals being paid monthly or is this all negotiable? Which part of the site can we find Baron??
Thanks
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Permalink Reply by Skip Peel - Mineral Consultant on
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The Baron will find us. LOL! I mean this thread. Or you can go the "Ya'll" at the top of the main page, click on it and then enter The Baron in the search box. The last time we discussed state leases it was in regard to Chesapeake choosing not to extend the original one year leases on Cross Lake acreage. Considering that they had spent summer 2008 type money on them, it was a surprise. If memory serves, CHK walked away from an ~ $20M investment. Of course if they had renewed it would have required an additional impressive sum.
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Permalink Reply by The_Baron on
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I found y'all.
To elaborate on State Leases: this applies to all leases given through the mineral board.
The "bonus" pays for the first year. All state leases are for three year terms, but have an annual rental due on the annerversiary date, IF the lease is not produceing or being activly drilled. I could go on for pages on the rules for paying delay rentals, but that is the gist of it.
The Rental is = to 1/2 of the bonus.
Once upon a time many leases with private citizens were for an annual rental, but now "paid up leases" are more common, simply because of two reasons: 1) landowners like to get money up front, 2) O&G companies like the simpler terms, they may have hundreds or thousands of leases to keep up with.
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Permalink Reply by Dion Warr, CPL on
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Baron:
Once upon a time?! It still happens quite a bit in S LA...
Many O&G companies do value the paid-up leases, as the lease tracking and overall maintenance expenses are greatly reduced particularly as to manhours, postage / certified mail expenses.
Another 'hidden' value is the ease of taking paid-up leases is O&G's advantage in conveying prospects to other companies without having to address such lease maintenance issues. It is much less likely for companies involved in acquisitions to lose leases due to improper lease maintenance during the transaction and due diligence period if it is pretty much a 'known' that a certain prospect area is leased through say, May 2011, without the need to drill or pay rentals, in areas in which leases which have been taken throughout an extended period (e.g., leasing over a couple of years). Many A&D transactions can take a few months to complete, and rental payments must be maintained during the period of transfer between Party A and Party B irrespective of the subsequent conveyances lest the lease(s) be lost.
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Permalink Reply by The_Baron on
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I admit my experiance in South LA is limited. As it has been said many times before on GHS, its a whole other world in south LA.
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Permalink Reply by JHH on
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Can anyone provide information about:
1. Cypress Drilling..
2. Where is the land? City parks, airports, undeveloped land... near neighborhoods?
3. Difficulty of drilling near developed areas?
4. Is there pipeline infrastructure to get the gas out?
5. Specific regulations/permits to be met because it is public property?
6. is the property one large chunk... or tracks spread out all over the city?
6a. Will someone post the lease?
6b. Other questions to come as needed
thanks in advance for any information.
jhh
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Permalink Reply by Skip Peel - Mineral Consultant on
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JHH. Your asking someone to do a lot of research here. I don't have time but I'll give you a couple of links to get you started.
http://reports.dnr.state.la.us/reports/rwservlet?
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Permalink Reply by Skip Peel - Mineral Consultant on
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