Replies to This Discussion

Permalink Reply by The_Baron on February 9, 2011 at 9:59

look at all the no bids... could the land boom be coming to an end?

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Permalink Reply by Skip Peel - Mineral Consultant on February 9, 2011 at 10:29

I find it especially interesting that neither Chesapeake nor Petrohawk made bids for the 17N -15 & 16W and 16N - 14W tracts.  Both 17N - 15W and 16N - 14W have unit orders for 33 out of 36 sections.

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Permalink Reply by The_Baron on February 9, 2011 at 10:40

I think they simply do not want to pay the minimum bids.

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Permalink Reply by Skip Peel - Mineral Consultant on February 9, 2011 at 10:43

Any idea of the minimum bid amount?

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Permalink Reply by CypressKnees on February 9, 2011 at 10:45

What does it usually imply when there are "no bids" and why might CHK and PetroHawk not be interested in those specific tracts?

I'm lost in the subtleties.

Thanks-

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Permalink Reply by Skip Peel - Mineral Consultant on February 9, 2011 at 11:00

There are generally two ways that publicly owned mineral tracts come to be included in a state auction.  1) A company can request a governmental entity  place certain acreage in the auction.  This is called nominating and may entail some discussion concerning what the company is willing to bid.  2) The governmental entity can place a mineral tract in the auction without a nomination and set the minimum acceptable bid terms.  A tract not receiving a bid indicates that the minimum bid was too high or that there is no interest by any company in leasing that tract at that time.  The state bonus paid secures the development rights for only one year.  To continue the lease in force without drilling would require a second year payment one half of the first.  In the last bid listed, if Comstock did not drill the lease in the first year, they would have to pay the $10,500 for a second year extension.

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Permalink Reply by Two Dogs, Pirate on February 9, 2011 at 11:49

There will not be another payment made in 36-8-14. The locals leases start to run out on 3-29-2011. You can bet that Comstock is sitting on go to turn the bit in the ground in the next few weeks.

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Permalink Reply by Mattie on February 11, 2011 at 5:00

Skip,

 

On the lack of bids by CHK and HK, I find it interesting as well - considering that CHK is currently drilling at least 1-2 wells offsetting the sections described above in 17N-15W, it can only be assumed that the minimum bid requirement is still considered by CHK as being too high for this area - I saw where there was dialogue in another thread where CHK suggested a floor price of $6k/acre in Southern Desoto PH, so I assume they may be going thru the same motions with the State of LA in other areas such as this - otherwise, the only thing I can assume is that they have some leeway on lease expirations in this area (2-yr extensions) that allow them to hold off for another 1-2 years before drilling.  Completion reports in the area haven't been great, but 6-8,000/day is nothing to snear at, either.  So, it must be one of the above issues that caused there to be "no bid" .   THIS, or they simply dropped the ball while focused on other "more prime" areas. 

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Permalink Reply by Skip Peel - Mineral Consultant on February 11, 2011 at 5:08

Mattie, the real significance behind the lack of bids is whether the tracts were nominated or the parish just placed them in the auction to see if they could garner a bid that met their minimum offer.  I suspect that the parish was behind the tract being included in the auction and required what they thought was a reasonable bonus based on past bids.  I think you are likely correct that Chesapeake is sending the message that they are no longer willing to pay the previous bonus range.  I don't have time to look it up at the moment but the database does contain notations of the company nominating the bid tract.

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Permalink Reply by Mattie on February 11, 2011 at 5:42

Not sure, but will monitor on my end and get back if there is any additional information.

 

FYI, had lunch with our old mutual friend Jaybird (doing an pipeline asset sale with him) earlier this week in NW Oklahoma - we revisited the "frog gigging" night in Shreveport 30+ years ago - remember that?  Good ole times for sure. 

I'll drop you a line sometime on a private email.  We need to catch up soon - was hoping to make it to Shreveport for Herman Williamson's funeral today, but work and weather didn't permit - one of my favorite people. 

 

 

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Permalink Reply by Skip Peel - Mineral Consultant on February 11, 2011 at 5:49

You have an excellent memory!  LOL!  Give Jaybird my regards.

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Permalink Reply by Mattie on February 11, 2011 at 6:02

Hard to forget with the drama at Thrifty "before" the hunt!!   LOL!!

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