I've never really thought about it in too much detail, but aside from paying off all debt, the sole purpose of selling their North Louisiana Lease/production was to fund Burkley-Phillips#1. MNLU Leased 13,000 acres and AEXP leased 5,000 acres, and together their leasehold covers the entire Buena Vista "turtle structure" (the hump found between salt anomalies). MNLU pulled an interesting little trick and only sold the North Louisiana Working Interest to Formations below a line described as 100 feet below the base of the Cotton Valley Formation (my wording may be off). Meaning that MNLU still has 100% of the leasehold to the Cotton Valley and Hosston Formations, both of which are prospective for natural gas. Furthermore, this lease is held by production for as long as the Haynesville Shale wells below are operated, which will be 20-30 years.
Last year, MNLU had a $40 million dollar line of credit provided by Guggenheim, but unfortunately, it's term has lapsed and as far as I know they never touched it...
If you are wondering what the cost will be to extend any leases that expire, I would assume $200 to $300 per acre, that is a fairly educated guess if they don't have contracts with 3rd party land companies to deal with. Though they will be at the mercy of the landowners, unless stated otherwise in the original lease document. In order to proceed with the well's completion, they only need to hold the lease on the 640 acre drilling unit the well is situated on. The next priority after securing this acreage would be to extend the lease on the 5000 acres that AEXP holds, as it is the best acreage from a geological standpoint. Looking back at the PR from last January part of the leases was extended for one year, and part for two years. Only the leases extended for only one year will be expiring in next January.
