Austin Chalk leasing in Louisiana
Question:
All of the large acreage landowners surrounding a small (150 acre) local subdivision in north central West Feliciana Parish have been leased since before Christmas to as recently as week before last. A few small acreage landowners in the 150 acre subdivision also recently leased with EOG ( within last 3 weeks) and several had appointments to sign leases. Suddenly about 2 weeks ago the subdivision acreage holders whose lease signing appointments were pending were called by the leasing agent who cancelled these lease signing appointments and no one has heard from them since. The reason given was that EOG was reassessing the boundaries? Surely, the geology hasn't changed and at least 2 pending leases of large acreage owners in the vicinity of the subdivision were finalized after the smaller acreage appointments were cancelled.
The landowners who did execute lease are now wondering whether their bonus checks are going to arrive.
Why cancel pending lease signings on acreage in the dead center of an already large leased acreage block with the excuse of boundary reevaluation? I could understand if the subdivision was located on the edge of the previously leased acreage block, but not in the middle of it. All the surrounding acreage is either leased by EOG or Conoco Phillips at rates from $600 to $1300 per acre bonus and 20% royalty. Most recently(in the past 2 weeks) $900 per acre - both small and large landowners getting the same deal. The subdivision appears located in the proximity of the boundary between acreage leased by Conoco Phillips on the south side and EOG on the north side.
Anyone care to speculate on what's going on?
Views: 6362
Replies to This Discussion
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Permalink Reply by Bob Zimmerman on -
I will speculate. The Austin Chalk has been spudded from West Texas to somewhere east of Baton Rouge, LA. By now geologists have a clear understanding of the AC's variable characteristics as to how drilling and production might fare in any given sector. Where the leasing money is more/acre, the AC may be considered more prospective on this basis alone.
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Permalink Reply by John Lann on
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My family has 200 acres in northern East Baton Rouge Parish. Our first offer was the first week of Jan. another 2 weeks later and another a week later. Another called to see if we would lease but never offered. Two of the companies kept raising their offers. We accept the highest a week ago and will sign this Friday. My cousin (85 acres) has already signed with the same company and received their check. If it is OK to share more details, I will post them later after two or three have said it is OK.
John Lann EBR Parish
March 20, 2018
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Permalink Reply by Skip Peel - Mineral Consultant on -
John, you, nor any other private land owner, has anything to fear from sharing lease offer terms as long as you are not bound by a non-disclosure agreement if you are dealing with reputable companies. As long as you are giving an approximate location and acreage size then you are providing the proper context for others who are considering or anticipating a lease offer. GHS is all about empowering mineral owners by sharing knowledge and explaining how the arcane business of leasing and developing minerals works. Thanks for your input.
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Permalink Reply by John Matherne on
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Well said Skip Peel
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Permalink Reply by Andrew on
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The information posted by John Lann earlier in this thread is some of the best intel on leasing I have seen on GHS, going all the way back to the heady days of the Haynesville Shale leasing frenzy. I hope other owners with knowledge of what is going on in their area will follow Mr. Lann's example and share what they know with others on this forum.
Knowledge is power, and when mineral owners work together, everyone wins.
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Permalink Reply by Charles Jenkins on
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In response to the first paragraph of Steve's post (above) I am told that signed leases on significant tracts in West Feliciana have been cancelled. Unlike my experience in the Haynesville, apparently proceeds are not given over at the time of signing. Admittedly, my experience is limited to the Haynesville but even so, this sounds off to me. Are the landmen doing these leases attempting to flip the leases? Could be, but the guys so have contacted me say they are working for one of the two large companies involved. I have yet to see the proposed lease so I do not know the answer to my question. I do not like the idea of minerals being tied up for a time and then cancelled. This is certainly a different process than what I experienced in the Haynesville Shale. Then again, perhaps I misheard the land owner with whom I spoke. Has anyone knowledge of this?
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Permalink Reply by Skip Peel - Mineral Consultant on
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Charles, signed by who? I have never heard of an O&G lease being "cancelled". Upon request of the lessor a lessee may "release" a lease but the common occurrence is that the leases remain in effect even if the original company no longer has intent to develop. There is money invested and there may be other instances of development interest occurring prior to the lease expiration date.
Proceeds come in different forms. More often than not lessees want to use a bank draft. Those are not valid funds until presented to the bank for payment. When you sign a lease you are "tied up" for the primary term at the minimum. The Haynesville Shale is a poor standard for how a lease program should be run.
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Permalink Reply by Steve on
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I had a lease signing appointment cancelled 2 weeks ago by Border Exploration LLC of Lafayette who said they represented EOG. Others around me did also, but these were merely appointments to sign after we had accepted verbally.
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Permalink Reply by Skip Peel - Mineral Consultant on
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That's not uncommon. There are a number of ways to go about offering and executing a lease. Verbal agreements are not binding. And landmen get pulled off one lease block to concentrate on another from time to time. I have a friend who was contacted several times by a landman working for COP months ago but was never presented with an actual lease. Then EOG came along and made an offer, followed up with an executable lease and signed my friend. The COP landman contacted him last week and was disappointed to find that he had leased to EOG.
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Permalink Reply by David Crockett on
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Skip the part that I am seeing is that no money is handed over at the time of signing. The company probably says they need time to verify ownership, etc. then they say they will pay after x number of days. So no money has changed hands at time of signing.
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Permalink Reply by Skip Peel - Mineral Consultant on
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You guys need to ask if you are getting a "check" or a "bank draft".
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