Haynesville Shale

The tracts in the auction are interesting as they support growing interest in areas generally considered either non-economic or marginally economic just a year ago.

3 bid tracts in Caddo Parish, 18N-15W.  The successful new version wells in the Greenwood-Waskom Field have revived interests in this far NW corner of the Haynesville Shale fairway.  Pine Wave Partners, Theophilus O&G and Mammoth MInerals were the winning bidders for tracts in 17&18N - 15&16W.   Winning bids contained bonuses of $1,010 to $2,000/acre and quarter royalty.

GEP Haynesville continued submitting bids that were rejected for "insufficient consideration".  They bid contained a 20% royalty which follows a previous month's bid of 22% which was also rejected.  I don't know if GEPH is trying to make a point or just expects that minimum bid requirements are just a suggestion. This was for Bossier Parish acreage in 16N-12&13W.  An additional bid in 17N-12W did not receive a bid.

Austin Chalk

4 tracts in Pointe Couee and West Feliciana parishes did not receive a bid while a 5th did receive a winning bid from Woodlands Exploration. The winning bid was for a bonus of $657/acre and a quarter royalty.

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Are these auctions just for the state or are can anybody list a property to be leased? And if so, then 1) is it a good idea? and 2) where do I look to get up to speed on this? Thanks!
Diana, the auction is for publicly owned mineral rights, not private mineral rights. The state owns a lot of minerals as do other governmental entities such as levee boards, school districts, volunteer fire departments, municipalities and parishes.

Thanks Skip. I guess I will just have to wait until they come to me. I am told that patience is a virtue ...

<$657/acre and a quarter royalty>>>

LOL, whatever happened to $125/acre and 1/8th?????

It was an illusion crafted for an area where mineral owners had not seen any serious development activity in many years and had a lengthy history of failed plays.  The perfect storm for savvy mineral speculators. 

For the benefit of full disclosure, the early leasing was quite risky in a play that was undefined as to economics or economic areas.  This isn't a "shale play".  Many owners of large Haynesville Shale acreage leased prior to the public announcement for less than $1000/acre and a fifth royalty.  After the play was announced and numerous companies kicked off competing leasing programs, the royalty quickly went to a quarter and bonuses escalated steadily over a number of months before crashing in late 2008 or early 2009 depending on location.  In addition, the decision to wait things out for better lease terms carry risks for those with very small to modest acreage interests.  With these very large drilling units, operators can withstand a good bit of "open acreage".  So the negotiating position for those small tracts isn't particularly good even after an area has been proven.

As I often say, there is more than enough risk to go around for every interest in an emerging but unproven play.  Every mineral owner needs to exercise some patience, do some research and execute a lease with the understanding that the future is unsure.  Anxiety or anger over what may happen later is a waste of time and unwarranted stress.

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