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.”

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.

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?