Louisiana Haynesville Shale Report May, 2011Louisiana Haynesville Shale                     REPORT                      Su...
Louisiana Haynesville Shale Report                                                                            2Well Activi...
Louisiana Haynesville Shale Report                                                                                        ...
Louisiana Haynesville Shale Report                                                                                        ...
Louisiana Haynesville Shale Report                                                                                        ...
Louisiana Haynesville Shale Report                                                                                        ...
Louisiana Haynesville Shale Report                                                                                        ...
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Sell Mineral Rights and Oil & Gas Royalties in the Haynesville Shale


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Check out the Haynesville Shale Report to get all the latest information on drilling, permits and production in Louisiana's Haynesville Shale. Caddo's mission is to educate Landowners and help them maximize their Mineral Rights and Royalties.

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Sell Mineral Rights and Oil & Gas Royalties in the Haynesville Shale

  1. 1. Louisiana Haynesville Shale Report May, 2011Louisiana Haynesville Shale REPORT Summer, 2011 SPONSORED BY CADDO MINERALS INC. - CADDOMINERALS.COM
  2. 2. Louisiana Haynesville Shale Report 2Well Activity Benton Shreveport Haynesville Shale “Core” Mansfield Coushatta Wells Currently Producing Wells Not Yet Producing Wells Permitted 1,072 626 309 Permits for New Haynesville Shale Wells 300 250 200 150 100 50 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011E
  3. 3. Louisiana Haynesville Shale Report 3 What Landowners Should Expect for 2011 Drilling in the Haynesville Shale is expected to decrease in 2011 due to continued low natural gas prices and competition from more pro table oil plays. A er 2 years of steady growth, permits for new Haynesville Shale wells peaked in September, 2010 and then fell by 21% in early 2011. Well operators are now only drilling wells that are required to hold their leases. They will not drill development wells until natural gas prices see a substantial increase. Additionally, many leases will expire un-drilled, and will not be re-leased because the Haynesville Shale Core is shrinking. Natural Gas Prices (U.S.) Haynesville Shale Decline Curve 14 20,000 12 Production Rate MCF/DayPrice of Natural Gas ($) 10 15,000 51% Decline After 3 Months 8 10,000 6 69% Decline After 6 Months 4 82% Decline 5,000 After 12 Months 2 0 0 2007 2008 2009 2010 2011 1 2 3 4 5 6 7 8 9 10 11 12 Year Months of Production “As a mineral owner, what should I expect in 2011?” Low Natural Gas Prices Abundant natural gas supplies, caused by development of new shale plays, will continue to depress U.S. natural gas prices. Declining Production Rates The production from Haynesville Shale wells will decline dramatically during the 1st year. The average well declines 69% over the 1st 6 months, and 82% over the 1st year. Only 1 Well per Section Haynesville Shale wells are not pro table at current natural gas prices. Until well economics justify drilling new wells, operators will only drill 1 well per section in order to hold the leases. Lease Expirations Many leases outside of the Core will be allowed to expire, and may not be re-leased because of poor well economics. Smaller Royalty Checks Royalty owners will see smaller royalty checks as the 1st well in the section declines, and no additional wells are drilled. Lower Lease Bonuses Landowners with land located outside of the “Core” should not expect to be re-leased. Lease bonuses inside of the Core will be much smaller than during the leasing boom of 2008-2009.
  4. 4. Louisiana Haynesville Shale Report 4Landowner Risks Montana Major US Shale Plays Thrust Belt Williston Basin Cody Gammon Hilliard- Appalachian Michigan Basin Greater Baxter- Basin Antrim Green Mancos River Forest Basin City Basin Devonian (Ohio) Uinta Basin Illinois Marcellus Basin Utica Piceance Mancos Basin Excello- New Hermosa Mulky Cherokee Platform Albany Paradox Basin Pierre Lewis Woodford San Juan Raton Basin Anadarko Fayetteville Basin Chattanooga ArdBasin m Black Warrior Palo Duro Bend ore Ba Arkoma Basin Conasauga sin Basin Basin Floyd- Valley and Ridge Province Barnett Texas- Neal Permian Louisiana- Basin Ft. Worth Mississippi Salt Basin Miles Barnett- Marfa Basin Woodford Basin Haynesville- ± 0 100 200 300 400 Maverick Bossier Sub-Basin Pearsall- Eagle Eagle Ford Ford Rio Grande Embayment Shale Gas Plays Basins Stacked Plays Shallowest / Youngest Deepest / OldestHidden Risks of owning minerals in the Haynesville ShaleThe oil and gas business is inherently risky, and mineral owners in the Haynesville Shale are not immune to the risks that may impact thevalue of their minerals, including… Competition from other Shale plays If new, emerging shale plays are more pro table than the Haynesville, then well operators will choose to drill in those plays rather than in the Haynesville. (see map above) Low Natural Gas Prices Low natural gas prices will continue to suppress the value of Haynesville Shale minerals (see chart on page 3). Regulations Tighter regulations on hydraulic well fracturing, spurred on by concerns about protecting drinking water, could be devastating for the Haynesville Shale by driving up the cost of the wells, and reducing their productivity. Well Operators Well operators are in total control of the well, including how it is drilled and produced. A poor operator can greatly diminish the value of the minerals. Shrinking Core The Haynesville Shale “Core”, which is the area of better production, has shrunk as operators drill more wells. Acreage outside of the Core is in danger of not being drilled, and leases may be allowed to expire.
  5. 5. Louisiana Haynesville Shale Report 5Maximizing Value “I feel good about my Mineral Ownership, but I’d also like to better understand my options.” Minerals are a valuable, but risky, investment. Landowners can protect the value of their minerals, and enhance their personal situation, by converting their minerals into cash, and by using the proceeds to... (Minerals/Land) Buy stocks and bonds Fund retirement Pay for education Cash Fixed Income Diversification Foreign Equities (Bonds/Pension) more value in their minerals than is prudent, and they should consider Domestic Equities re-balancing their portfolio by converting some of their minerals into (Stocks) other investments. Should I Sell my Mineral Rights? You should consider selling your mineral rights if it makes good nancial Diversified Portfolio sense for you to do so. Get more information on selling your mineral rights at CaddoMinerals.com. You can also learn about selling royalties and get tips on leasing your land. Taking Control Landowners can take control of their minerals by asking themselves, "Do I have plenty of cash with no immediate If "Yes", then the mineral owner can feel good about retaining their minerals. If "No", then the mineral owner should consider selling all, or a portion, of their minerals, and diversifying their portfolio.
  6. 6. Louisiana Haynesville Shale Report 6 Keys to SuccessKeys to a Successful Mineral TransactionA successful mineral sale requires that both the Buyer and Seller are happy with the result. Fair Price Agreeing on a fair price is a critical aspect of a successful mineral transaction. Buyers are typically more knowledgeable and objective about the real value of the minerals, while Sellers o en react to their emotions and to local hearsay about valuation. Good communication is required to bridge the information gap to allow a transaction to occur. Title Establishing that the seller has good title is key to a mineral sale. The Buyer will research the real property and probate public records to establish “record title”. If record title cannot be established, then other steps may be necessary in order to verify ownership and close the transaction. E cient Closing Once a sales price has been agreed to, the Buyer should move quickly to complete the title review process and close the transaction. The payment should be in the form of a bank wire or check. Bank dra s o en take longer. Good Faith Dealing It is imperative that both Buyer and Seller deal in good faith in order to complete a successful transaction. CADDO MINERALS Cash for Minerals & Royalty Leasing Assistance No-Hassle Quote a leader in Louisiana’s Phone - Local - 318-490-0427 Haynesville Shale Toll Free - 877-620-7717 Email - info@caddominerals.com Online - www.CaddoMinerals.comHow Caddo Minerals Can Help You Minerals and Royalty Buyer Caddo Minerals is an active buyer of minerals and royalties, focusing on the Haynesville Shale. Leasing Caddo Minerals can assist landowners in getting their land leased. Knowledge and Expertise Our professionals are experts and knowledgeable about oil and gas minerals and royalties in the Haynesville Shale. Because of our deep knowledge about the minerals market, we are able to pay top dollar. Customer Service We are committed to serving our customers with the professionalism and respect that they deserve. We move quickly, and we “go the extra mile” for our customers.
  7. 7. Louisiana Haynesville Shale Report 7Questions & AnswersCommon Questions about Minerals & Royalty What are minerals? Minerals are everything below the surface of the land, including oil, gas, and other hard minerals. Minerals do not include subsurface well water. What is royalty? Royalty is the share of revenue that comes to the landowner from the sale of oil and gas produced from under their land or Unit. The royalty percentage is set out in the oil and gas lease. Can minerals and royalty be separated from the land? Yes, a landowner can sell their minerals or royalty while retaining the surface of the land. Can a portion of the minerals or royalty be sold? Yes, a landowner can sell any portion (eg ¼ or ½) of their minerals or royalty, and retain what they do not sell. What about inherited property that is shared with other family members? This is very common, and any family member can sell their minerals or royalty without having any e ect on the other family members. What is a Net Mineral Acre? The formula for Net Mineral Acre is ownership interest times tract size. For example, if 2 brothers each own a 1/2 interest in a 2 Acre tract, then each brother would own 1 Net Mineral Acre. What about Un-leased Land? Minerals and royalty have value, and can be sold, whether the land is leased or un-leased. What is a Haynesville Shale Unit? In Louisiana, Haynesville Shale wells are assigned to a 640 Acre Unit, and revenue is allocated to each landowner based on their ownership in the Unit and their royalty percentage. Assistance in Leasing The leasing boom is over in the Haynesville Shale, and oil companies are going to allow many leases to expire over the coming year. Having an active lease is essential for the Landowner to maximize value from his minerals. Identifying the best oil company to pick up the open lease, and negotiating favorable terms for the lease, requires extensive expertise and market knowledge. We Can Help Caddo Minerals can help you get your minerals leased. We have Have you considered the benefits of years of experience dealing with Oil and Gas companies, and have been successful in getting the best deal for our clients. Monetizing your Minerals? Talk to Caddo Minerals Contact Us Answers Fast Closing (318) 490-0427 If you decide to go at it alone, Caddo is more than happy to share a friendly conversation and lend you advice on leasing your Lump Sum Payment info@CaddoMinerals.com property. We’re all in this together! Local and Trustworthy www.CaddoMinerals.com