How Much Per Acre For Eagle Ford Shale Gas Leases?

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The Eagle Ford shale is a broad, crescent shaped area that runs from the Mexico border to southeast Texas. Landowners lucky enough to own the mineral rights in the area deemed to be productive of natural gas and oil are being approached by landmen, or representatives of oil and gas companies with offers to lease their property. From half acre city lots to multi-thousand acre ranches, the amount of lease payments per acre are all over the place. There have been Eagle Ford shale leases made early on, in potentially marginal areas to the north and south of the main play, of as little as $50 an acre.  Some savvy landowners in areas where the production is expected to be incredible, have held out for over $2000 dollars.
Your bargaining power depends on how hot competition is among oil companies for land, how close to producing wells you are and the current price of oil and gas.
If you are one of those landowners that has not signed a lease yet it is imperative that you consult with an area oil and gas attorney. They will have some inside knowledge of what your neighbors are getting. You may also want to have a conversation with your friends and neighbors about what might be a fair price. Many will be unwilling to disclose what they were paid but if you can get a ballpark figure, and find out what kind of royalty they will get from producing wells, it will pay off later.

All Eagle Ford shale lease acreage is not created equally. Some areas within the shale will prove to produce high volumes of natural gas, others high volumes of oil or condensate. There are marginal areas where little or no production will occur. For the most part, shale plays, like the Barnett shale, and Marcellus are semi-uniform, in terms of making a producing well near another producing one.

This should prove to be the case through the core area of the Eagleford shale, along the Edwards reef and Sligo reef trend. What the shale will be like toward the upper regions remains to be seen. The upper side of the Eagleford shale has been called the “oil window” and it is there that some incredible oil wells have been made.

With lease rates per acre of between $200 and $2000 per acre and varying amounts of royalty agreements it pays to be informed.

Here is a document listing some things you should consider when leasing your land for oil and gas exploration:

oil and gas lease
Please post your comments if you have any insight on how much per acre landowners are receiving in your area  and check back with this post to read the comments of others.
The book “Money In The Ground” is a very helpful, though not cheap, resource for landowners to own and refer to. It is available for sale at the link in the right margin of this page.

The Case Against Greed

If the going rate for leases gets too high, due to multiple landowners holding out for what the perceived “going rate” should be, then an oil company might move on and focus on leasing elsewhere where prices per acre are lower. Your land might be left out of the initial drilling phase and months or years could go by before a well is drilled. If you factor in the “opportunity cost” of having missed out on x amount of royalties from a producing well (and the interest that money would have accrued) your gamble might be seen later as having backfired. One month’s production at 25% royalties might equal many times what the difference in your and their price per acre for Eagle Ford shale acreage was. Also, say you sign a lease with “Joe’s Exploration Company” for $3000 a acre vs. $900 with a major oil company. Will the little company have access to the pipelines needed to move the amount of oil produced on your land, or get contracts with an oil hauler for enough trucks? Or, will your  well sit there on a 1/32th choke, held back until they can move the oil in a few months or years?   Remember, it only takes one producing well to hold most leases.  Situations like these may make signing with a major at a lower price per acre more attractive. (Just my opinion, so consult your oil and gas attorney since choosing which way to turn in this fast paced oil play can be very difficult.)

Note: There is a new discussion area for landowners. You may continue to use the comments below, or visit Eagle Ford Shale Leasing Discussion Area and join for free to exchange news with other landowners. Knowledge is power, so use this discussion forum to your advantage.

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