Replies to This Discussion

Permalink Reply by Debbie Everett on October 10, 2014 at 10:04

Mr. Peel, we own land in Section 3, T22N, Range 2W, which has been leased by Southwestern.  I don't really understand how to read these auction bids or what they mean to us.  Are we included? If so, how will it affect us?   Any enlightenment would be appreciated.  - D. Everett

Permalink Reply by Skip Peel - Mineral Consultant on October 10, 2014 at 10:20

Debbie, these are public lands that are leased by being nominated to the mineral auction where any qualified bidder may compete for the lease.  State leases have two important elements for mineral owners to understand. First, state leases are usually the last leases to be taken before development commences in a particular area.  That fact does not guarantee that a well or wells will follow but it is  a reasonable indication of intent to develop.Second, state leases are the only place that you will see the bonus paid by a lessee.  The bonus is not included in O&G leases.

Yes, the limits of the site architecture make the cut-and-past hard to read.  Here is what this means:  The first number is the Tract Number assigned for the purpose of the auction, the second entry is the parish, in this case Union.  Then the string of numbers are the sections in which the tract lies.  The reasons for so many sections is that this tract is likely the bed and bottom of a stream that was navigable when LA came into the Union.  The state owns the beds and bottoms of rivers, lakes, bayous, etc. that were deemed navigable in the early 1800s although many would not be considered so today.  Skip over the next numbers and go to the successful bidder, in this case Southwestern.  The next number is the number of acres in the tract. The next is the total bonus paid.  The next is the bonus per acre paid ($155).  The next is the extension bonus which is half of the original bonus.  These state leases are good for one year, 12 months, 365 days.  If not drilled in that time the lessee must pay half the original bonus to extend the lease for an additional year.  Operating companies do not like to pay to extend these leases that why they are usually among the last taken and why they often indicate that drilling is in the near future.  The last number, in this case .20, is the royalty bid.  So these leases are for a bonus of $155 and a royalty of one fifth.

Use this link and click Submit Query to see the full auction results in the state database.

http://sonlite.dnr.state.la.us/sundown/cart_prod/cart_min_leas_tract1

Permalink Reply by Debbie Everett on October 10, 2014 at 10:41

Thanks! We are fairly recent land owners of old family land.  This is an opportunity to educate ourselves.

Permalink Reply by Ben Barnhill on October 10, 2014 at 12:11

Thanks Skip, as usual your explanations are easy to understand. It's greatly appreciated.

Based on what you said about these leases likely being bayou, river bottom etc, I wonder if this is basically following the Bayou Deleoutre?

We had 15 acres included in a drilling unit recently and are hoping that the remaining contiguous 111 acres are included in future units.

Again thank you for taking the time to explain this to us oil land novices.

 

Permalink Reply by Skip Peel - Mineral Consultant on October 10, 2014 at 12:26

You're welcome, Ben.  Since I work generally for land and mineral owners I get a lot of practice in reducing a complex subject to terms understandable for the average person. Sometimes tracts with multiple sections can be a road right-of-way.  Most municipal and parish governmental entities prefer to have the state handle their oil and gas leases.  The best means to figure out just what is being leased is to review the tract description and the accompanying plat.  State auction tracts fall into several categories.  You can use this link to see the tracts in previous auctions, including October, and for the coming month.  Click on Notice of Publication.

http://dnr.louisiana.gov/index.cfm?md=pagebuilder&tmp=home&...