Indigo making aggressive offers to purchase mineral rights.

I was recently contacted by a representative with Indigo, who I have current well contracts with. Two of the several wells have only been producing a few months. An initial offer was made, then he increased the offer by 20%, then offered an additional 33% when I seemed reluctant. Why would Indigo be so eager to increase their initial offer by 60%? I asked my O&G attorney what was going on up there but I haven’t been able to get much info. Anyone know if they are planning anything big in DeSoto?

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Hi Dion, 

I sent you a friend request so that I could send you a message. I believe it is still pending. Thanks! 

Renee:

As Skip aptly notes - I've been more out than in on GHS as of late.  I did note your friend request and accepted.  Please feel free to message me.

Renee Brown, Just FYI, when Dion Warr or anyone else for that matter, has the designation of CPL this is the meaning behind it:  

A CPL certification recognizes a landman as an expert in the landman industry, as well as his or her commitment to extensive land management education. Becoming a CPL is the most intensive, requiring either significant experience or a considerable combination of experience and education

Good to know. Thanks for the information! 

Renee, if you don't hear from Dion by Monday, check back and I'll give him a phone call to alert him to your friend request.  He stays busy and tends to come and go here on GHS.

Thanks so much, Skip. 

Have an undivided interest in about 13 acres (with no access) in Sec 18, 9/12, Sabine Parish (Mitchell area). One of the owners has been offered $10,500 for his interest which I estimate to be at most a 1/15th. This seems high to me and am wondering what is going on in the area to make this kind of offer realistic. 

The basic answer as to what is going on in your area is that the same is going on in many areas of the Haynesville/Bossier fairway.  There are no public record indications on the intent to drill any new wells in Section 18 at this time.  Both Vine and GEP Haynesville have been active in the area, are currently drilling wells in the township and there are plenty of older producing Haynesville wells to provide an idea of the rock quality.  It's a good area to own minerals.

Indigo has sold their interests to Southwestern Energy so it may be a while before we get an idea of how aggressive of a drilling program they will have.  Section 19 to the immediate south is/was an Indigo operated unit so the two line up nicely for the type of long lateral horizontal wells that all operators currently prioritize.  It is impossible to know the value of minerals without knowing the terms in a lease especially the royalty fraction.  An offer of $10,500 for less than an acre of mineral rights doesn't sound right even if the seller had a quarter royalty.  The price is way out of the ball park and the interest is so small.  This would be high even if there were one or more current well permits including Section 18.

Skip - Could this be part of the sudden increase in request to purchase interest that we have been seeing in San Augustine, Shelby and Rusk Counties as well? I had someone again call early in the morning here (05:00 A.M.) about my Family interest Production Wells and Interest in Quirk (A-35), E.M. Hagler (A- 449), M.C. Flourney (A-556), SPRR (A-607), SPRR (A-555), I&GRN RR (A-341) and SPRR (A-261) in San Augustine. All of these offers started last month and offers are becoming more aggressive, frequent and increasing in dollar offer amount. 

I Have started getting additional offers on other Wells, including some we believed to have been played out years ago, so I assume something is going to start happening in the near future... or someone is really rolling the dice out there! 

Bill, an increase in offers to purchase Haynesville Shale minerals has been obvious from the calls and emails I have been receiving for going on two plus months now.  Since I follow national media on natural gas, it was not a surprise.  Natural gas is back in favor largely because it is seen as having a longer productive life span than oil.  The increase in demand globally has been wide spread from pipeline volumes to Mexico to an increase in demand for LNG.  Companies that acquire mineral rights are now focused on natural gas with an emphasis on Haynesville/Bossier reserves due to low transportation costs owing to close proximity to multiple end users and another twenty-five to thirty years of recoverable reserves.

As to those played out wells, if they are the original unit well then they are holding somewhere around another five to eleven future (LA) wells that will likely be even more productive because of high intensity frac designs.  Since Texas drilling units are configured differently its harder to predict the number of future wells per unit there.

For those who are interested in selling some or all of their mineral rights, this would be a good time to do so.  I have advised a number of clients with large holdings that they should sell some portion of their rights every time the value spikes with the aim to be completely divested in the next ten to fifteen years.  Beyond that time frame it is impossible to know where national energy policy may take us.

The offer is for outright purchase of the land not just mineral rights. It struck me as so excessive that it raised suspicions. 

Does seem particularly strange considering the quite small acreage and the fact that the ownership is in undivided interest.

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