New Type Auction
initially offers
OIL GAS Lease Options to buy at The sellers asking Price
Oil and Natural Gas producers, investors and interested parties flocked to an unusual auction (some bids on leases were also received from the Internet) at the Holiday Inn in Shreveport at which drilling leases were put on the block for only a down payment barely amounting to pocket change for most energy companies. McClure noted the basic sale is like going to a livestock auction: different buyers looking to buy various deals coming thru the gate except that the auction starts with 6-day option to buy at the seller's asking price. This can quickly turn into a normal auction with the seller receiving more than he was asking.
In this auction the bidding was on more than 30 privately held lease areas. In each
case, all that was actually bought was an option to check out the property for up to six days during which the right to buy the leases at a full price is held exclusively for the winning bidder. This concept of putting down a small amount of cash in order to lock in the chance to buy hundreds or thousands of acres of drilling leases was a novel idea to most of the oil industry buyers present at the auction. As the bidding proceeded, they showed good acceptance of the idea developed by Pabco Energy, Inc(The Auction Company).
One buyer, who asked not to be identified, said that for a small amount of money, his company could not afford not to reserve some of the available leases for possible
purchase, because increasing industry competition for drilling sites is making leases
harder to come by. If at the end of six-day option period, the bidder wants to buy the leases, he may do so at the minimum asking price per acre set by the seller, or the buyer can try to negotiate the price downward with the seller approval, Global Trade Days Inc President Hal McClure said.
He noted, however, that if the winning bidder decides the property is not worth buying, the bidder forfeits the option money which is then split between the
seller and Global. By doubling their option money, option holders may gain another six days to study leases or deals they have the option to purchase, McClure said.
McClure noted that by offering these options at auction, private mineral owners are likely to get more money for drilling leases than they would if these owners try to sell the leases themselves. "It helps to get the leases out in front of more people and on the Internet," he said. Pabco, hoping its concept will catch on, plans to conduct future lease auctions.
Four Oil And Gas leases from Shreveport area (Haysville Shale) were optioned at auction for over $20,000.00 per acre asking price. Two well service companies, one with 2 service rigs and one with 5 service rigs. The option money immediately became serious... this placed them into a traditional auction with the companies selling for more money than what the owners had asked. For additional details on this process, read six-day option process.
Should the option money have gone over 20% of the per acre asking price, the leases would have been returned to auction and auctioned in a regular auction and could have sold for more than the asking price per acre.
Leases and several other Oil and Gas items will be auctioned in future weekly Friday 10 am auctions in Shreveport, LA.
Their website at www.globaltradedays.com has more information.
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For Immediate Release |
