BONUS PAYMENTS DEPEND ON MANY FACTORS-SHREVEPORTTIMES.COM ARTICLE -12-22-08
shreveporttimes.com
December 22, 2008
Bonus payments depend on many factors
By Bobbie J. Clark
bobbieclark@gannett.com
All land is not created equal.
Just ask a landman or someone who is negotiating a mineral lease.
Bonus payments for leases have varied, with reports of people getting more than $15,000 per acre, while others have gotten offers of around $5,500 per acre.
Allan Seabaugh, a local oil and gas attorney, drafted clauses for a lease with Petrohawk Energy Corporation worth $16,550 an acre for neighborhoods around Ellerbe, Norris Ferry and Wallace Lake roads.
Competition was the primary reason they got so much, Seabaugh said.
They were able to pit Petrohawk and Chesapeake Energy against each other, driving the price higher and higher. "They bid hard for it," he said. "We were pretty fortunate."
There are several factors that go into lease bonuses, including accessibility to a drill site and pipelines and contiguous acreage, Seabaugh said. Rural communities will probably get the higher prices because there are fewer people with more acreage, he added.
Clay Baskin, director of public relations for Twin Cities Development, said it is easier — and cheaper — for them to deal with one person who has 300 acres, instead of hundreds of people who have a tenth of an acre each.
Twin Cities handles lease acquisition for Chesapeake, which has the most land under lease at about 550,000 acres.
"There's a lot less legwork," he said. "It cuts down on our overhead costs."
Twin Cities' initial offer for landowners is $5,500 per acre, but that number is not set in stone.
For example, The Times has reported the Dogwood Homeowners Association recently made a recommendation to accept Twin Cities Development's offer of $8,750 per acre, if 90 percent of the Dogwood community signs leases.
The Greenacres Place neighborhood in Bossier City has gotten Twin Cities' standard offer of $5,500 per acre, if 90 percent of the neighborhood signs, according to the latest offer sheet.
Baskin said people who live in more urban areas have a better chance to sign a lease if they come to them with a large tract of land.
That's exactly what the ShreveCentre Coalition is trying to do.
Currently, it is made up of 16 neighborhood associations in Shreveport.
Larry Farley, one of the group's organizers, said few neighborhoods in Shreveport have gotten — much less signed — a mineral lease.
"We're still getting organized," he said. "One of the neighborhoods now in the coalition ... previously put a package together and went to Chesapeake. They told them to get with some other (neighborhoods) and come back."
That's easier said than done. Many don't know who to contact or where to get started.
Ora Hart, president of the Cedar Grove Neighborhood Association, said her community has yet to receive any lease offers.
"I went to a meeting, but they couldn't tell me who was working in Cedar Grove," she said. "We should be getting something. Cedar Grove is such a large area."
The South West Shreveport Home Owners Coalition is another group of neighborhoods that has banded together to negotiate mineral leases.
Jerry Merrill, an oil and gas professional, has helped several neighborhoods in the coalition negotiate leases.
The latest lease bonus he negotiated netted $10,750 an acre. However, he has heard of much higher numbers. Without being specific, he said a church off Kingston Road got $17,500 an acre.
He also has heard of someone getting $25,000 an acre for 12.5 acres.
"They are paying insane money for these properties," he said. "This whole area is blessed."
Tom Dark, chief administrative officer for the city of Shreveport, advised that people will be best served by joining one of the two neighborhood coalitions in town.
"If not, then people can go door to door to see if they can find some neighbors to join them," he said.
The more neighborhoods that come together, the better the price will be when negotiations come around, he added.
Dark said there was a time when the highest bonus numbers were hovering around $10,000 an acre. Now, the big ones are at $20,000.
"It's clear the market is still interesting," he said. "There is a limit. We just don't know where it is. We were told sometime ago that it might be the upper teens or low 20s."
Additional Facts
RELATED LINKS
Petrohawk Energy Corporation: http://www.petrohawk.com/home/
Chesapeake Energy: http://www.chk.com/
December 22, 2008
Bonus payments depend on many factors
By Bobbie J. Clark
bobbieclark@gannett.com
All land is not created equal.
Just ask a landman or someone who is negotiating a mineral lease.
Bonus payments for leases have varied, with reports of people getting more than $15,000 per acre, while others have gotten offers of around $5,500 per acre.
Allan Seabaugh, a local oil and gas attorney, drafted clauses for a lease with Petrohawk Energy Corporation worth $16,550 an acre for neighborhoods around Ellerbe, Norris Ferry and Wallace Lake roads.
Competition was the primary reason they got so much, Seabaugh said.
They were able to pit Petrohawk and Chesapeake Energy against each other, driving the price higher and higher. "They bid hard for it," he said. "We were pretty fortunate."
There are several factors that go into lease bonuses, including accessibility to a drill site and pipelines and contiguous acreage, Seabaugh said. Rural communities will probably get the higher prices because there are fewer people with more acreage, he added.
Clay Baskin, director of public relations for Twin Cities Development, said it is easier — and cheaper — for them to deal with one person who has 300 acres, instead of hundreds of people who have a tenth of an acre each.
Twin Cities handles lease acquisition for Chesapeake, which has the most land under lease at about 550,000 acres.
"There's a lot less legwork," he said. "It cuts down on our overhead costs."
Twin Cities' initial offer for landowners is $5,500 per acre, but that number is not set in stone.
For example, The Times has reported the Dogwood Homeowners Association recently made a recommendation to accept Twin Cities Development's offer of $8,750 per acre, if 90 percent of the Dogwood community signs leases.
The Greenacres Place neighborhood in Bossier City has gotten Twin Cities' standard offer of $5,500 per acre, if 90 percent of the neighborhood signs, according to the latest offer sheet.
Baskin said people who live in more urban areas have a better chance to sign a lease if they come to them with a large tract of land.
That's exactly what the ShreveCentre Coalition is trying to do.
Currently, it is made up of 16 neighborhood associations in Shreveport.
Larry Farley, one of the group's organizers, said few neighborhoods in Shreveport have gotten — much less signed — a mineral lease.
"We're still getting organized," he said. "One of the neighborhoods now in the coalition ... previously put a package together and went to Chesapeake. They told them to get with some other (neighborhoods) and come back."
That's easier said than done. Many don't know who to contact or where to get started.
Ora Hart, president of the Cedar Grove Neighborhood Association, said her community has yet to receive any lease offers.
"I went to a meeting, but they couldn't tell me who was working in Cedar Grove," she said. "We should be getting something. Cedar Grove is such a large area."
The South West Shreveport Home Owners Coalition is another group of neighborhoods that has banded together to negotiate mineral leases.
Jerry Merrill, an oil and gas professional, has helped several neighborhoods in the coalition negotiate leases.
The latest lease bonus he negotiated netted $10,750 an acre. However, he has heard of much higher numbers. Without being specific, he said a church off Kingston Road got $17,500 an acre.
He also has heard of someone getting $25,000 an acre for 12.5 acres.
"They are paying insane money for these properties," he said. "This whole area is blessed."
Tom Dark, chief administrative officer for the city of Shreveport, advised that people will be best served by joining one of the two neighborhood coalitions in town.
"If not, then people can go door to door to see if they can find some neighbors to join them," he said.
The more neighborhoods that come together, the better the price will be when negotiations come around, he added.
Dark said there was a time when the highest bonus numbers were hovering around $10,000 an acre. Now, the big ones are at $20,000.
"It's clear the market is still interesting," he said. "There is a limit. We just don't know where it is. We were told sometime ago that it might be the upper teens or low 20s."
Additional Facts
RELATED LINKS
Petrohawk Energy Corporation: http://www.petrohawk.com/home/
Chesapeake Energy: http://www.chk.com/
Views: 161
Replies to This Discussion
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Permalink Reply by Spring Branch,mineral owner on -
Earler in this thread, I thought I was responding to bill murphy's thread wherein he questioned whether he should hold out for $22,500 an acre and 30% royalty or just go unleased. I tried to point out possible pitfalls of going unleased if too many acres in a section demanded terms which no O & G company is going to pay in all likelihood,under current circumstances. I tried to make bill murphy aware that there are actually strategies that can be employed in his section, not favorable to him, if too many acres hold out. Correct me if I'm wrong, but in Oklahoma, if you try to hold out, you're forced in and a judge determines what bonus and royalty is "reasonable". I don't ever remember mentioning that I would lease for any paltry sum of money or paltry royalty rate. Believe me I would go unleased in a heartbeat and let them drill a well and take my cost of the well out of production if my alternative were to accept terms which I thought were unacceptable. I do have to be aware, however, that if I decide to take that path, things possibly unfavorable to me could happen. I've read graysands comments three times and concluded that he thought we were at a Narcotics Annonymous meeting. Otherwise I have no idea what the hell he is talking about.
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Permalink Reply by Dion Warr, CPL on
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KB:
I don't know if it helps the discussion, or continues to confuse it, but usual custom is to place "mcf" in all lower case as shown. Thus, little"m" means thousand. "mmcf" would be "thousand thousand cubic feet" or million cubic feet. The confusion (IMO) is when some folks use the abbreviation "Mcf" (with the big M, little cf) to refer to "million cubic feet"; perhaps this is what Google is referencing.
Other than that, the only thing that I can offer as a guide is context. If an operator is happy that their gas well is producing at 10MCF per day, they probably mean Million cubic feet, and not m(thousand) cubic feet. LOC still uses mcf (thousand cubic feet) in all of their reporting.
P. S. - Please respectfully measure manhood in terms of either centimeters (cm) or decimeters (dm). Using meters (m) under any circumstances would be referred to as 'lying'.
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Permalink Reply by Bobi Carr ("parker") on
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Spring Branch,
Where do you get the figure for up to 1/2 million for a pad site. That's $62,500 per acre @ 8 acres.
Am I missing some pieces of the puzzle?
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Permalink Reply by Spring Branch,mineral owner on
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I'm referring to the cost to landowner for the pad and the cost to build road to it, soil cement it, level it, rock it, dig pits, fence it if necessary, etc. I'm not an expert, but I think ther cost of one of the large, 8.5 acre double pads that CHK is building to drill two sections, depending on length of road and terrain, would cost from 1/2 to 3/4 of a million $.
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Permalink Reply by BirdDawg, plain ole' idiot on
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S.B,
Sounds reasonable to me. Lots of dirtwork involved.
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Permalink Reply by Spring Branch,mineral owner on
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KB, I have watched with enthusiasm the building of one of CHK's double pads where they had to build about a mile of road and then clear the pad in the middle of forest. I've always been fascinated with heavy equipment, and after watching it all being constructed, Im no longer surprised @ the cost. They can easily use $100,000 worth of soil cement on the roads and pad just to support the weight of the heavy equipment. They are clearing timber right now for a double pad on Hwy 789 in SW Caddo Parish, about a mile south of Forcht Wade Prison and Chimp Haven if you know where that is. I'm watching this one with a bit of extra interest as I own minerals in one ot the two sections the pad will be located on. By the way, I leased in July of 2007 for $250 an acre and have no hard feelings. If, after leasing for $250 an acre they drilled a vertical well, I would have VERY HARD feelings. That will not be the case here.
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Permalink Reply by Spring Branch,mineral owner on
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graysands, my experience with KB has been that she is perfectly capable of taking care of herself without your help. "$50 royalty"....graysands, what the hell are you talking about??? Here, graysands, let me help you out.................EVERYBODY HIRE A LAWYER!!!!!!!!! That's the only comment you ever make that is even the slightest bit understandable or might be construed as helpful. Other than that, I never have the slightest idea what you are talking about. I have concluded you have zero knowlege of this play. Unlike the majority of the other folks on this website who seem to be very knowlegeable. By the way, in your previous post you stated..."know if "they" are drilling in your section soon, and "they" do not continue to drill. Graysands, do you even know who "THEY" is? Or are you just making comments with no knowlege as usual.
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Permalink Reply by sesport on
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graysands - I don't know what you've discussed with spring branch before, but this is credited to you prior to spring's replies to you under this discussion.
"If you really need the money of course...take what you can get. I know some crack heads that would take a dollar downtown. I think some of them already did take a dollar?"
This was spring's reply, "You think differently.....I can live with that, but I hope you're not in my section, because I want my section drilled."
Now, some of us may not be posting to this discussion, but we may be reading trying to learn & sort it out for ourselves. I say this respectfully, but your posts aren't clear and haven't helped with the confusion.
I ask that, if you want to continue your debate with spring alone, that you take it to each others' comment page.
Thanks -
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Permalink Reply by Spring Branch,mineral owner on
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A typical graysands post.....most helpful to all who read it. Let me see.... in reviewing your brilliant posts on this thread, I've been called a "crackhead", "smart ass", "asshole", "scum sucking bottom feeder", "jerk".........did I leave anything out graysands? I'm sure other readers of this discussion are mesmorized by your brilliance. From start to finish, exactly what have you added to this discussion which might be helpful to anyone other than your psychiatrist?
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Permalink Reply by sesport on
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Shale Geo - I believe that's what graysands was trying to do, but more importantly also apologize. 'Nuff said, move on with the discussion and let's get this gas moving!
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Gray,
Get a grip man. Very unlikely that there is Haynesville Shale in your area.
Very good possibility that here is good sand play there. Be glad for what you have. -
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Permalink Reply by Bill Murphy on
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To help clarify this somewhat, the 500 acres that is under lease was leased at $250.00 per
acre sometime ago. The other 140 acres is unleased. When all of the leasing is complete, I
expect about 5 percent or less will be unleased. The last offer that I heard of was $400.00.
I have heard that CHK has expressed a desire to lease at least 90 percent. That tells me that
they do not expect 100 percent.
Some of the landowners have said they do not plan to sign a lease, period.
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