The top oil and gas exploration companies in the Eagle Ford shale are the following:

EOG Resources:  520,000 acres in mature oil window, 26,000 acres in wet gas window and 49,000 wet gas. Total: 590,000 acres. For more detailed article see EOG Resources

Chesapeake Energy:  (partner CNOOC): 445,000 net acres. Potential net unrisked, undrilled wells: 5,540.

Newfield Exploration: (85% working interest), 335,000 acres. Mostly in Dimmit and Maverick counties.

Apache Corporation:  450,000 acres mixed oil and gas windows.

Marathon Oil

One of the highest prices paid so far for Eagle Ford shale acreage was by Marathon Oil to Hillcorp Energy Corp. (Hilcorp Resources Holdings) Marathon paid an estimated $25,000 per acre for prime Eagle Ford shale acreage in the oil and wet gas windows. By years end Marathon will have approximately 285,000 net acres in the play.

Petrohawk Energy: 224,000 acres (Hawkville field), 73,600 acres (Black Hawk field), 50,000 acres (Red Hawk field). Total: 347,600 acres.  See more detailed article about Petrohawk Energy here: Petrohawk Eagle Ford Shale History

Pioneer Natural Resources: 310,000 acres.

Anadarko Petroleum: 300,000 + net acres. (Mostly in wet gas and condensate windows.)

Conoco Phillips: 300,000 + acres.

St. Mary’s Land And Exploration: 250,000 acres.  (Consists of 165,000 acres, 100% working interest in wet gas window and 85,000 acres in wet gas and oil windows, JV with Anadarko.)

Forest Oil: 105,000 ares, primarily in Gonzales, Wilson, DeWitt and Lee counties.

Swift Energy: 89,000 acres in Eagle Ford shale and 113,000 in Olmos formation with some overlapping acreage.

Other Eagle Ford shale players with less than 100,000 net acres:

Carrizo Oil And Gas: 41,000 net acres.

Others: Talisman Energy, Hess Energy, StatOil, Rosetta Resources, Exxon Mobil, Goodrich Petroleum, Penn Virginia, Petro Quest, Crimson Exploration and Carrizo Oil and Gas.

Note that the acreage amounts listed above will change from month to month as the major players in the Eagle Ford shale acquire or divest holdings.

Original Post:

EOG announced in a May 4th, 2010 webcast that they are planning a major oil and gas seismic survey for this summer and fall that will stretch across their 120 mile long lease area in the oil and condensate window of the Eagle Ford Shale. It was stated in the webcast that the current drilling program would be “moderated” until the results of the seismic survey in the Eagle Ford shale leasehold area was completed and fully analyzed. Investors were told not to expect any more “constant Eagle Ford news flow” until later in the year. The geophysical seismic study should take most of the summer to complete and we could possibly be seeing a very big drilling program by EOG starting in the Eagle Ford shale oil window this fall. In the past investor presentation they announced that “major production would come online in 2012″.

The only way for major Eagle Ford shale oil production to come online is for utilizing more than just six rigs, as they are presently running. Previous statements have indicated that EOG may try rotary steerable technology and multi well pads for maximum efficiency.  Current rumors in the oil patch are that they are planning a 25 rig program for this coming year.

One thing is certain and that is after paying up to $2000 or more an acre, EOG wants to hold on to much of the 505,000 acres in the oil window of the Eagle Ford shale as possible and they will have to drill quite a lot of wells in the coming three years to accomplish that, since most  of the lease terms are for that long.  Granted that many of their leases are large ranches and for many oil and gas lease contracts it only takes one well to hold the lease, but they have also leased scores of smaller parcels, down to only  a couple of acres.  The cost of losing these very small leases will not hurt them that much, and renewal offers can be made to hold them, but my guess is that EOG will start first with the larger ranches where the new Eagle Ford seismic survey data shows the best prospects and then move to drill on the smaller parcels toward the end of their three year term expiration dates. I suspect that we are talking about more than two dozen rigs running when EOG ramps up their major Eagle Ford shale drilling campaign in late 2010 and into 2011.

Oil and gas seismic survey leasing is already underway in McMullen, Dimmitt,  LaSalle, Atascosa, Karnes, DeWitt, and many other counties. If you or your neighbors have signed a lease with EOG you should be getting a call regarding permission to do an oil and gas seismic survey on your property.  For an overall picture of the entire EOG Eagle Ford shale oil and condensate window lease area, the seismic survey will be done on as many parcels as they can obtain permission for, regardless of whether they have been leased for Eagle Ford shale drilling rights or not.

What Landowners Should Consider

If you have already leased your land for Eagle Ford shale drilling I see no problem with allowing a seismic survey to take place. Here’s the dilemma facing landowners who have not already leased their property for Eagle Ford shale drilling. Should you let oil and gas companies such as EOG hire  contractors to come onto your land and use 3D seismic technology to see what is under your property for the cost of a few hundred dollars in surface damages?  This would be like allowing the person you are playing poker with peer over your shoulder and see your cards before a bet is made.   EOG could even sell the results of the seismic survey  to other oil and gas companies looking to lease Eagle Ford shale acreage that EOG has deemed unworthy.  I think it would be wise to contact an oil and gas attorney before allowing any seismic survey of your land, especially if you have not signed an Eagle Ford shale lease yet.

Nolan, May 14, 2010

See updated info above.

For those who have been wondering what EOG Resources is up to in the Eagle Ford shale, a recent press release has shed some light on their plans.

EOG Resources has so far been hush – hush about their plans for drilling in the Eagle Ford shale.  On the company website they announced several weeks ago that they were aquiring acreage but were going to keep plans for development quiet until most of the leasing had been done. Now that it has they are letting the cat out of the bag.

Now information is surfacing, such as this from an official press release, that they are planning a major drilling program in the oil window of the Eagle Ford shale with ”significant production” coming online in 2011.

EOG declared the Eagle Ford shale a ”major oil discovery“   in this April 7 press release.  CEO of EOG, Mark Papa was quoted as saying that the Eagle Ford shale was, in his words “one of the most significant United States oil discoveries in the past 40 years”.  EOG has estimated that the Eagle Ford, as an oil discovery, will rank #6 in size of all time giant oil fields in the U.S. just after the Bakken Shale. The largest would be Prudhoe Bay.

EOG hs aquired just over a half millon acres of South Texas leases across six counties.

Sixteen dileneation wells were drilled over a 120 mile trend to determine the extent of the play.

“Based on initial drilling and production results, as well as technical and core analysis, the estimated reserve potential on EOG’s 505,000 net acre position in the oil window is approximately 900 million barrels of crude oil equivalent (MMboe), net after royalty (NAR).”

(NAR refers to how much the company keeps after giving the landowner a percentage of production.)

EOG is currently operating six rigs,  drilling more wells over a large area of the Eagle Ford shale in the upper portion known as the “oil window”. Due to depressed natural gas prices, the oil rich part of the shale may be more intensley drilled than the southern gas portion.

Many Potential Well Locations

EOG has estimated that there are 2,840 potential well locations in the 505,000 it holds in the oil window of the Eagle Ford shale.  They estimate that 75% of the acreage is drillable. They are basing all estimates of production on well spacing of 125 – 140 acres per well.

EOG has stated that there is “great rock quality with high consistency” in the play, with wells 30 miles apart showing similar porosity of between 4 – 11% and permeability of 40 – 1,300 Nd.

Leasing is underway in the upper counties including Frio, Atascosa, LaSalle, McMullen, Zavala, Dimmitt, Live Oak, Wilson, DeWitt, Gonzales, Karnes, Dimmit and Webb counties.

EOG has a good track record of drilling horizontal wells in the Barnett Shale and Bakken Shale. EOG investors as well as landowners who just signed leases should be pleased with this recent news about the Eagle Ford shale oil discovery.

Update: In a May 4 EOG webcast it was stated that the current drilling program in the Eagle Ford shale would be moderated until a major 3D seismic project was completed and the results analyzed. EOG has drilled their 17th Eagle Ford shale well, the Harper 4H, which is producing 602 Bbl of oil per day and 650 Mcf of gas. “Don’t expect a constant Eagle Ford news flow from EOG until late this year” it was stated in the webcast.
EOG expects to average only 6000 Barrels per day equivalent per day of oil from the Eagle Ford in 2010 with much more production coming online in 2011. This indicates that a major drilling program will ramp up in late 2010 when the most productive areas of the acreage are identified and targeted by 3D seismic surveying.

Update:

Despite persistent rumors of a 25 rig program, Oil and Gas Journal reported the following on August 9th, 2010:

(From Oil and Gas Journal)
HOUSTON, Aug. 9 – EOG Resources Inc., Houston, will ramp up its operated rig fleet to 12 at the end of 2010 and 14 in 2011 from five at present as it better understands the South Texas Eagle Ford shale from interpreting 3D seismic along the 120-mile oil trend in which it holds 505,000 net acres.

EOG management said it is still early days in the play, but the Eagle Ford reservoir seems to be working on expansion drive toward 3-4% estimated ultimate recovery. Unresolved are determining optimum spacing, locating wells, areas that will be productive from Upper and Lower Eagle Ford or just one, and other issues.

EOG plans to drill 245 gross Eagle Ford wells in 2011 compared with 111 this year. Even so, the formation will be a large contributor to oil production growth in the second half of 2010, as EOG has drilled and completed 31 wells and has 25 awaiting completion.

Recent company Eagle Ford wells had initial production rates of 1,033, 1,002, and 625 b/d of oil plus rich gas, and the first wells in Wilson County came on at 707 b/d and 836 b/d. EOG has 100% interest in the wells.

EOG raised its 2010 capital expenditure budget by $500 million. Of that, roughly $270 million is for Eagle Ford crude oil related production and midstream facilities the company had previously planned to contract to a third party. EOG laid the change to timing and cost issues.

EOG’s exploration staff is clamoring to test the Austin chalk and Buda formations on the company’s Eagle Ford acreage, said Mark Papa, chairman and chief executive officer. Papa said EOG also sees South Texas production contributions from the Frio and Vicksburg formations.

Update #2:

HOUSTON, Aug 6 (Reuters) – EOG Resources Inc (EOG.N) said on Friday it plans to sell about 180,000 acres in U.S. shale plays as part of the oil and gas company’s effort to increase funds for oil exploration.

EOG will sell 117,000 acres in the Eagle Ford Shale in South Texas; 51,000 acres in the Marcellus Shale in Pennsylvania; in 15,000 acres in the Haynesville Shale, Mark Papa, the company’s CEO, told analysts on a conference call.

“We’re so long on acreage relative to what we can logically develop in a reasonable period of time,” Papa told analysts.

There is no word yet on where the acreage EOG is selling is located but statements from Papa indicate that because EOG will be “focusing more on oil production”, the acreage will not be part of what it holds in the oil window. It would be hard for me to imagine them giving up much acreage in the lucrative oil window. It could be this is dry gas acreage farther south and west.

Companies such as EOG Resources and Petrohawk Energy have decided to focus more on liquids than on natural gas. To do this will require a lot of capital and the company has realized that it is in way over its head when it comes to drilling up Eagle Ford shale acreage, which is mostly on three year lease agreements, before those leases expire.  To exploit what they have they will need large amounts of capital, something the latest Eagle Ford shale acreage sale aims to remedy.

The size of an oil or gas play may be only a few hundred acres or as is the case with the Eagle Ford shale, Haynesville shale, Barnett shale and Marcellus shale, cover hundreds of thousands of acres over a wide region.

A shale gas play, such as the ones mentioned above, is simply a discovery of oil or gas in shale rock that is significant enough for oil and gas companies to launch a campaign of leasing and subsequent exploration. In the case of the Eagle Ford shale it is turning out to be both a shale gas play and and oil play.

What Is Shale Gas?

Shale is a sedimentary rock that is generally formed as particles of sediment settle out in calm water. Shale can be formed in shallow inland waters or deep ocean basins. Many of the shale formations in the United States, such as the Marcellus shale, were formed during the Devonian period, around 390 million years ago.

The rock found in the Eagle Ford shale, which is the focus of this blog, was formed in a marine environment during the Cretaceous period, approximately 145 to 65 million years ago. It was during the Cretaceous period, following the Jurassic period, that many of the worlds limestone formations were laid down. Cretaceous literally means “chalky”, taken from the German word for chalk,  Kreide. The Cretaceous period was a time of warm climate and high seas. During the Cretaceous period billions of tons of CO2 were “sequestered” by marine organisms and eventually returned to the earth in the form of sediments.

Shale rock is generally high in organic content. Once covered up by other sediments and buried over millions of years, heat and pressure begin to work on these sediments and oil and gas are formed. Some of the oil and gas may begin to migrate upwards, to layers of sandstone and porous limestone where it becomes trapped. These are considered conventional oil and gas reservoirs and shale is often the “source rock” or original source of the hydrocarbons. In some cases, as in the Eagle Ford shale play, a significant quantity of oil and gas remain in the shale rock. Natural gas and oil that occur in shale are called “unconventional”.  Now with new horizontal drilling and hydraulic fracturing methods it is possible to extract that oil and gas. “Unconventional” gas is quickly becoming the new norm.

The illustration below shows how South Texas looked during the Cretaceous. It was covered by shallow warm seas. It was during this period that the Eagle Ford shale was deposited.

Below is an illustration of what a shale formation looks like underground and how a horizontal well is drilled.

Shale gas, from rock formations such as the Marcellus shale, Haynesville shale, Barnett shale and now the Eagle Ford shale, is an important energy resource for the United States. Now thanks to these “discoveries” or moreover the advances in technology that make recovery of oil and gas from shale possible, we have over 100 years worth (and growing) of natural gas supply in North America. Hopefully our elected officials will wake up to this new reality and quit wasting our tax dollars on things like corn ethanol and “clean coal” and instead focus on converting our vehicles and power plants to use abundant natural gas.

Article by Nolan Hart

Here is a good book to get if you are considering leasing your land for oil and gas exploration. It’s not cheap but could save you thousands in the long run.

The name of the oil and gas play is frequently misspelled as “Eagleford”. The correct spelling is what is seen on this website.   The Eagle Ford shale takes it’s name from the small town of Eagle Ford Texas, where it outcrops in North Texas near Dallas.

The following map is from Ross Smith Energy Group . They do not sell maps to the public.  It appears here with their permission.   This Eagle Ford shale map shows the trend from Mexico (where it obviously continues across the border as well) to East Texas. It shows the low pressure, oily section in the northern region, the condensate section in the middle and the dry gas section at the lower half. Although it is difficult to read the gray areas are Austin Chalk producing areas. Wherever you find Austin Chalk production you are likely to find Eagle Ford oil as well.

Here is a map from EOG Resources showing the oil, gas and condensate zones of the Eagle Ford Shale as well as some initial production rates. (Note, IP, or initial production rates should not be confused with long term production rates). You can click on the map for full size.

Below is a map from the U.S. Energy Information Administration. The map is a little out of date when it comes to showing well locations, since dozens of new Eagle Ford shale wells have been drilled since it was made. It does however provide a good picture of Eagle Ford shale thickness and extent.

The following Eagle Ford shale map from the Texas Railroad Commission shows counties with permitted and completed wells as of August, 1, 2011.

Below is an Eagle Ford shale map showing the depth of the top of the formation.

Below, Eagle Ford shale thickness maps from Petrohawk Energy. Thickness in feet of the Eagle Ford shale in Atascosa, Gonzales, Wilson, Karnes and DeWitt counties is shown.

The map below, from Marathon Oil, shows the Eagle Ford shale divided into four zones, dry gas, wet gas, volatile oil and black oil. While the distinctions between “black oil” “volatile oil”, condensate and “wet gas” are something even petroleum engineers can’t seem to agree on, basically “volatile oil” is lighter oil that evaporates faster than heavier crude. Lighter crude oil (higher API gravity) typically trades at premium prices since it is more easily refined into gasoline, etc. Marathon Oil purchased the acreage shown in blue from Hilcorp Resources Holdings for approximately $20,000 an acre.

The Carrizo Wilcox aquifer is an important source of water for much of the area where the Eagle Ford shale lies, and a primary source of frac water used in completing wells. Below is a map of the Carrizo water sand.

Below is a chart showing the Cretaceous geology of South Texas, including the Eagle Ford shale formation. The Pearsall shale is located deeper than the Glen Rose formation at the bottom of the chart.

Below, The first Eagle Ford shale well near Fowlerton in the old Naylor and Jones Survey.

The Naylor and Jones Unit 86, #1H is the first permitted Eagle Ford shale well within 10 miles of Fowlerton Texas..

A Brief History Of Fowlerton Texas.

At the turn of the twentieth century a couple of shrewd businessmen, the Fowler brothers, decided to form a land company and promote the dry, cactus and mesquite covered country along the Frio river in LaSalle and McMullen counties as the “Wintergarden”. They attracted well over two thousand buyers, many of whom migrated from the East Coast for the chance to own a plot of fertile farmland for a few dollars. A farm could be had for as little as twenty five dollars down and ten dollars a month. Many have called the brothers “swindlers” but some historians maintain that they did have a vision of the area as a farming utopia. The Fowler Brothers happened to tour the  country just prior to their development plans, during one of the “wet” cycles, when almost any crop could grow there.

Below is an advertisement that appeared in a 1913 edition of the “Fowlerton Reporter” for the First State Bank Of Fowlerton Texas. Like most of the buildings in the town of Fowlerton, nothing remains today.

Photo Of The First State Bank Of Fowlerton Texas

History of Fowlerton Texas And The Naylor And Jones Land Company

Two brothers with the surname of Dull, who had made their fortunes in Pittsburgh, PA, once owned the vast 400,000 acre Dull Ranch. The Dull brothers later sold 240,000 acres to B.L. Naylor and Judge A.H. Jones.  Naylor died in 1910 and Jones in 1912. Jones had contracted with the Fowler Brothers to develop 100,000 acres around what would eventually become the town of Fowlerton, Texas. Growth of the town really took off in the years between 1913-1915.

The Fowler Brothers, in conjunction with Naylor and Jones Land Company, laid out the town  they named after themselves on a grid system and over two hundred miles of roads were built. Lots were divided up, some as small as a sixteenth of an acre in the town-site,  as well as numerous farm plots of anywhere from an acre to a hundred acres or more. When someone bought a ten to 160  acre tract of farm land, they automatically were given a lot in the townsite of Fowlerton.

A cotton gin, large rail depot, hotel, two banks, department stores and schools were all built. There was even a seafood restaurant featuring fresh oysters and shrimp that were brought in on ice from the coast by rail car.  Fowlerton Texas featured several paved streets, sidewalks, fire hydrants and free flowing artesian water wells, (which unfortunately contained some salt.)  The “Artesian Route” as described on the SaU&G railroad advertisement, referred to the areas numerous flowing wells.

The San Antonio, Uvalde & Gulf Railroad Company, nicknamed the “Sausage” connected the new farming center with faraway markets for produce such as onions, cabbage, spinach and other vegetables that were grown by the farmers. The following flyer is from Fowlerton’s newspaper, the Fowlerton Reporter. You will notice many town names, such as Prince and New California that exist in no form today.

old flyer from SAU&G railroad in South Texas

At the height of Fowlerton’s heyday, somewhere between 2000 to 4000 people called the town and immediate vicinity home. Over the years a series of droughts, combined with the negative effect of watering the farms with saline artesian well water, forced almost all the farmers to leave the country. A few remained and switched to ranching but by the 1960′s the town of Fowlerton Texas was down to about two hundred residents. Now census figures show that only about a hundred hardy souls remain.

What does remain in great number are hundreds of small lots, many of which have dubious ownership. Because of the “buy ten acres, get a town lot” system, many farmers never used or even claimed ownership of their town lots from the very beginning of the subdivision, starting in the 1900′s. Over the years many of these lots were sold for back taxes or claimed under the “quit claim deed” law, that enables one to claim ownership simply by occupying the land and paying taxes. Other owners kept up their taxes, though those parcels have no  road access and have been used for generations by local ranchers as their own. Another issue is that the town was incorporated, with official roads and streets, which still  may be legally opened up and which run right through tracts of land, next to (and even through) existing houses and barns, etc. There is no city government so who get any oil and gas royalties from the land occupied by the dozens of active and abandoned streets?

All of this is an attorney or landman’s nightmare  and when it comes to tracking down the owners of these lots it won’t be easy especially since the records are many, are kept in two different county courthouses (LaSalle County and McMullen County). For this reason the township of Fowlerton, as well as a similar Wintergarden community, Los Angeles, will likely be the last acreage to be leased by major oil companies.

Below is a recent photo of Fowlerton as it appears today.  Of all the buildings that were built in the once prosperous town only a handful of non-residences remain standing. The old Red Store, (rear left), which was once owned by Mr. O.W. Herman and sons, now serves as the post office.  (Ironically and sadly,  as the biggest economic boom in Fowlerton’s history arrives, the government is considering closing down the post office there.) The Baptist church is located two blocks off of highway 97 and the old Catholic church, now boarded up, sits surround by cactus and mesquite just off of Texas street.

Fowlerton Texas U.S. Post Office

One thing is for certain, and that is the little community is about to experience the biggest “land rush” since the days of the Fowler Brothers. Most of the interest will be in mineral rights of property outside of the town.  The vast number of owners of the town site lots may make drilling in the Fowlerton town site prohibitive since it may be difficult to get all of the thousands of owners  to lease enough land for wells to be drilled.  Whether this oil boom will lead to any real population growth for Fowlerton remains to be seen.  For those with fond memories of  towns like Fowlerton and Los Angeles Texas, there is hope that these historic towns may be revived from “ghost town” status.

Update: 09/02/2011

Reliable sources have indicated  that EOG Resources has assembled a team at the Cotulla, TX office to begin tracking down the owners of mineral rights in the old Fowlerton Texas townsite. Initially the company, which has leased up most of the land around the 2000 acre townsite, had decided to avoid the area, due to the difficulties involved.  As production figures began to come in from new wells on either side of Fowlerton over the past few weeks, things apparently changed. The fact that EOG Resources already has contact information for many of the townsite lot mineral rights owners, (due to the fact that they have already leased many of the associated 10 acre+ parcels in the old Fowler Brothers development), is a plus.  Still, the process of tracking down all of the remaining owners may take months, but may be worthwhile for EOG in the long run. Fowlerton is apparently is situated at a “sweet spot” in the Eagle Ford shale play, which could potentially contain millions of dollars worth of oil and natural gas.  Currently EOG Resources is in the process of either drilling or planning to drill several new wells in the River Lowe Ranch lease, located about 2.6 miles northeast of  Fowlerton, and  in the Naylor and Jones Unit 43, about 3 miles to the southeast of town. See map below:

Article by Nolan Hart. 

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

The upper side of the Eagle Ford shale has been called the “oil window” and it is there that some incredible oil wells have been made. Prices per acre for Eagle Ford shale oil leases in the “oil window” have reached record levels. The central part of the play is referred to as the “wet gas” window, and contains large volumes of natural gas liquids which are worth more than dry natural gas.

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!