STATE BID TRACT RESULTS
Today’s lease sale bids bare or non-existent
By Vickie Welborn
vwelborn@gannett.com
Bids were bare or non-existent at today’s state Mineral Board lease sale, offering another example that the Haynesville Shale big land grab has stalled for the time being.
Of the thousands of acres up for consideration, very few local tracts received attention. And those that did drew bids more reminiscent of pre-Haynesville Shale offers.
Whether today’s low bids were rejected or accepted is still unknown. State Mineral Board Secretary Marjorie McKeithen has not yet returned a telephone call seeking more information on the board’s decision. The Mineral Board meeting started at 11 a.m.
But the tract sheets posted online at 11:16 a.m. easily tell the story. Row after row of posted acreage was marked with a notation of “no bid.”
The only property getting attention were four state-owned parcels that include water beds and bottoms and three separate tracts owned by Northwestern State University, the Caddo Levee District and the Natchitoches Parish School Board.
Bids for the state land ranged from $287 to $787 an acre – a far cry from the $27,700 to $30,000 an acre bids submitted in July. Royalty payments were set at 25 percent.
Classic Petroleum Inc. was the high bidder on most of today’s tracts. It offered $587 an acre, which amounts to a $74,549 cash bonus, for 127 acres of water beds and bottoms shared between Caddo and Bossier parishes. Another 4-acre tract in Caddo drew the same per-acre offer.
A tract of 346 acres that includes Wallace Lake at the DeSoto-Caddo line drew a bid of $787 an acre from Classic Petroleum and $753 an acre from Cohort Energy Co., adding up to a $272,302 cash bonus from Classic Petroleum versus $260,538 from Cohort Energy.
A 101-acre tract in Red River Parish received a bid of $187 an acre, or $18,887 cash bonus.
A 31.1-acre tract owned by NSU in Bossier Parish drew $355 an acre - $11,044.05 cash bonus – from Martin Producing LLC. Royalty payments were set at 22.5 percent.
The Caddo Levee District owns a 147-acre tract that includes land that juts into Wallace Lake at the Caddo-DeSoto line. Classic Petroleum bid $287 an acre, $42,407.12 cash bonus, and Cohort bid $753 an acre, $111,263.28 cash bonus.
Only $100 an acre was offered for a 160-acre tract that the Natchitoches School Board owns in Natchitoches Parish. Classic Petroleum was the sole bidder, offering $16,000 cash bonus.
State agencies whose lands were ignored in the bidding process include the Bossier Parish sheriff’s office Law Enforcement District, Bossier Police Jury, Webster Police Jury, Louisiana Department of Wildlife and Fisheries, Red River Parish School Board, Ware Youth Detention Center, town of Coushatta, Natchitoches Parish Police Jury and school board lands jointly owned by Natchitoches, DeSoto and Red River school boards.
By Vickie Welborn
vwelborn@gannett.com
Bids were bare or non-existent at today’s state Mineral Board lease sale, offering another example that the Haynesville Shale big land grab has stalled for the time being.
Of the thousands of acres up for consideration, very few local tracts received attention. And those that did drew bids more reminiscent of pre-Haynesville Shale offers.
Whether today’s low bids were rejected or accepted is still unknown. State Mineral Board Secretary Marjorie McKeithen has not yet returned a telephone call seeking more information on the board’s decision. The Mineral Board meeting started at 11 a.m.
But the tract sheets posted online at 11:16 a.m. easily tell the story. Row after row of posted acreage was marked with a notation of “no bid.”
The only property getting attention were four state-owned parcels that include water beds and bottoms and three separate tracts owned by Northwestern State University, the Caddo Levee District and the Natchitoches Parish School Board.
Bids for the state land ranged from $287 to $787 an acre – a far cry from the $27,700 to $30,000 an acre bids submitted in July. Royalty payments were set at 25 percent.
Classic Petroleum Inc. was the high bidder on most of today’s tracts. It offered $587 an acre, which amounts to a $74,549 cash bonus, for 127 acres of water beds and bottoms shared between Caddo and Bossier parishes. Another 4-acre tract in Caddo drew the same per-acre offer.
A tract of 346 acres that includes Wallace Lake at the DeSoto-Caddo line drew a bid of $787 an acre from Classic Petroleum and $753 an acre from Cohort Energy Co., adding up to a $272,302 cash bonus from Classic Petroleum versus $260,538 from Cohort Energy.
A 101-acre tract in Red River Parish received a bid of $187 an acre, or $18,887 cash bonus.
A 31.1-acre tract owned by NSU in Bossier Parish drew $355 an acre - $11,044.05 cash bonus – from Martin Producing LLC. Royalty payments were set at 22.5 percent.
The Caddo Levee District owns a 147-acre tract that includes land that juts into Wallace Lake at the Caddo-DeSoto line. Classic Petroleum bid $287 an acre, $42,407.12 cash bonus, and Cohort bid $753 an acre, $111,263.28 cash bonus.
Only $100 an acre was offered for a 160-acre tract that the Natchitoches School Board owns in Natchitoches Parish. Classic Petroleum was the sole bidder, offering $16,000 cash bonus.
State agencies whose lands were ignored in the bidding process include the Bossier Parish sheriff’s office Law Enforcement District, Bossier Police Jury, Webster Police Jury, Louisiana Department of Wildlife and Fisheries, Red River Parish School Board, Ware Youth Detention Center, town of Coushatta, Natchitoches Parish Police Jury and school board lands jointly owned by Natchitoches, DeSoto and Red River school boards.
Views: 35
Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on
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This is sobering news. In the coming months, certainly into the new year, most leasing activity will focus on sections where an operator plans to drill in the near future and where they presently hold a significant leasehold. For landowners unleased at this time, I suggest that it is a good time to focus on family and the holidays. As many members have stated, "your shale isn't going anywhere". GHS is a great way to keep up with the dynamics affecting the lease value of your property. Check in often and continue to share information. When current leasing activity ceases to be infill in nature and becomes more prospective for expanding the boundaries of the play, bonuses will rebound to some degree. The demand for, and the price of, natural gas will govern any future increase in the bonus value of your minerals. If there is any comfort to be gleaned from this month's tract bids, it is that royalty percentages have remained at 25%. Happy Holidays and Best Wishes For The Future.
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Permalink Reply by BirdDawg, plain ole' idiot on
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Skip,
I don't know what you think, but I think all of these offers should be rejected. I really think that lease bonuses will not be at the previous highs for a long time, maybe never. But I think for the quality of leases they are getting, this is ridicously low. Just my opinion.
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Permalink Reply by Skip Peel - Mineral Consultant on
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BirdDawg. As these land/mineral owners are governmental entities, imo, it would be a dereliction of their fiscal responsibilities to accept these offers. Unless they wish for their constituents, the tax paying citizens they represent, to throw them out of their positions, elected or appointed, they should reject these bids and take a holiday break. These governmental entities should be in positions allowing them to wait for more favorable conditions. Or at least until there is a better understanding of mineral values going forward. I hope that their constituents understand that there is no way they can accurately predict the future nor any guarantee that any agreement to lease they may make is at the apex of bonus values. The savviest investor can not "time the market" and they should not be expected to either. Bonus value is important. But for these governmental entities, royalty percentage is much more so. Long term mineral income and how they spend it will be the ultimate test of their stewardship.
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Skip, I agree 100%
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Personally, I am sorry to hear that.
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Permalink Reply by Skip Peel - Mineral Consultant on
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What's done is done. The best strategy now may be to pull all mineral acres controlled by governmental entities out of the state auction process and sit on them for the foreseeable future.
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Permalink Reply by Grice on -
http://dnr.louisiana.gov/min/contact.asp
If the current bid awards displease you, might I suggest you contact the OMR and voice your concerns. While you may or may not get a direct response, at least you will indicate a concern. Those concerns could potentially help govern the activities of future bids.
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Permalink Reply by Skip Peel - Mineral Consultant on
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For those so inclined, that is one possible avenue. I tend to think they'll get more consideration and response out of their local police juror, school board member, mayor, levee board, etc.
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Permalink Reply by The_Baron on
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You have to remember it is the ultimate desire of the state to encourage exploration, not inhibit it.
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Permalink Reply by Grillin' - MmmMmm on
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totally agree. The lease bonus is just a very small part in the overall value of the mineral interests. I think the state should get this acreage into the hands of those who will drill wells and get production going so that the 25% royalty has a chance to pay. After all, the big big value is in the royalty, not the bonus.
And this result is not unlike what is happening in other areas as well. Up in Canada in their "hot" shale plays, bids were going through the roof during the summer but the last couple of bid rounds resulted in much much lower results. Everyone has taken the check book and put it in the safe. Money is tight, very tight. I've seen exceptional projects put in the freezer over the last 2 weeks, projects that were no-brainers little over a month or so ago. Haven't seen this mentality in several years...almost as bad as when gas was $0.50/mmBtu. Truly amazing!
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Permalink Reply by Grice on
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While that may be true, are they so eager to do so that they suppress public responsibility in order to reach those goals? If so, then why offer a bidding process at all? Why not just give the rights away for free? I know that may sound irresponsible at best, but it follows the current actions of the mineral board. At some point, the response to a bid has to be "DECLINED". Under the current situation, to what level would the mineral board be willing to impose such a response? We already know what happens with the acceptance of $1.00 per acre.
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