State leases are generally the last leases taken after operating companies have largely assembled their private leases.  At least one reason for this is that state leases are only effective for one year.  If not drilled in that time, the lessee must make an additional bonus payment to extend the lease and the extension is limited to one year.  After the second year passes an additional bonus payment is required and no state lease may have an effective period longer than three years.  Also of interest to mineral owners in the prospective area, state leases require a minimum quarter royalty.  We can revisit that in the future if the first wave of wells are economic.

The auction of June 10 will include 23 tracts in Rapides, Avoyelles and Evangeline parishes covering 1326 acres.  The number of tracts is actually more important than the total acreage because these state leases will fill in the missing pieces of the leasehold previously taken from private owners.  Traditionally the taking of state leases, particularly this many, signals the start of drilling programs.

So for all those member waiting to see well permits and rigs running on their lands, your wait is almost over.  Good luck to all.  Here we go.

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Thanks for posting these results.

Points to some near term drilling activity???

You're welcome, RM.  Operators tend to take state leases last prior to kicking off their drilling program.  There is a lot of acreage to be tested across central LA so there is no compelling reason to get into a land rush at this point.  I suspect that the tracts receiving successful bids will fill in where private leases do not cover lands about to see the bit.

Assume Banff Energy is brokerage firm working for major operator?

Yes.  That's the way bidding usually works.  The fact that COP has placed some bids is somewhat unusual.  A number of companies specialize in the state bid process.  There experience is valuable.  At some point in the future the bidder will file in the public record a conveyance to their client.  That's usually far enough after the fact that any of us paying close attention have already figured out the identity of the client.

Anyone know anything about  banff energy?

David, as I mention above it is usual for firms that specialize in the mineral auction to bid on behalf of clients.  So there is nothing of value to us associated with Banff Energy.  As with many land companies, they use a name that sounds like they might be something other than what they are.  It is easy to search for Banff Energy as an "operating company" registered with the state.  They aren't.  That means they have never drilled a well.  You can go to the SOS website and get some basic information but it's of little value.  Firms like Banff work for multiple clients and perform a number of services but they do not drill wells.

BANFF ENERGY, L.L.C. Limited Liability Company LAFAYETTE Active
Previous Names
Business: BANFF ENERGY, L.L.C.
Charter Number: 41040933K
Registration Date: 1/4/2013
Domicile Address
  113 ST. JAMES DRIVE
  LAFAYETTE, LA 70506
Mailing Address
  113 ST. JAMES DRIVE
  LAFAYETTE, LA 70506
Status
Status: Active
Annual Report Status: In Good Standing
File Date: 1/4/2013
Last Report Filed: 12/15/2017
Type: Limited Liability Company
Registered Agent(s)
Agent: CRAIG A. RYAN
Address 1: 1200 CAMELLIA BLVD., STE 300
City, State, Zip: LAFAYETTE, LA 70508
Appointment Date: 5/12/2016

Officer(s) Additional Officers: No 
Officer: JULIE H. INZERELLA
Title: Manager
Address 1: 113 ST. JAMES DRIVE
City, State, Zip: LAFAYETTE, LA 70506

Thank you Skip

You're welcome, David.  Banff, like most of the companies that place bids in the monthly mineral auctions, are middlemen.

Just out of being curious, some of these small tracts are in the middle of what I thought were all privately owned properties in our area. How does the state generally acquire  these tracts? Non payment of property taxes and so forth?  Once again Thanks Skip for the valuable info.

The state by law is required to hold in perpetuity any acquired mineral rights through whatever means.  So besides the "beds and bottoms" of all water bodies navigable at the time of statehood, all mineral rights that may be acquired at a later date become state property and may not be divested.  Keep in mind that the state Mineral Board auctions include all public lands.  So mineral rights owned by a municipality, a levee board, a school board, a volunteer fire department, etc. are regularly part of the onshore tracts appearing in the monthly auctions.

Got it.  Could this be a signal of any sort of immediate action on top of all this positive news?  Because of the pipeline limits being reached in the Permian I guess they will re-intensify their focus on our area.  Have they figured out the better procedure to deal with the differences between Karnes county and our parishes chalk formation?  Thanks

State leases more often than not signal that development activity is about to commence.  Companies accumulate the private leases for an area of interest and then fill in with state leases which must be drilled within a year, forfeited  or an additional lease bonus paid for the second year.  I think we will see multiple well permits in the coming weeks.

As far as I can tell, no, the operating companies are just beginning to get the science and drilling results they need to try and crack the code on the central LA AC.  There will be a learning curve and there will be areas that are economic and areas that are not.  This is not a shale play.  Rock quality and the amount of recoverable hydrocarbons will vary across the area now seeing interest.  It's like a lottery - some will win and some will lose.  It may well take two or three dozen wells and another year to know whether the play is economic.

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