I am looking at leasing some TMS acreage to flip.  However, the acreage I am looking at is somewhat scattered. For example, there is a thousand open acres.  However the acres are somewhat scattered in different sections.  Will that hurt me on the future sale to a major company?  I am not familiar with how the units are formed with horizontal TMS wells, and I wanted to make sure that this will not be a problem in the future.

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Randy,

Don't worry about section lines. They don't matter in South Louisiana. Most of the sections are irregular - not 640 acres. The units are formed to force pool the various interests in the area around a well site. A unit may pickup a Section, several sections, only a portion of a section and not all of it. Its different down here than in North Louisiana where everything is nice and pretty with 640 acre square Sections.

If your acreage position is not contiguous it will appear less attractive on a flip (of course location always matters). Blocky acreage is prime. You must also consider the possibility of someone forming a unit that contains a portion of your acreage prior to the flip. Lease to them? Can you participate? Go non consent?

Joe is correct on units in LA.

Mississippi will be blocky and get more irregular towards the MS river. Mississippi is also approving larger units for the moment (1000+ VS. 720).
I am currently dealing with a guy in Wilkinson County who represents three other landowners who have about 4000 acres they are willing to lease to me. However, they want $375/acre 3 year lease, with no kicker. Also, they want 1/4 lease to the base of the Wilcox and a 1/5th to the deeper stuff. I think he and his buddies are crazy. Is it normal for these landowners to ask for a 1/4 to the Wilcox and a 1/5th to the deeper stuff?
Not sure if this is helpful to you or not but ours is just South of Wilkinson in W Feliciana parish. We have 740 acres- $250 (5/5), 1/5 surface-Wilcox, 3/16 deeper. Leased in '08.

Randy,

Unless there is "The Stampede" that some are talking about and the companies are buying any and all acreage blindly then I'm not sure you have a good deal at any price. The only possibility would be for you to go in and do shallow drilling to hold the property with production. Otherwise, Companies with deep pockets can wait you and the lease term out or do a "Top-lease" and be in the position to pick the lease up at the term of yours.

As for what they are asking for: I want 1/4 no matter where. In time they may get that and more - bonus that is. Also, I would want a nice delay rental. Something that means they are serious about doing something; otherwise the company gets a free ride for two additional years. So be nice to these guys they are not crazy. You haven't dealt with crazy because you haven't dealt with me.

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