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 -
Bill, if your acreage is even slightly Haynesville prospective, and it must be if CHK is leasing in your section, I'd have to ride them down, too, if their best offer was $400/ac. 5% or less unleased shouldn't be too big an issue for them. I would be shocked if they drilled a Horizontal with you unleased without first making a genuine effort to lease you. The effort so far doesn't appear genuine. Maybe they're not in a big hurry, if they don't plan to drill it for a while.
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Permalink Reply by Bill Murphy on
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They are building super pads in this section with an adjoining super pad in the
section just south of this section, plus 2 more in the 2 sections just west of
these. Also a pipeline is under construction or preparation for construction.
They gave an excuse that they thought we (the other 140 acres) was already
leased. They certainly know now that it isn't. I have heard that they plan to
start drilling next month.
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Permalink Reply by Spring Branch,mineral owner on
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I am convinced that CHK is going in so many directions @ the same time, that their right hand doesn't know what their left hand is doing. I have unleased acreage a mile and a half from Petrohawk's 28 mmcf/d (million, KB) well and before Petrohawk announced the results of their well, I tried to get CHK to lease it. They turned it down saying they didn't have any acreage in the area. Turns out the operator of the Cotton Valley in my section had sold/farmed out their deep rights to Chesapeake. I am convinced that when they turned me down on the lease, they really didn't know that they had the deep rights on the majority of the acreage in the section. It'll cost them more the next time we talk!
On another subject, Bill. What do you refer to as a super pad? When I use the term, I'm talking about CHK building a 8.5 ac. or so acre pad right on the section line between two sections. One half of the pad is in lets say the NE corner of Section 32 and the other one half of the pad is in the SE corner of Section 29. A giant pit seperates the two pads and the two pads share a common road. They can actually have two rigs drilling simultaneously, one drilling laterally to the south in 32 and the other drilling laterally to the north in 29. It seems to be a very efficient way to do it and where possible CHK will employ this method most of the time going forward. Does that describe what you are referring to as a super pad?
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Permalink Reply by Bill Murphy on
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I heard from the owner of the land where the super pad is beening built
that each of these pads can have 4 wells. There can be 8 wells on the 2 adjoining pads. Also the 2 other sections could support 8 wells, for a total of 16 wells in the 4 sections.
They have built a road (going south) and have east/ west roads at the end of this road to the pads that are on the N/S section lines.
The way I interpet this layout is for a pad on the a section to the north is:
One well going southeast - One going north/northeast - One going north/northwest - One going southwest. The section to the south would be reversed. The layout for both sections would form an eight pointed star.
Thereby covering all areas of both sections.
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Permalink Reply by Snake Stewart on
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Permalink Reply by Shale Geo 32 minutes ago
Children. Can we stay on point and cut out the ridicule? It is posts like these that drive away anyone with real knowledge of the play. Think about that.
Jay
Good point Jay.
But us children will be children. Especially when we feel someone is talking down to or being disrespectful of someone.
I am glad that all 6 pros on here, "with real knowledge of this play" have tried to continue to enlighten us but if it cant be done in the proper, polite manner, it means zero because people will stop reading. If we look back through the pages of this site, the pros have certainly tipped the scales in their favor in terms of being antagonistic, excluding yourself and a few others that come to mind. If not for me,to help balance things out, the scale would have already flipped over, gone off the table and onto the floor. (LOL)
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Permalink Reply by Dorcheated A1 on
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To be honest this is the most excitement I've seen on here in awhile.
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Permalink Reply by Two Dogs, Pirate on
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You been laying low though, for a few weeks.
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Permalink Reply by Dorcheated A1 on
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Two Dogs,
If it keep's at this pace I might go two more weeks.
I'll go back and read some old post. Maybe it will stir the old blood.
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Permalink Reply by Two Dogs, Pirate on
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I sure has been slow. A good argument at least keeps things a popping. We could allways prod Earl or Snake and get something started.
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Permalink Reply by BirdDawg, plain ole' idiot on
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A'll right guys. I got my rsp's on my head.
And my banana hammock going on too.
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Permalink Reply by Two Dogs, Pirate on
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Is that your pirate clothes BD.
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