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Permalink Reply by Wilma Watts on November 8, 2009 at 10:26

I have a few acres about a mile from the Kardell well that I might lease. Anyone have any idea what things are going for bonus and royalty wise?

Just curious. Thanks for any feedback.

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Permalink Reply by Cheerleader on November 8, 2009 at 10:58

Wilma,
Leasing in San Augustine is a new game considering the presence of the Kardell well and the vigor that Devon is showing with the new lease applications. The SA courthouse is swarming with landmen. The other OGs will follow Devon's lead. A range of $10,000.00 to $15,000 is not at all unreasonable. SA county has the largest and most prolific well in the Haynesville. The bonus should be comparable to the best bonus offer in Louisiana. Accepting $10,000.00-$15,000 per acre is a gift to the OG. In the next year you will be able to get more. Never any less that 25% royalty. I thought I saw recently on this web site that Sabine Parish had received a 30% royalty.

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Permalink Reply by Bill Williams on November 8, 2009 at 11:10

i'm trying to post from a blackberry, so the one I posted awhile ago may be buried in the discussion..but isn't it true that the Haynesville shale gets much thinner south of San Augustine? That's what I'm hearing through the grapevine and that the Kardell is considered the southern limit. I'm told there is Haynesville gas south of town towards 103 but that it's deeper and the shale thin in comparison to Kardell area. Somebody told me that South of S.A., if explored and produced, will get done when all else is played out. So is this boom just about north county? would be great to hear some opinions here because you never know what to trust hearing things from somebody that heard it from somebody else. But this somebody told me they heard it's common knowledge that it thins out (all the o and g companies' common knowledge that is.

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Permalink Reply by jffree1 on November 8, 2009 at 12:05

Why do you suppose Devon moved into Sabine County last summer making initial offers of 5K and 25%? Do you suppose that they were foolish enough to throw all that money around knowing that the shale was less prospective as you say you heard (for whatever that's worth)? Devon is the "old man" of shale producers. I don't believe they are that foolish. Not for a minute. The clock is running on those leases, tick tock.

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Permalink Reply by JWC on November 8, 2009 at 12:08

I am certainly no Geologist but when all of this started there was a lot of talk about SA not being in the play because it was to far South and the Shale thinned so Shelby county was considered the southern part of the play. Looks like that theory is blown. I do believe the Shale is deeper in SA but after a well like the Kardell do you think it would thin that quickly. 103 is about 8 or 9 miles south of the Kardell and there has been a lot of land leased down there (for 5k and acre) and it has been leased for over a year now so I wouldn't think they would let those leases expire. I look for them to try and tie up some units down there. I guess if I was in the O&G business I would be trying to make some comments that might keep the lease bonuses from sky rocketing....jmo. Time will surely tell. This play is still young.

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Permalink Reply by jffree1 on November 8, 2009 at 12:38

"I guess if I was in the O&G business I would be trying to make some comments that might keep the lease bonuses from sky rocketing....jmo. Time will surely tell."

No, doubt! And time will tell... They are not going to go knocking on doors where they "think" the prospects might be good... unless they already have a real good idea that the prospects WILL be good.
Wildcatting is pretty sophisticated these days (I hear) and Haynesville wells are VERY expensive. I don't think they throw darts at maps on the wall anymore. So, if one of the known shale operators in the area makes you an offer it is because they think the land is a) prospective for a good well or b) they can flip it to a smaller operator who may have to be satisfied to be on the fringes.
I have only heard of one well that was deemed a "bad" well in the Haynesville by it's operator. That was way up in the north in Harrison County. Rumor is, there are no dry holes in the Haynesville... only less, or more, economic wells. Time will tell so everyone should relax and get ready to wait some more.

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Permalink Reply by Bill Williams on November 8, 2009 at 14:39

Excellent point. And I realize now you weren't implying that I was an oil and gas company--at first I thought that's what you meant. it just sucked hearing that when, like you said, 103 is just 8 miles away.

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Permalink Reply by Bill Williams on November 8, 2009 at 14:34

I'm not in the oil business. 2 or so years ago I leased my minerals down around 96 and 103 for practically nothing. Then the otger day somebody told me about the shale being thin down there. All I really want to hear is that's a load of BS and there's proof otherwise. I don't want to sit 10 feet from a goldrush and feel like a stooge. No--if I were in the oil busoness I wouldn't admit to being so ignorant.

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Permalink Reply by jffree1 on November 8, 2009 at 15:06

Bill, It's going to take time. Try not to listen to rumors and speculation. It only makes you fret and worry about something you have little or no control over.

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Permalink Reply by JWC on November 9, 2009 at 0:43

Good point jffree1. I think as they move South there will be a lot of rumors and speculation. Keep up with the well results that is what tells the tale.

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Permalink Reply by Wilma Watts on November 8, 2009 at 13:51

Thanks Cheerleader.

Here is something to ponder.

Just a thought. Crimson (CXPO) has 12,000 acres in the San Augustine prospect. Most of the leases have 2 years left on the 3 year term.

After the Kardell well if leases fo for $7,500 an acre CXPO's acreage might sell for $5,000 an acre with 2 years left.

Value of CXPO's haynesville leasehold alone would be $60 million. Market cap of the entire company is $50 million.

Something in my calculation does not add up. But I know Chesapeake makes a killing re-selling leasehold positions to third parties. Maybe CXPO will also. Then again, maybe they will lease my lands. Or Devon for that matter, I like the DVN folks, they know their stuff.

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Permalink Reply by Cheerleader on November 8, 2009 at 18:38

Wilma,
Is the term "San Augustine prospect" terminology for the totality of Crimson's acreage in SA county?? Or is this 12,000 acres in a particular area of San Augustine County?? How far north, in SA County, does Crimson's leasehold extend??
Thanks

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