The state conducted its regular monthly lease sale and the results show positive signs of recovery for Louisiana’s oil and gas properties. The shift couldn’t have come at a better time for the state. The lease sales in June and July resulted in two-year record lows, while April and March both produced the worse numbers on file since 2004. The February sale was actually up from last year, but 2009 started off with the slowest January sale the state had seen in 13 years.
During the August sale yesterday, the state Mineral Board collected more than $7.3 million from 31 leases covering 2,600 acres. There was even action on normally-dormant offshore property, as the Houston-based Hilcorp Energy Company scooped up 33 acres in the South Timbalier area for $9,141. There was also an offshore lease sold in July, but it was the first one for the state since January.
East Baton Rouge Parish got up on the board this week as well thanks to a $2,100 investment from local landman Mark A. O’Neal. The lease is 2.7 acres and situated near the St. Helena Parish line. In addition to this high bidder, leases were sold in 11 other parishes, including Allen, Caddo, Cameron, DeSoto, Lafourche, Madison, Ouachita, Plaquemines, Red River, St. Charles and Terrebonne.
As for how the figures look statewide, that’s a matter of perspective. This year’s August oil and gas lease sale is dwarfed when compared to last year’s August sale, but that’s due chiefly to the record-setting activity that was taking place then in the Haynesville Shale area of north Louisiana. In August 2008, the state moved 51 leases covering 7,432 acres and collected $93.8 million, about 13 times over what was collected this month.
When the monthly sale is contrasted against August sales from preceding years, however, a small upswing in the value of leases statewide can be seen, which is among the first signs of recovery lease sales have shown this year. The numbers level out beginning in August 2007 and reveal that this month could actually be labeled a performer of sorts. From 2005 to 2007, the August sales averaged about 37 leases each and $2.8 million in revenues—this month nearly saw that monetary amount tripled.
If this month’s sale revealed any consistency, it can be found in the fact that action is still hot up in north Louisiana. Twenty of the 23 north Louisiana leases were sold in Caddo, DeSoto and Red River parishes, in the area of the Haynesville Shale natural gas formation. Of that 20, 16 were sold in Caddo Parish, the hub of related activity. Lease values also remain strong in that area, officials point out, with the 20 Haynesville Shale area leases averaging more than $6,500 an acre—up from nearly $4,800 an acre in July.
