Replies to This Discussion

Permalink Reply by Land Rat on March 7, 2012 at 4:57

Does anyone know who is currently leasing in the Brown Dense? 

Permalink Reply by Skip Peel - Mineral Consultant on March 7, 2012 at 5:06

Please excuse the segmenting of this discussion topic as there are character limits that will not allow it all in one text string.  I didn't wish to put it in the Blog format as I think many members would miss it.

The lease terms also go through a progression with early leases being for a five year term and possibly an extension option, then three year terms with 2 year extensions and then finally, when drilling is imminent, 3 year leases for those lessors who have acreage of relative importance. 

I think that some members with minerals in the Brown Dense Fairway are getting concerned that they were "left out" and feel the need to contact SWN or other energy companies so that they too can have a lease.  That's not a good strategy unless you won't to receive one of the lower offers if indeed a company is willing to make an offer in your area at that time.  Energy companies lease where they have plans to develop, not necessarily where willing mineral owners are requesting a lease.  If your minerals are located in an area that an energy company wishes to develop, they will find you.  The key to being "found" is to have clear title to the land and/or minerals in the public records of your county or parish.   When an energy company is ready to form a unit or permit a well, they will come back and attempt to pick up the mineral acres not leased in the initial rounds of lease offers.  There is no need for them to lease small tracts where they have no near term plans to drill.  They may make a reduced offer if your minerals are located in the core area of their AOI.

Although there is much more to discuss, I will let interested members make replies so we can address specifics.  Please state clearly whether a question or comment pertains to Arkansas or Louisiana as the mineral laws differ significantly.

Permalink Reply by Land Rat on March 7, 2012 at 5:13

I'll also say that having a published phone number with an answering machine is helpful!  It sounds simple, but with older generations dying off and younger generations adopting only cell phones it can be difficult to reach people.  When I have worked prospects in the past I have definitely skipped over owners where I get "the number you have reached has been disconnected." 

Permalink Reply by Colquitt Charlie on March 7, 2012 at 5:16

So......where MIGHT this all lead ?   (given what EVERY reader on this board knows about the same pattern that has been experienced with the Haynesville (Chesapeake's early "low profile" leasing - followed by the extraordinary bonuses paid a couple of years ago - and now with the slowdown due to the nationwide GAS GLUT due to shale drilling).  

Some have suggested that even if success is declared in the next few months that there will not be an upward trend (*or spiral perhaps) in favorable leasing terms.  But don't forget - this is being described as an oil play - and there is no nationwide glut of oil - in fact, dollars are frantically chasing oil prospects nationwide (Eagle Ford, Bakken, etc).

So maybe the fun is just ahead  ?????

Permalink Reply by Skip Peel - Mineral Consultant on March 7, 2012 at 5:23

Operators learned lessons in the frenzy of the Haynesville Shale leasing.  The main one was to avoid competition for leasehold where possible.  There are a lot of misconceptions about what transpired in the Haynesville Shale Play.  Two companies, and some would say their respective CEO's, got into a highly competitive battle for Haynesville leasehold where both companies had previously started lease blocks for Cotton Valley development.  Specifically this was in a limited area of south Caddo Parish and north DeSoto Parish.  That competition caused others to raise their bonus offers, not their royalty offers, however not to the extent that those two, Chesapeake and Petrohawk, did.  The reports and rumors of those incredible lease offers often disguise the fact that the area under contention was relatively small and the time line short.  That scenario will likely not play out again in the LSBD or other emerging unconventional reservoir prospects.  The Tuscaloosa Marine Shale discussed here on GHS is a good example. 

Permalink Reply by Colquitt Charlie on March 7, 2012 at 5:35

still pondering whether the mere fact that it's a prospective oil play could trump all that

Permalink Reply by Skip Peel - Mineral Consultant on March 7, 2012 at 5:42

I doubt it, Joseph.  It's not the only "oil play" around and leases can be bought cheaper in some of those than in the LSBD.  Successful  LSBD wells will have the effect of increasing bonus offers but nothing like those offered in the Haynesville Shale Play.  Also the offers will vary by state (AR mineral laws are quite unfavorable for the mineral owner) and vary depending of the size and location of mineral estates.

Permalink Reply by tater on March 7, 2012 at 6:15

Skip, there seems to be a lot of leasing interest in North Bossier Parish along and south of the state line.  Most say this is not for the LSBD.  If not, what new "stealth" play is possibly happening in this area?  The description you gave above seems to be playing out in this area (lease a majority of a section and move on).  I have spoken to several landowners in this area who have leased or been approached to lease their minerals from east Bossier Parish over to the Red River over the past serveral months.  Different people have been told different things about who the operator is and what their target zone is.

Permalink Reply by Skip Peel - Mineral Consultant on March 7, 2012 at 6:27

tater, I look into the activity you refer to occasionally but find little fact in the public record.  JBL Land has not recorded any leases and I haven't decided whether the rumors of Petrohawk as the operator employing JBL are true.  There is too little reliable information at this time.  I would decline to enter into an "all depths" lease or to lease my deep rights without knowing the energy company/operator behind the lease offers.

Permalink Reply by Skip Peel - Mineral Consultant on March 7, 2012 at 6:29

Negotiating an Oil & Gas lease with a view to the long term and the benefit to future generations is a wise approach.