Haynesville Shale on Front Page of New York Times

Well, I guess the whole world now knows about the Haynesville Shale, since the New York Times has written about it today, featuring it on page 1A.

MANSFIELD, La. — They had to repeat the amazing number, $28.7 million, over and over, to make sure it was real and would not go away. Even then, the members of the De Soto Parish Police Jury — the county commission — could hardly believe it.

They laughed, rocked back in their chairs, shook their heads, stared at the ceiling and muttered oaths to each other. “We have — $28.7 million,” said the president, Bryant Yopp, to settle the matter, definitively if still incredulously. It was nearly one and a half times the parish’s entire annual budget.

A no-holds-barred, all-American gold rush for natural gas is under way in this forgotten corner of the South, and De Soto Parish, with its fat check from a large energy company this month, is only the latest and largest beneficiary. The county leaders and everyone around them, for mile after mile, over to Texas and up to Arkansas, in the down-at-the-heels city of Shreveport and in its struggling neighbors, suddenly find themselves sitting on what could prove to be the largest natural gas deposit in the continental United States.

Already, several dozen people who own parcels of land over the field are becoming instant millionaires as energy companies pay big money for the mineral rights to the gas, which like other energy sources is worth far more than it was last year. Jalopies are being traded in for Cadillacs, plans for swimming pools are being hatched in rusty trailers, and the old courthouse here is packed to the rafters day after day with oil company “landmen” (and women), whose job it is to frantically search the record books for the owners of the mineral rights to land that has become like gold.

In the space of months, the price of such rights on an acre has shot up to $30,000 from a few hundred dollars and is still climbing. Some very modest people, in a place where the Tough Steak Meat Market sits near the Triple J Motors car lot and the courthouse square is half boarded up, are becoming very wealthy, very quickly.

“These people are not college graduates,” said Reggie Roe, a parish official who has 987 acres and is looking at considerable enrichment himself. “Now they’re walking in with $2, 3 million. They don’t know what to do with it.

“What are these people going to do with all this money?”

So far, relative restraint — or perhaps bewilderment — reigns.

“I bought a brand-new Cadillac,” said Mike Smith, an appraiser, but not for much longer. “I’ve always wanted one, and I wrote them a check for it, and that was a good feeling. It’s definitely made me, I guess you would call it, financially independent.”

“It’s just changed my whole life,” Mr. Smith said, adding, “You get over a million in one night, it’s hard to get used to.”

He is working on it though, with visions of a long-dreamed-of golfing vacation.

Linda Whatley, a bank worker who said she had become a “multimillionaire overnight,” said she had paid off her house, but being “country people” and “not extravagant,” she had kept a lid on spending.

“My retirement horizon has gotten shorter,” Ms. Whatley said.

The parish, meanwhile, overwhelmed with its windfall, is unsure what to do with it. “Let’s get the people out of the mud and the dust, in the entire parish,” said J. O. Burch, a parish leader, pleading with his colleagues for road spending. “The public has asked, all these years, for things we couldn’t afford.”

But caution prevailed. The people’s representatives listened to a few bankers preach investments and then held off on making a decision.

The upfront payments for the mineral rights are only the beginning, as people here never tire of telling visitors. The promise of additional royalties from the gas is already dancing in their heads.

“I’m going to get me one of these $70,000-a-month personal checks, and it’s going to change my life,” said the sheriff, Rodney Arbuckle. He did not appear to be joking.

The boom took off in late March, when word was announced of a highly productive new well in the area. Ever since, the gospel has been that Haynesville Shale, the name for the enormous gas-bearing rock deposit thousands of feet down, will transform this woebegone region, which has not known anything approaching prosperity since the oil boom went bust a quarter-century ago.

Nobody knows for certain how big an area the Haynesville Shale covers — no government entity has mapped it. But energy companies and experts say it is large, possibly the largest in the lower 48 states, with an estimated 250 trillion cubic feet of recoverable gas. (Last year, the United States consumed 23 trillion feet.) It is up to 13,000 feet underground, extending into East Texas. A few initial wells are already producing startling amounts of gas, and the country’s appetite for the stuff is only growing larger as petroleum becomes more expensive.

“Without question, there’s money flowing in already,” said the mayor of Shreveport, Cedric Glover. “The energy in the area, you can sense it; you can feel it.”

The hotels and bars in Shreveport, a long-suffering city near the Texas line, with its semiabandoned downtown and tomblike quiet after 5 p.m., are now filled with the oil company landmen, whose numbers have blossomed overnight from the low hundreds into the thousands, by some accounts. Neighborhoods in the city and elsewhere are banding together to strike the best possible deals with the energy companies.

The experts say the hype appears to be justified, which is why companies like the Chesapeake Energy Corporation and the Petrohawk Energy Corporation are now paying top dollar for land that was once hoarded to eke out miserly timber sales, at best.

“Six months ago, you could have bought the whole parish for $1,000 an acre,” said O. L. Stone Jr., the clerk of court.

New drilling techniques, prohibitively expensive until recently, are making it easier to fracture dense rock thousands of feet below the surface to extract the gas. Chesapeake Energy predicts dozens more rigs by the end of next year.

“The way I look at it, this is for real,” said Brian J. Harder, a research associate at the Louisiana Geological Survey, at Louisiana State University. Mr. Harder said at least five wells on the Haynesville Shale were already three to five times more productive than a comparable shale formation elsewhere.

“The five wells they’ve made are real,” Mr. Harder said. With Haynesville and another shale formation in Pennsylvania and southern and western New York, the Marcellus Shale, “we’re talking about doubling the nation’s gas reserves from two fields,” he said.

As it is, there is no elbow room at the 1911 Beaux-Arts courthouse in Mansfield, a city of about 5,500 people. Open a door into a small room, or look into a corner, and two or three landmen are stuffed into it, peering into their laptops. The Records Room is shoulder-to-shoulder.

“It’s nutty right now,” said one landman, Derrick Palmer, “but it’s nutty in a good way.” He was tracing the ownership and rights on an interesting parcel back to the 1840s.

Citizens, said by some of the landmen to have grown distrustful since agreeing to deals months ago that now look pallid, are in the Records Room doing their own research about mineral rights.

“I ain’t got but an acre-and-a-quarter,” said Floyd Turner, a truck driver. “But I’m hopeful. That’s all I can say.”

The Pickens Plan calls for More Natural Gas

Billionaire oil man T Boone Pickens has a knack for making accurate predictions about the future of energy markets. Pickens believes he has the plan (Pickens Plan) to save the United States from its dependence upon foreign oil. Pickens plan to reduce our oil consumption includes increasing our wind & solar power AND converting our automobiles to run on natural gas.

Investing in natural gas and the Haynesville Shale

Jim Cramer, former hedge fund guru, of CNBC's Mad Money says the price of natural gas stocks are ridiculously low. Cramer says one of the best long-term investments in natural gas is Chesapeake Energy (CHK).

Chesapeake's stock price has fallen with the price of natural gas, but Cramer doesn't think that either will be down for a long time. Cramer believes the world will use more, not less, natural gas, as efforts to find alternatives to petroleum increase. Besides, natural gas is cleaner and greener than oil-based fuels.

Oil Gains Ground, but natural gas continues slide

Since topping out at $13.50 per 1000 cubic feet on July 1, the price of natural gas has fallen sharply to $9.33, its lowest point since March. How will the falling price of natural gas impact leasing activity (and royalty lease bonuses) in the Haynesville Shale? This is a question that remains to be seen.

Oil Gains Ground, but natural gas continues slide
July 24, 2008 NEW YORK (AP) — Energy market investors managed to win back modest gains Thursday following oil's big drop a day earlier, but again drove natural gas prices sharply lower as a three-week sell-off of that fuel continued unabated.

Light, sweet crude for September delivery rose $1.05 to settle at $125.49 a barrel on the New York Mercantile Exchange — gaining back only about a quarter of Wednesday's decline. August natural gas tumbled 46.5 cents to settle at $9.283 per 1,000 cubic feet, its lowest point since March....

Natural gas fell after the Energy Department's Energy Information Administration said in its weekly report that natural-gas inventories held in underground storage in the lower 48 states rose by 84 billion cubic feet to nearly 2.4 trillion cubic feet last week.

Investors hoping for an uptick in demand — and a reason to stop the fossil fuel's sharp decline — were looking for signs of a slower build. However, the Energy Department figure came in at the high end of a forecast range of 79 billion to 84 billion cubic feet provided by analysts surveyed by the energy research firm Platts.

Natural Gas Leases: $20,000 an acre + 30% royalty

from KTBS

The Haynesville Shale has taken Louisiana by storm in a very short period of time.

In March, Chesapeak Energy announced the shale -- estimating the field had as much as 20 trillion cubic feet of natural gas. That would put it at four times the size of the gas field around Fort Worth known as the Barnett shale -- one of the biggest in the world.

A year ago, oil companies paid less than $250 an acre for the leasing rights to drill. Now, property owners are getting $20,000 an acre and as much as 30% of what a well brings in -- three times what it was a few months ago.

New Rigs on Order for Haynesville Shale

New rigs on order for shale
By Vickie Welbornvwelborn@gannett.com

Thirteen drilling rigs are on order to tackle exploration of the Haynesville Shale in northwest Louisiana and east Texas. Nomac Drilling LLC, a subsidiary of Chesapeake Energy Corp., the leading company in development of the natural gas reserve, has completed the order.
A news release Friday from Chesapeake does not specify how many rigs will go to each state.

Delivery will begin in late fall and continue through early summer 2009.
The order includes four National Oilwell Varco 1,000-horsepower and nine Letourneau Technologies 1,500-horsepower rigs. Rig fabrication will be done in Houston, where both companies have their headquarters.

All rigs will be able to drill to more than 17,000 feet deep to meet Chesapeake Energy's requirements to develop the shale area. Nomac's regional office in Marshall, Texas, will direct the new rigs and other Nomac rigs moving into the Haynesville Shale area. The rigs will require four crews of five people for around-the-clock operations.


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Sellers and Buyers Compromise to get the Most Out of the Haynesville Shale

From KTAL News. July 8, 2008

Local real estate experts say sellers and buyers want the same thing when it comes to the Haynesville Shale and are being forced to compromise. Ben Dowis, NWLA Association of Realtors, says “A seller wants to retain the minerals to benefit from the royalties and the buyers want to gain them so they can benefit down the road."


Dowis tells KTAL because of this, sellers and buyers are looking to negotiate. He says, "What we're seeing now is most buyers and sellers are compromising. In some cases a seller is taking the bonus or the upfront money on the lease and conveying the benefits to the buyer so they may benefit from the royalties at a later date."

Jennifer Houghton with Remax Executive Realty assisted a person in selling his home but tells KTAL because of the Haynesville Shale, it was not easy. Houghton says, "We had a buyer that wanted the mineral rights. We had a seller that wanted to reserve the mineral rights." So, both parties decided to compromise. Houghton says, "The seller is reserving the mineral rights for five years and the buyer will receive them after that."

Both Houghton and Dowis say if a compromise is not reached the seller and the buyer could feel some negative side effects. Dowis says, "If the sellers want to retain them it may impact the value he's going to receive on the property. If the buyer wants to acquire them it may impact the property value he'll have to pay.”

If in the end the seller decides not to negotiate and desires to keep his or her mineral rights, the seller cannot drill directly on the property unless the buyer grants surface use. However, the seller can do what's called diagonal drilling. That's an option to drill from a different location.

GMX Resources Inc. Announces Haynesville/Bossier Shale Drilling to Begin 3Q08

OKLAHOMA CITY, July 7, 2008 (PRIME NEWSWIRE) (visit www.gmxresources.com to view the most recent Company presentation and for more information on the Company)

GMX Resources Inc. (Nasdaq:GMXR) today announced the commencement of a Haynesville/Bossier drilling program, beginning in Q3 2008. The Company expects to spud four rigs drilling horizontal wells in the Haynesville/Bossier Shale in its 100% acreage in 3Q08. GMXR will change its drilling program to development of the gas shale. Additionally the Company expects to deploy two Flex "purpose built" rigs in early 2009.

"The early successful results of nearby and offsetting Haynesville/Bossier wells warrant our company's conversion to focus the majority of our efforts drilling horizontal wells. This plan will fully develop our underlying gas shale over the next five years at 80 acre density. Production rates from the shale and rates of return appear to be far superior, which should increase GMXR's production, cashflow and return on equity over the period. We will continue to add shale acreage around our core area and will also add additional rigs to develop the shale during this period of high natural gas prices," stated Ken Kenworthy, Jr., the Company's Chief Executive Officer.

Increase in Capital Expenditure Budget
GMXR also announced an increase in its 2008 capital expenditure budget from a previously announced $195 million to $271 million. This increase will allow the Company to drill up to 4 to 6 net horizontal Haynesville/Bossier shale wells in its 27,500 net Haynesville acres. The new capital expenditure budget also includes acreage acquisition cost, infrastructure build-out and equipment upgrades. The Company expects to fund its entire capital expenditure budget with cash flow and its forecasted bank borrowing base. Additionally, the Company has increased its 2008 guidance for discretionary cash flow to $100 million, up from $80 million, revenue to $140 million, up from $125 million and EBITDA to $115 million, up from $95 million. Production guidance will also be raised to 7.8 BCFE for 2H08 and 13.8 BCFE for the full year. 3Q08 production will be flattened somewhat to 3.3 BCFE due to longer drilling times for the horizontal wells, but 4Q08 should increase to 4.5 BCFE and raising daily production rate expectations to 60 Mmcfe/d by year end, up from previous guidance of 42 Mmcfe/d.

Successful Completion of Haynesville Acreage Addition
GMXR successfully closed its previously announced acreage acquisition. Effective July 1, 2008, the Company has added an additional 7300 net acres in Harrison, Marion, and Cass counties in East Texas plus acreage in Caddo Parish, Louisiana. The Company now operates a total of 28,000 net acres with 27,500 Haynesville/Bossier acres with 344 locations on 80 acre spacing. Continue story here.

Oil & gas companies drilling in the Haynesville Shale

Oil & gas companies drilling in the Haynesville Shale

Posted: May 29, 2008 08:43 PM Updated: June 17, 2008 10:15 AM

Source: KSLA http://www.ksla.com/Global/story.asp?s=8399052

The boundaries of the Haynesville Shale are not exactly known., but it's believed to stretch from Sabine Parish all the way up through DeSoto, parts of Red River, Caddo, Bossier and Webster Parishes. Surveying and exploration continues, and companies aren't sharing their estimations for proprietary reasons. But they are snatching up land and mineral leases.

Here is a list of oil & gas companies currently working and drilling in the Haynesville Shale :

*Goodrich Petroleum Corp. (NYSE: GDP) Goodrich announced May 29th the acquisition of additional interests in the Cotton Valley trend, which increases its net exposure in the Haynesville Shale to approximately 30,000 net acres. The Company also announced updated Haynesville drilling activity at Bethany-Longstreet and plans for the Longwood field. They also announced the signing of a definitive purchase and sale agreement with a private party to acquire approximately 3,250 net acres in the Haynesville Shale. The Company has plans to drill two new vertical wells and re-enter another to test the Haynesville Shale at Longwood by the end of the year.

*Chesapeake Energy Corp. (NYSE: CHK) is the third-largest U.S. natural gas producer in the U.S. The Oklahoma City-based company says its Haynesville Shale site in Louisiana "could potentially have a larger impact on the company" than any previous project. Chesapeake already has 300-thousand acres leased in the Haynesville Shale, with a handful of wells already drilled. The company plans to have a total of a half a million acres and 15 rigs up and running by the end of 2008.

Chesapeake and Goodrich Petroleum Corp. announced June 16th plans to enter into a joint venture to develop crude oil and natural gas prospects in northwest Louisiana. Chesapeake will pay Goodrich about $178 million for working interests in deep strata of the Bethany-Longstreet field. Oklahoma City-based Chesapeake also will pay an undisclosed amount to a third party for rights to the deep strata of the Longstreet field.
The purchases, expected to be completed by July 15, will give Goodrich and Chesapeake each a 50 percent stake in the deep strata of the two fields, located in Caddo and DeSoto parishes.

Petrohawk Energy Corp. (NYSE: HK) has entered into agreements with several private parties to acquire additional leasehold interests in the Haynesville Shale area of North Louisiana. These agreements also include rights to other formations. These additions bring Petrohawk's acreage position in the Haynesville Shale play to over 70,000 net acres, including approximately 30,000 net acres in Elm Grove field, historically the Company's largest producing property with natural gas production from the Hosston and Cotton Valley formations.

Exco Resources Inc. (NYSE: XCO) Oil and natural-gas producer Exco Resources Inc.'s board approved a $123 million increase in its 2008 capital budget, to $923 million. The increase includes $90 million for the more drilling in the company's Haynesville Shale position in Louisiana, $30 million for additional drilling in its Vernon Field in Louisiana, $2 million for additional Cotton Valley drilling in Texas and $1 million for information-technology initiatives, Exco said. (AP)

XTO Energy, Inc. (NYSE: XTO), announced late last year it would pour most of it's capital budget into emerging gas plays in East Texas and Louisiana, including the Haynesville shale. Their primary producing horizons in the Eastern region include the Pettit, Rodessa, Travis Peak (Hosston in La.), Cotton Valley Sand, Bossier (Gray Sand in La.), Cotton Valley Lime and the Haynesville, ranging in depth from 5,000 to 13,000 feet.

Cubic Energy, Inc. (OTCBB:QBIK) is based in Dallas and described as a "junior explorer" that recently reported positive results from three deep wells it drilled in the play. The company announced May 12th plans to drill two new wells to the Haynesville Shale in the Company's northwest Louisiana acreage. The company is evaluating and planning for some horizontal drilling in the Haynesville Shale for possibly later this summer. www.cubicenergyinc.com

GMX Resources Inc. (GMXR) The Company expects to add a sixth leased rig in early 2009 which will focus exclusively on horizontal development of the Haynesville/Bossier gas shale in the Company's operated acreage. In 2006, GMXR and its joint development partner Penn Virginia Oil and Gas, L.P ("PVOG") had drilled and completed 19 vertical test wells across its acreage completing the Haynesville/Bossier Shale in most of the wells.

Rest of the story here: http://www.ksla.com/Global/story.asp?s=8399052

Residents turn out in droves for Haynesville Shale meeting

Residents turn out in droves for Haynesville Shale meeting

By Ginger Ramsey / gramsey@gannett.com

Southwood High's flagline was practicing on the corridor in front of the school's office as hundreds of Southern Hills residents filtered into the auditorium for a Haynesville Shale 101 meeting June 17. The informational meeting was held after Southern Hills Home Association President Pat Spigener said, "In the past couple of weeks, I have had many requests by homeowners to know more about the recent issue of Haynesville Shale. The homeowners association has responded to your requests." SHHA members welcomed visitors and directed them to tables where they could sign in to receive additional homeowner information and an informational brochure from the mayor's office before searching for a seat. "There were well over 650 names signed in," Spigener said. Southwood High assistant principal Jeff Davis helped the audience find seats and line up against the walls as people poured in from the south parking lot before making the final assessment, which closed the meeting due to overcrowding. Those turned away were invited to attend other meetings June 19 at a nearby church and June 21 at the Convention Center. "It really was a great turnout. I didn't know there was a fairly large amount of people turned away," said Spigener.

Read the rest of the story at The Shreveport Times. http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=/20080625/SHVOICES/806250312

Chesapeake enters into Haynesville Shale venture

Chesapeake Energy enters into joint venture with Plains Exploration for Haynesville Shale

NEW YORK (Associated Press) - Natural gas and oil producer Chesapeake Energy Corp. said Tuesday it entered into a joint venture with oil and gas company Plains Exploration & Production Co. to sell a part of its leasehold in natural gas deposit Haynesville Shale.

Chesapeake said Plains Exploration agreed to buy a 20 percent interest in its leasehold as of June 30 for $1.65 billion in cash. Chesapeake owned about 550,000 acres of the shale, in northwest Louisiana, as of that date. As a result of the joint venture, Plains Exploration will own 110,00 acres and Chesapeake will own the rest.

Chesapeake said it plans to keep acquiring leasehold and Plains Exploration will have the right to a 20 percent participation.

Under the joint venture, Plains Exploration has also agreed to fund 50 percent of Chesapeake's 80 percent share of drilling and completion costs for future wells over a period of several years until another $1.65 billion has been paid.

Chesapeake said the companies' current leasehold could hold unrisked unproved reserve potential of 23 trillion to 44 trillion cubic feet of natural gas equivalent.

The company added it expects to drill at least 600 wells over the next three years.

Where are Gas Wells being Drilled

Where is the Haynesville Shale? Here's a map showing the primary drilling activity in NW Louisiana, North East Texas (and a little Arkansas).

Check out this MAP of the drilling activity in Louisiana.

Do you own mineral rights in the Haynesville Shale area? Have you been contacted about leasing your minerals? Leave a comment. Let's get a good discussion going.

Haynesville Shale - Crystal Ball Needed? Or Not?

Haynesville Shale landowners (mainly mineral rights owners) may not need a crystal ball to predict the future when it comes to potential gas royalties. Based on (a) the huge investments being made by gas companies; (b) the advanced geological tools used today and (c) the huge hits made by Penn Virginia and Petrohawk, there’s definitely a lot of gas in the Haynesville Shale.

Many predictions have the Haynesville Shale being bigger, much bigger, than the Barnett Shale. So, put away your crystal ball and gaze west to Fort Worth and beyond to see what’s happened in the Barnett as the best predictor of what’s to come in the Haynesville Shale. Some handy links:

Fort Worth Star Telegram’s Barnett Shale Blog

Ask Chesapeake

What’s your prediction? Hype or Boom for the Haynesville?