herefordsnshale

I think that I noticed in a couple of your posts that you mentioned you had 2 years left on your contract? I was curious if you have been approached by anyone to sell a % of your mineral rights or even a top lease yet? My dad's in the same position. Thanks.

Do you know how to e-mail on here in private. This is the first time I have every been on one of these things.
I don't know if that is what the friend thing is about.
Do you work for a company in Shreveport?

About all I know. My/our lease expires 8/09 through Petrohawk. Either I pray the lease expire before a well is drilled (this way/us would receive a new lease with a huge up-front bonus) Or pray they do hit a well and it's a big one.

I don't wish to guess what Petrohawk's tolerance may be for unleased acres in a section. You may wish to check out the discussion I just started concerning the current economic impact on HS operators. There are other factors that can come into play when the money pinch requires triage. For example, you have two sections with approximately the same acres under lease but the capital to drill only one. The average royalty in one is 23.5% and 18.75% in the other. If associated development costs (roads, pipelines, etc.) are the same, which one would you choose to drill? Instead of drilling one $8M horizontal to HBP one section would you choose to drill 3 $2.5M verticals to HBP three sections? If Petrohawk is serious about your section and one or more landowners are unwilling to lease, the leased landowners will receive offers to extend their leases. If those leased landowners are leased at less than 25% and will accept an increase to 25% in exchange for the extension, Petrohawk may hang on for a better day. If landowners demand a lease bonus for the extension, Petrohawk may walk. As you can see it's a complex question with many possible circumstances and outcomes. Let me know if you or your neighbors are approached with an extension offer and I'll try to give some advise at that time. Good Luck.

I would take CHK or HK over any other operators with the exception of Devon or EOG for overall horizontal completion experience. CHK and HK have the added benefit of experience and data for your specific locale. Now as to leasing, I have no advise. But from a standpoint of who pokes the holes in the ground. I would be satisfied with a coin flip between the two. Good Luck.

Herefordsnshale,

As far as I have been able to determine, my tract of 75 ac is the only relatively SIZABLE piece of dirt in #20 that is not yet leased. I say this as there may be some lots back in Chester Lowrey's old subdivision back on the south line of #20 that are not leased.

I am not opposed to leasing, it's just that I am NOT going to fork-over 3/4 of my minerals (under a 25% royalty lease) for what amounts to "pennies", let's say. I do not, by the way, buy into all the "horror stories" put out by the O&G folks about going into a well as an UMI.

Furthermore, I was told by a very reputable souce (landman) that the lease on the 80 ac just to the West of me on the W/ line of #20 expires the middle of April, and thus for the "hurry-up" to get #20 going. Most, of the land in #20 was leased by the Classic H. bunch a few years back. CHK got all these leases, I understand. (I did NOT lease with these folks, by the way.) I have talked with several people who thought that their lease was going to expire at the end of 3 years, only to find out that there was a 2 year extension that they really didn't understand was there! Not-to-happy folks, to say the least. (It is also my understanding that the 80 mentioned above DID NOT have the 2 year extension.)

There are so many reasons and interplaying factors involved in this whole business as to why one section is not looked at any one particular time, that I would not hazard a guess about your section. I'm sure that in time the answers will become evident.

Thanks for the correspondence. Stay connected, and in return, if I hear of anything that I think you might be interested in, I'll "holler".

BTW, I believe you to be in the timber business. Yes? If so, you might know my brother-in-law. His name is A. Robbins who just retired with IP after 32 years. His family is from the Oxford area (where we buried my sister in April of last year.) Just a thought.

And, if ole' "Fox" gives you any trouble, just let me know -- we'll get a switch and give him a good whoopin'!

Have a blessed day!

I do not know the answer to your question. And I do not provide legal opinions as I am not a lawyer. It seems a simple enough question for the legal eagles on the site. If you do not wish to post it on the main page, I suggest you send it to KB on her personal page. Though KB is not an O&G attorney, she is an attorney and IMO qualified to answer your question.

Last year the rule of thumb was 90 days. If a permit had not been issued 90 days from the lease expiration date, it was practically impossible to get a well spudded in time. I think that has changed now that the industry has slowed development in other plays. Now there are more rigs available. Also more of the subs that build roads, pads, etc. It may be possible to get a well spudded in 60 days now. The first activity to look for is lease extensions being filed in the clerk's office. They will be "memo of lease" or "amendment of lease" documents. If there are none filed and it is 60 days from the expiration of your lease, you are in the zone. But if you are in a good area and other operators are interested you may receive some "top lease" offers 4 to 6 months out. That's if a competitor knows or suspects something. Otherwise the big boys don't normally draw top lease action. The smaller operators do.

Sometimes a company keeps a small fraction of a section under lease or comes in at the last to try and get a small portion leased just to be a Working Interest in the wells. That way they have access to all the logs, cores, etc. In other words, the science generated by the drilling. It can be quite valuable. It's usually CHK that I hear doing it but all operators at one time or another do it. In this play good data is hard to come by so it happens more often. Since you have had a landman course, you are probably familiar with the "day book" at the clerk's office. Just stop in and flip through it. It will take less than 5 minutes to discover if any lease extensions or top leases are being recorded.

Hi Chris, It sounds like this is community property unless you specifically called it separate (and she acknowledged it was yourseparate) when you did the refi. My expert (my wife) on real estate title says some lawyers might disagree on this one. You said you communitized the asset, did you convey an undivided 1/2 to her in a deed?

Jay

Two Dogs is right, your lease as a single man is a good lease.

Did the OGML that you signed pre date the "communitization?"

Chris, In order for this to be made community property you will need to prep a deed granting your wife an undivided 1/2 interest in the property.

Jay

Chris, Hope it all goes well for you.

JM

Just a quick FYI::

1) Recently received a pre-app notice that CHK is going to unitize Sec.'s 17 and 16 in T11R15. Therefore (according to my figurin'), this leaves only a couple of sections in 11&15 not yet unitized, other than those under Toledo Bend or HBP.

2) I attended a conference in Natch. on 3/25 concerning their (CHK)'s attempt to TACK ON 400 ac. in Sec.#29 to Sec.#20, thus making a unit of1040 ac. Reasoning presented was that the rest of 29 is under water and too close to the Texas line to stand on its on, basically. Some landowners in 20 not too pleased with this as no concrete information was given as to just how they intend to develop 29. It appears to me to be nothing more than a transparent attempt to HBP 29 with the upcoming production in 20. Just my opinion, but I think I'm correct.

JUST ANOTHER LAND-GRAB BY THE O&G GUYS!

Any thoughts on this?

Interesting development. Do you know when Petohawk's other leases expire? It would appear that Petrohawk is willing to let this section go. They may retain a small interest just to have access to the well data in the future. Chesapeake's "carry" from PXP and their hedge position gives them more options than Petrohawk at this time. And Petrohawk will have to make some tough choices. They can't drill it all. And they can't afford to pay for lease extensions on all the leasehold expiring. They will have to pick and choose a lot as long as the price of ng is so low. Keep in mind that last summer a good well paid for itself in 60 days and that money could be reinvested in the next well. Now any production not hedged takes 3 to 4 times as long to pay a well out. Instead of 6 wells a year for the same dollars, they get 2. Tough times when all they have to work with is cash flow. Until the market improves, that's the only option they have.

I am not knowledgeable concerning the transaction you mention. But it is vaguely familiar. I think it has been discussed before and if I remember correctly, Les B. or Two Dogs, was familiar with it.

cHRIS, kEEP ME POSTED.

bEST,

jAY

IP sold CHK everything but it is subject to existing leases and servitudes if I recall. I have the deed but it is big and I haven't had time to read the whole thing. There will be a can of worms opened with that transaction you can bet.

CHK it seems to me is taking on IPs ability to launch the cat fight and you can bet it will be one. Ip has done their best to try to confuse the situation with all kinds of documents filed over the past couple of years. Lawyers are going to have plenty of work sorting through this mess. I haven't looked into a lot of it, but one company that I do work for holds a lease covering 6000 acres and there is no delay rental in the deal, but the language states that if they drill a well every 180 days it will hold the lease beyond the primary term. This lease is for shallow rights and you can bet that CHK ain't gonna spend too much money trying to get back shallow rights that they will never drill.

It will be that, IPs mineral title is very complicated. I have more extensive work done in Sabine Parish that involves IP and also in other parishes but not in DeSoto. The only thing I remember doing in DeSoto was the mill.

From what it looks like to me they bought everything, this will leave CHK to fight the fight as to who owns what. There are no time lines and CHK gets it all. If I remember correctly the deal went down for 300 and something million dollars on 13000 acres, more or less, but I may be wrong.

You got it C. E.

Sec 20, T11, R15

Me, too!

Thanks. Good luck.

Hello, herefordsnshale. Yes. In general the valuations discussed are in the ballpark. As in most things related to the HS play, there are no accurate hard and fast rules. Each situation is different. A major portion of my business is representing mineral owners who wish to sell all or a portion of their mineral interests. The investors that purchase those mineral interests prefer to purchase mineral servitudes. As opposed to royalty. The reason is that they wish to exercise "executive rights". And the investors that I place my options with are savvy veterans who know how to maximize their investments through the use of those executive rights. As a general assessment, I consider it a very astute move for mineral owners to sell a 50% stake in their minerals to experienced investors. They lock in a guaranteed payday from minerals that are impossible to estimate the future value of and at the same time gain free, professional management of their minerals going forward. The investor will bring the benefit of experienced legal counsel, geologist and landman resources to the partnership. And the mineral owner will benefit accordingly at no cost to themselves. I consider that a win - win. And the long term capital gains paid on the sale of minerals owned over 2 years is 15%. Beating the heck out of what many are paying on their lease bonus payments. I

Investors rarely purchase a fractional mineral interest less than 50%. In order to exercise executive rights, they must have that as a minimum ownership interest along with a purchase agreement clause granting them those executive rights. Less than 50% does not convey those rights. Any percentage over 50% does so without the need for the clause. I offer a purchase option for a limited period of time. 30 to 90 days depending on the size and complexity of the mineral estate. The option states a purchase amount and can be executed by any third party investor that I assign it to. The investor pays me a small commission based on that purchase price. There is no cost to the seller. The option period allows an interested investor to perform their own due diligence as to merchantable title. They will have their landman do a separate and more comprehensive title review than the one that I conduct. Payment is by wire transfer, money order or cashier's check at the sellers prerogative.

I'll give you an estimate off the top of my head. Here are the basics I need to know. Location? Size of mineral estate? Do you currently own the surface? What operator holds the lease and what is the royalty? What is the initial term of the lease and does it contain provisions for extensions? There's actually a lot more to analyzing a lease but it gets kind of complicated. I can give you a pretty good ballpark number from these basic questions.

$5,625 to $6,000 per net mineral acre at current valuations.

If you sold a half interest. That would be 25 net mineral acres. And your total, 50, would be the gross acreage. The term net is used as you would actually be selling (conveying) a 50% undivided interest in each of the 50 acres. If you were selling a 100% interest, it would be 50 net mineral acres. The quoted price is not only based on the tract being under leased, but on which company you are leased to and the prospect that the eventual operator of a unit in your section would be Chesapeake or Petrohawk. Both of which are equally favored by investors. Unleased mineral acres in prospective areas are more valuable as a general rule of thumb. An investor granted executive rights would be the legal party to negotiate a lease and share in the bonus. And would therefore place a higher value on the minerals. The investor granted executive rights as part of a purchase of a tract under a lease would also be the party empowered to negotiate a top lease or a new lease in the future if the existing lease expires. The only down side historically to waiting for an existing lease to expire before selling a mineral interest in whole or part would be poor performing or unproductive wells being drilled in the vicinity of your tract. This will occur from time to time along the periphery of the HS play boundaries with the disappointing initial wells in north Caddo Parish being the first such example.

Yea I googled it then posted the change. Those movies were a long time ago.

My email to your wildblue.net address did not go through. Please contact me on my personal email: skippeel@gmail.com or call me at 318-861-3633, at your convenience. Regards, Skip

Hey,

You and your wife need to join us for some bowling.

hereford---I will be checking to see what I can find out about combining sec 20 and 29. I cannot confirm that they did. Boy, rig 104 is loud isn't it. I can hear it all the time outside.

Hereford----wayne a gadman, who owns 120 acres in sec 29 told me he was told by Onebane law firm that it was granted. He has not officially received notice yet. The drilling rig is in place and has begun the drill.

The Order is on Sonris (go to Documents).

Despite all the efforts of most of the decent, sincere people in Section 20 pointing out that it is simply not FAIR to the mineral owners of that section to decrease their revenue stream by putting 29 in with 20, and that there IS ample acreage in 29 for a well site, the Commish did exactly that "on the spot".

No one HAS YET been able to come up with an explanation of just how the well in the S/E corner of 20 is going to " . . . economically and efficiently . . . " drain gas in 29 when THE LATERAL GOES DIRECTLY NORTH AWAY FROM 29 !

Good ole Louisiana politics ! "Dem dat gots the gold -- makes de rules !"

In short -- the fix was in befort the sun came up on the Hearing day !!

Our family leased to Cheasapeake and are hoping they will be the ones in there. We are in Section 24 T11N R16W, our family property runs down powerline/across pierce Rd and to and across day RD, down Pierce Road and to leaseback on the East side. Where are you in regards to the Trinidad #104 Well. Hope we all get drilled . Have you seen any survey trucks on site yet. Call if you do....we want to be on hand if possibe.

J & L