Today's lease sale disappointing for area governing bodies

By Vickie Welborn
vwelborn@gannett.com

BATON ROUGE – Cooling of the leasing frenzy associated with the Haynesville Shale was evident today as upfront bonus payments offered for local government owned land in northwest Louisiana was less than half of what some received two months ago.

That means no big pay days for the City of Shreveport, Bossier City, Caddo Parish Commission, Bossier School Board and Bossier Police Jury. Mansfield’s 113 acres also were ignored.

The only one getting a significant pay check for leasing mineral rights will be Northwestern State University. The 367 acres it owns in southeast DeSoto Parish drew one bidder with an overall payment of $4.4 million, which is based on $12,033.13 an acre. Future royalty payments will be paid at 25 percent.

The nation’s economy and the drop in natural gas prices are getting the blame for the lackluster lease sale conducted this morning by the state Mineral Board in Baton Rouge.

But it shouldn’t diminish the long-term impact the Haynesville Shale will have on the region’s economy, said Don Briggs, president of the Louisiana Oil and Gas Association.

“It’s about economics. It’s about competition," Briggs said. "We are in a very, very difficult time. This whole issue is very far reaching. But Louisiana is very blessed to have an investment in (the Haynesville Shale) up there. But certainly prices are being affected, and they have been in the last several weeks."

What’s important to remember, he said, is the long-term investment is not the upfront bonus money. “It’s the 20 years of royalty that will be received over a period of time. That’s where the big profit is,” Briggs said.

Mansfield Mayor Curtis McCoy believes the area governing bodies were hurt in the sale because each had set minimum bids that were based on the offerings of two months ago. In July and August, the low bids were hovering around $27,000 an acre. It was in July that the DeSoto Parish Police Jury received $27,500 for its acreage at the airport, reaping a check of a $28 million, and the Caddo Commission received $30,000 an acre for assorted property, resulting in a payment of $14 million.

Mansfield had hoped to get $20,000 an acre for 113 acres located around the oxidation pond on George Hunt Road. “It was really hot back then, but prices have really fallen. So what we’re going to do is get on the bid list for next month, and we’re not going to set a minimum bid,” McCoy said via cell phone as he traveled back from the lease sale in Baton Rouge. “I was trying to bring home the bacon, but I didn’t get it.”