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
We also recommend joining the following site, Shale Landowners Mineral Rights Forum, to learn more about oil and gas leasing, pipeline ROW contracts, etc.
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!
Previously we asked readers to use the comments section below. Now, please visit this site, The Eagle Ford Shale Mineral Rights Owners and Landowners Forum where you can ask questions and communicate with other landowners.
We have 200 acres in far southern Caldwell County. We are only about a mile south of Gonzales County. Do you know if or when activity will initiate in Caldwell County?
Sadly leasing prospects for the EF in Caldwell county are bleak with current technology. The formation is too shallow(less than 4,000ft) resulting in lower presssure and two thin, maybe 40 ft resulting in lower reserve potential. High pressure is essential to producing from tight shale formations. I am just to the south of you in Gonzales county and no one is interested in our minerals for the resaons listed above. the deeper pearsall shale maybe a better shot at some point in the future, if the price of natural gas improves.
Does anyone have knowledge of any leasing activity in southeast Trinity County?
My family has 34.4 acres in Atascosa County on the edge of the shale. We do own all mineral rights. I am wondering if we should contact an oil company to see if they are interested. We haven’t had any offers but I understand that area is getting more active.
If there was any real interest the landmen for the oil companies would be contacting you. Your best bet is to stay in contact with your larger neighbors to see if they have been contacted or leased. Your tract isn’t large enough to attract much attention since it requires a min. of 55 acres per well and oil companies will want a large tract that will allow for many well locations, if they are going to invest the large sum it takes to drill even one well. The only part of Atascosa county that has much interest at the moment is the southern 1/4 of the county. This is the deeper part of the shale that is generally thicker i.e. more reserves and more importantly has higher pressure that will force the oil out of the tight formation. I appreciate your frustration, as I am in a similar situation in Gonzales county. You can try working with someone like Eric Ormund at e.ormond@conceptenergyinc.com, they are great if there is some interest, but they can’t generate leases. Good Luck Gary
I would contact EOG there in jourdanton then take your contract to a lawyer. Our was really, let me know if you want his info. Best to you.
My family have half the mineral rights on 90 acres in Lavaca county, Alease was given to the land owner for his half but we were never contacted and our half was not leased, Can a company only lease half of the mineral rights?
it seems that all should have been leased at the same time.
This is probably a better question for an attorney, but I will take a shot at it. A oil company can lease any % interest in the minerals, while it is likely they want them all they have to start the process somewhere.
First there are some additional facts needed. 1. Do you own 1/2 of the minerals and the executive rights? If not and the other owner has the executive rights they can execute the lease covering your interest without your involvement, you will get the same deal that they have negoiated for themselves. You will be asked for your social security number or tax ID and to sign an acknowledgement of the lease with your address so that they can process any payment.
2. If you only own a 1/2 royalty interest as opposed to a 1/2 mineral interest, you don’t participate in the bonuse payment only 1/2 of any royalty income.
3. The other mineral owner may have been presented a lease, but not signed it. Unless they or someone else has the executive rights the surface owner can make any deal they choose with respect to their mineral interests.
4. They may have been paid with a bank draft as opposed to a normal check that can be held for 30 to 60 days and not received any cash as yet. .
Short of employing an attorney, My suggestion is to call the other owner and find out who the company is and get a contact name and get the full story from them. The direct approach is usually the best. I sold several properties where I retained a 1/2 mineral interest, but gave the purchaser the executive rights and 50% of the minerals, so I stay in touch with them on the status of any leasing
Good luck in sorting out the issue.
At what point does the <15 acres of mineral interests leased in the Eagle Ford Shale? I own 15 acres of 100% minerals of which 10 acres is land on FM 1680 (Old Moulton Road) btwn Moulton and Waelder, TX. Exploration of the Eagle Ford Shale is in all directions of me, and I many have put together all sorts of contiguous acreage from time to time, but I've never been approached; I assume because of small acreage in the Sarah Smith League in Gonzales County. Keep posting.
I am not a geologist, however from what I have read as the eagle ford trend moves to the north and east it is a less proven producer. I am not sure exactly where your property is, but the closer to Waelder your property is the shallower the depth of the eagle ford, plus it is probably thinner as well. As a rule the deeper and thicker the better in shale formations like the EF, it has a better gas drive to push the oil out, as long as you are still in the oil or liquid area, which you almost certainly are. You are at a disadvantage with small acreage Since it takes a min. of 65 ac per well with current spacing rules. Oil companies want to assemble large tracts where they can drill dozens of wells at a minimum or get enough minerals leased where they can compel the oil company owning the neighboring leases to set up a joint venture for the drilling and spread the risk. However the major companies prefer to own it all and have full control. You don’t have much negoiating leverage until they can confirm production at the same depth near your property, oil companies refer to this as being “on strike”. Wells to the south and east don’t count much in confirming your minerals. My advise is to stay in touch with your neighbors and be prepared to act in unison when an interested party comes along. A speculator has been working on putting a huge tract together under option in your area, I think the option deal expires in one week and I haven’t heard that it was exercised. My guess is that you havent’t missed out on anything but a bunch of hype.
Good Luck, I know that it is no fun to wait, but the silver lining is that the oil companies are continually improving their completion techniques so you will get a better well once you get one.
Gary thanks. I will reply later.
Gary
I heard that Penn Virginia is beginning to hit some good wells in Lavaca country near all the wells they have in Gonzales county. Will this play continue to grow??
Yeap! And, we are in the path with seismic activity in Gonzales County, named Peach Creek; adjoining Flatonia-Schulenburg commencing June 2012 both NE Gonzales County and SW Fayette County in this Eagle Ford Shale trend. There are already many O&G operatives in the area, and leasehold interested in the liquids-rich “oily” window. However, the Seitel Data June 2012 will seismograph down to the Glen Rose, Pearsall stratas some >30,000′. Many wells have already been drilled in the NE Lavaca, NE Gonzales, and SW Fayette counties areas; showing potential with Wilcat drilling. Congrats, on your good wells in Lavaca Co. and we are next in line.
Any idea what the depth is in the area of Wilson County just north of Poth and what is the difference between volatile oil and black oil?
This area of Wilson County ranges from 4000 – 6000′, see the third map here: http://eaglefordshaleblog.com/2010/02/19/eagleford-shale-maps/
The “black oil” area of the Eagle ford typically has lower GOR or gas to oil ratio, hence less gas to help force the oil out of the shale. Also, it has lower gravity crude (heavier oil). “Volatile oil” refers to liquds that are “near crude” but also near to condensate, and the “volatile oil window” has a higher GOR ratio, therefore more gas in the rock to help force out liquids.
So if our leases are in the black oil window does that mean there may be no drilling in that area?
Depending on how thick the shale is, and other factors like microporosity and pressure, good quality crude oil can be produced from the “black oil” part of the EFS. For the most part, is cheaper to drill from 4000-6000′and smaller companies will do it. If your land is not already leased, then there is a chance the shale is too thin where you are, or has just not been tested yet. Hang in there. Our family has some minerals on land near the old town of Nockenut, on the edge of the shale but it’s held by production so no lease for EFS.
It is already leased, so i guess its not a lost cause yet…
Sorry,I don’t have the map I need in my car to answer the depth question. The short answer to you question on volitale and black oil is that the volatile oil is produced from the deeper section of the formation it is higher gravity (better). And has more associated gas (better), so there is more pressure to force the oil out. Black oil is from the shallower section, it is heavier gravity (not good) and has minimal gas pressure (bad)
What is the current market price for mineral lease in the gas window of the eagleford, off IH 35 and U.S Hwy 44, at Encinal? What is the potential for leasing these days 330 tract acres