How Much Per Acre For Eagle Ford Shale Gas Leases?
The Eagle Ford shale is the nation’s hottest oil and gas play and oil companies are paying top dollar for leases in areas where the concentrations of oil and natural gas liquids are the highest. The Eagle Ford shale is a rock formation that covers a broad, crescent shaped area that runs from the Mexican border to southeast Texas. Landowners lucky enough to own mineral rights in areas considered to hold natural gas and oil are being approached by landmen, or representatives of oil and gas companies with offers to lease their property. Oil companies are interested in everything from half- acre city lots to multi-thousand acre ranches and 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, for as little as $50 an acre. Some savvy landowners in areas where the production is expected to be incredible, have held out for over $6000 dollars or more per acre. (There are some crazy figures being thrown around these days, who knows what is true at this point.) When you hear figures such as “$22,000 paid by Marathon Oil for Eagle Ford acreage”, realize these numbers are not what landowners are receiving, but are what was paid in transactions between corporations holding already leased land.
How Much Is My Land Worth Per Acre For An Eagle Ford Shale Oil Lease?
Your bargaining power depends on how hot competition is among oil companies for land, how close to producing wells you are and how prolific they are, if you are in the “oil – wet gas” windows of the play, thickness and quality of the shale in your area, the current price of oil and gas and last but not least, how much land you have.
If you are one of those landowners that has not signed a lease yet it is imperative that you consult with a good oil and gas attorney. Aside from reviewing any offers that you have received, they may have some inside knowledge of what the going rate for Eagle Ford shale leases is in your area. You may also want to have a conversation with your friends and neighbors about what offers they have received. Some may be unwilling to disclose what they were paid (most oil leases include a nondisclosure clause) but you may get a ballpark figure.
Why Some Acreage Is Worth More To Oil Companies
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 Eagle Ford, Barnett shale, and Marcellus shale are semi-uniform, in terms of making a producing well near another producing one. EOG Resources, for example, has drilled over 100 wells and not had a “dry hole” in the Eagle Ford shale.
Where Eagle Ford Shale Price Per Acre Is Highest
In the central, “over pressured” area of the Eagle Ford sale, or the “wet gas and condensate – volatile oil windows,” some very high producing wells have been made. Prices per acre for Eagle Ford shale oil leases in the liquids rich zones have reached record levels.
With oil and gas lease rates per acre of between $200 and $6000+, with 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. It is a bit outdated, and contains some advice that does not pertain to Eagle Ford shale leasing, but nevertheless it will give you an idea of things to consider when leasing your land for oil and gas exploration.
oil and gas lease
Another document about oil and gas leasing from Texas A&M University can be found here: Oil and Gas Leasing Tips
Please post your comments below 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 Case Against Greed
Here is just something for everyone to ponder. I’m not an O&G landman or big landowner, etc. As a former oil and gas industry employee who worked in horizontal drilling in the Barnett Shale, I started this site to help folks understand what the Eagle Ford shale is and what it is about to become. For small landowners (less than 300 acres) it’s definitely not just about “price per acre” for leases when so much royalty income is at stake. A few months production could make your price per acre for leasing seem like “chump change”. A royalty share of 25% is commonplace in the Eagle Ford shale. Under such terms, the landowner receives a quarter of the revenue from an oil or gas well as long as it produces.
Even with well spacing of around 140 acres, oil companies like a large amount of land on which to drill multiple laterals, dig frac pits, drill Carrizo water wells, etc. There is still lots of country to be drilled and many large ranches to drill on with ideal conditions so smaller tracts of land are less desirable. A competing company is less likely to get into a bidding war for a 100 acre tract in the middle of someone else’s territory . In areas where the land is all divided up, a few “hold outs” may just end up putting off the major oil company who is leasing most of the area, and they might just move on elsewhere for the time being. Laterals of several thousand feet may cross numerous parcels and if there is a landowner holding out because they heard “somebody”, somewhere else got $10,000 an acre when the going price in your area is $1000 an acre, larger companies may get tired of playing games just pass the acreage by, letting leases expire. There is a shortage of frac equipment, trucks, rigs, etc. right now and companies like EOG Resources and Chesapeake are prioritizing what will get drilled and what will not. Not all the land leased on three year terms will be drilled. Big ranches will come first.
Developing this oil play is more like a predictable manufacturing operation, rather than how oil wells were drilled in the past vertically, low tech and with lots of uncertainty. A lot of money and machinery all need to come together in one place and the more room there is, the more that can get done.
The highest price per acre for Eagle Ford oil and gas leases right now are in the “oil and wet gas windows”, are on big acreages, and are free of hassles like landowners nickel and dimeing over lease payments or heirs squabbling. O&G companies are first going where it is “easy and there is oil”. These are just a few things to think about when offered an oil lease on your land.
As a small landowner, if you get a good offer from the oil company who has leased up most of the land around yours, you might do well to take it. Greed may very well backfire on you, and have repercussions for all the other landowners around you. These are just my thoughts and are no substitute for the advice of a good oil and gas attorney.
Chime In!
Please use the comments section below to discuss going rates per acre in your area or to ask questions. No solicitations please!
I would think the going rate even for acreage with non participating mineral rights would be much more than the going bonus rate for the area. Before signing any deal, get several offers and have a law firm that specializes in oil and gas, such as Martin Abstract in Jourdanton, Tx, take a look at the deal. Though most lawyers have nondisclosure agreements with clients they could possibly help you avoid an unfair deal.
EFS Blog Editor, so what happens when you have a fault running underneath your property and you never get drilled because the Operator who shot seismic on your property would never drill in or around a faulted area? They have that info but you, the mineral owner do not alot of times. So, in that case, the answer is you would have been better off to receive a bonus but no royalty was ever had when you could have sold at least some of your mineral interest after collecting the bonus money to diversify your risk. This same thing happened to me under an EOG lease in Karnes Co., which is one of the most productive counties in the play. Therefore, what I did, by not selling at least some of my minerals, is I played oil man and gambled and lost. That is fine because I am a gambler and can afford to lose but It depends on your risk tolerance, etc… and how much of a gambler one is. You act like everyone wins every time because there are no dry holes but there are no dry holes because the oil companies shoot seismic first and spot faults and then never drill there so that is why they have no dry holes. But to the mineral owner, it was a dry hole when maybe they could have taken some chips off the table at some point by selling. Unless you know the geological footprint of your exact tract, you do have risk of having a negative geological anomaly that many others may not have, i.e., you are playing russian roulette. So, I would suggest that unless you are independently wealthy and you can afford to gamble and take the risk, odds are you will be ok but some people might rather take a bird in the hand and not put all their eggs on one basket. Every situation is different and you have to act accordingly. Do not think that your case is accurate for all individuals. Personally, I now otherwise and wish that I would have sold some and kept some because in hindsight, that would have been the best decision based on the production outcomes v. the price that I was offered for my mineral interest which was better than not receiving any royalty income.
Allen
Thank you for your feedback. You present some good arguments for selling part of your mineral rights that might pertain to very small tract owners. I could see that some people with non participating mineral rights, those about to die, etc, may benefit from selling out, but I don’t see the fault block argument as that much of a factor. Chances are if you’ve got more than just a few acres, you’ll get a well drilled in one of those fault blocks on your property, so selling out because of that fear seems irrational to me. Of course it could happen, but none of the landowners I know in McMullen, LaSalle or Atascosa wouldn’t consider that so big of an issue as to sell out. Let me make it clear that I’m not opposed to those who buy and sell mineral rights. The problem is, as you may be aware, there are some shady operators working in S. Texas right now, and many are misleading folks, especially older ranchers, as to the facts. Some folks don’t even understand the difference between selling and leasing, unfortunately the buyers aren’t educating them. Case in point. An older widowed rancher, who I have known since she taught me in elementary school, recently was approached to buy her mineral rights on 360 acres. She sold, and received a one time payment of around $5000 an acre. Only two months before that, her neighbors had got $3000 per acre in bonus money, so she though she had made a good deal, not understanding how royalty works. Granted she is 77, but now her neighbors have two wells, making 600 barrels a day plus gas, and she has one on her land, from which she or her grandchildren will never see any money. They’re suing for misrepresentation, but not sure how that will go. Each time I visit my elderly parents I find several more letters from companies wanting to buy their mineral rights and that concerns me a great deal, since I don’t believe all of the buyers out there operate on the best ethics. Many do, however, and I’m sure that your firm is one of them. . Let’s just agree to disagree and leave it at that. Since I don’t know “who is who” and what the ethics of the company they represent are, I’d rather that posts on my site contain only information about fair rates in the area, without solicitations for business. I know it’s easier to have the person contact you via email or a phone number to answer these questions, but each day I’ve got to delete over 50 (or more) spam posts on that one article alone. You could change your user name to reflect who you are with, such as “Coyoteminerals” so that folks could look you up on the web in that manner. Or, you can make your user name an active link to your site by putting in the URL info on the post form, either way, I’d like to keep solicitation on the blog to a minimum for my own piece of mind, as well as to avoid clutter, legal reasons, etc. Anyhow, thanks for the reply. You are welcome to answer questions of readers at any time, just please leave off phone numbers and email.
Thanks.
I appreciate your candor and willingness to provide good and honest opinions and I want the same as you which is good, solid and accurate info. so people can make good decisions, whatever their circumstances. Additionally, I have not solicited nor do I intend to solicit to anyone online at this site. Yet, I will take your advice and change my name as you suggest. You have done a good job providing info. for people to educate themselves.
One thing that might be good for people to study decline curves of the top wells and the worst wells to date in the EFS. This could give people a feel for a range of potential production that they could expect when they are ultimately drilled. Many wells that I have seen decline as much as 90% within 6 months and people need to be educated about this so that they understand the difference between IP rates and decline rates as it pertains to what their royalty checks will look like over time.
Good advice on checking production numbers vs IP rates. IP or Initial Production rates confuse a lot of people. For those who wish to check RRC monthly production figures, an easy way is to visit http://gis2.rrc.state.tx.us/public/startit.htm then enter your county and choose “identify wells”. Zoom in to wells near your property and click on those colored green, then click on GIS Attributes, Operator-Wellbore then on “Production Query”. Divide the monthly values each month after the first month by 30 and you’ll get a good idea of production per month and how it’s falling off. Note, production data is listed by field, so if the field has more than one well it is hard to figure where the production came from It’s tricky to tell a well’s true production by RRC reports though, since some wells may be choked back waiting on pipelines, etc. Even if a well makes half of its production in six months, it can still amount to one heck of a lot of money, and you can bet that in a few months or years another lateral will be drilled, higher or lower in the formation or next to the other one, and fracked again. Judging from the billions being spent on pipeline contracts by companies such as EOG, they’re in it for the long haul. Experience has shown that for every doubling of wells in a shale play, productivity increases 15 to 30% due to better methods. EF wells are not going to have as bad a fall off as Austin Chalk wells did by a long shot.
We have 1,000 acres of mineral rights in Mavrick County (just South of Eagle Pass) and have been contacted by several companies wanting to lease them. We have heard so many different prices for leases that we are totally confused. What is a good price for minerals in that area.
Does anyone know what the going rate is to lease land for oil/gas storage vessels in Atascosa County.
We own surface and mineral rights of almost 50 acres in Muldoon and have been contacted by a couple of companies wanting to lease it. One of the companies have already gone out of business and the other made a very low offer. I can’t find any thing on this company on the internet about this company. My instincts are to just wait and see if any other offers come around. It seems that drilling is starting up in that area soon. How long should we wait and what would be a good offer for that area?
Is land being leased in the Seguin area? and at what rate…
Is land being leased in the Cuero/Yorktown area? By whom? Rate?
We were approached by a landman in Guadalupe county outside of Seguin..We only have 16 acres with mineral rights, and the railcommision requires 40 to drill..Pooling is required in this situation..We agreed but a couple of othere didnt..So what is next..THey are sure there is oil under us..WAit for a better offer and precede? Dont know whats in store..your advice please..
we currently have 10 acres in christine and was told there might be water on our land but the contract they were trying to get us to sign seemed really low (5% royalty)….does anyone know the going rate for leasing land for water frac???
There is a company going around claiming to have a new technology to tap into hidden zones of water. This is a total scam. The have no such technology and are wanting all of your water rights. 5% is way too low, and the wells they are proposing would suck the aquifer dry in a few years. Please spread the word about this company to your neighbors and tell them to run! For more info, contact Evergreen Water District in Pleasanton at 830-569-4186 and ask them about the company.
I contacted evergreen and they said yes their a scam and hold your water rights for several years. We want to lease out our 10 acres for equipment storage but are unsure who to contact. Do know of any companies that want to store equipment in Christine.
I am a part owner of 3 separate parcels of land all connected to one another. We have paid up leases on all 3, and the land is located near Floresville very close to Poth I gues the furthest southwest quadrant of Floresville. I have been watching the maps for permits and scheduled water or oil wells. Do you know h=if permits are being issued inside of Floresville at this point in time yet? The map is clear, but it is not easy to see if the permits are being issued inside of Floresville?
I am a part owner of 3 separate parcels of land all connected to one another. We have paid up leases on all 3, and the land is located near Floresville very close to Poth I gues the furthest southwest quadrant of Floresville. I have been watching the maps for permits and scheduled water or oil wells. Do you know if permits are being issued inside of Floresville at this point in time yet? The map is clear, but it is not easy to see if the permits are being issued inside of Floresville?
I’m currently under lease in Madision County. Would any of you folks in the blog have any info on how far to the NE the Eagle Ford runs and to what depths and thickness as it runs to the NE . Any info would be welcome.
Martin,
Industry activity is definitely coming your way, but your position also brings with it other opportunities besides the Eagle Ford. A select group of companies are now playing what has been called the “Eagle Bine” which is a cross between the Eagle Ford and Woodbine formations. Not only that, there is significant potential with the deeper formations (Buda to Georgetown) this is starting the be toyed with in the surrounding counties. If you have any more questions or would like to discuss further, let me know.
Brendan, thanks so much for your response. Is there any place that you might suggest that I might go for thicknesses and depths of the different formations as they relate to the County?
Brendan,
Thanks for the fyi. In the Northern Gonzales County and Northwest and Southwest of Flatonia, Texas in Fayette County activity has increased with Southern Bay, Sharon Hunter, ZaZa and Nabors who is doing a lot of vertical drilling. Tonight I heard that Chasapeake Energy and others are late to the Oil Window, but highly interested in this areas since another formation is being explored (Edwards)in addition to EF. In and around Lavaca County and Gonzales County wells, I understand that the Buda is the formation above the Edwards but below the EF, and Magnum Hunter has sold 35% of is leased inventory to Southern Bay and that the Edwards is being explored! So, can you shed light on this issue? And, is it true that that in and around the areas mentioned that the thickness is 11,000 to 8,000 and not fringed? Last, I heard that there is a “coal” trend running through the region too! Brendan, let us know, and thanks.