Have you had offers to buy your Eagle Ford shale mineral rights? The Eagle Ford shale is one of the hottest oil and gas “plays” or discoveries in the United States. Many landowners have been approached to lease their land for exploration or even sell Eagle Ford shale mineral rights outright. Lease payments have sometimes exceeded $10,000 per acre, with 25% royalties to the landowner in some south Texas counties. In the past oil and gas drilling in South Texas was hit and miss. Anyone going door to door offering this much money or even twice that amount to sell your Eagle Ford shale mineral rights completely, would have been unheard of. While there are many reputable landmen out there, there are also con men buying Eagle Ford shale minerals by telling the landowner there is hardly any chance oil or gas will be found. In many counties such as Gonzales, LaSalle, McMullen, Live Oak and Atascosa, the productive part of the Eagle Ford shale play extends across a wide area and there are few, if any dry holes.
The reason that things are different this time is that the Eagle Ford shale formation covers a wide area and there is potential production under almost all of it, to varying degrees. Unlike pockets of oil or gas that were hit and miss in the old days, oil companies can drill sideways in the Eagle Ford shale, which is rich in hydrocarbons like oil, gas and condensate, and make many more wells.
Leasing Vs. Selling Eagle Ford Shale Minerals Outright
Mineral rights can be sold as a percentage with you keeping some interest, or completely transferred. If you sell them, you no longer have any future rights to any oil or gas that may be found on your land. You’ll simply have so sit by as well after well is drilled and someone else is getting rich.
If someone has arrived at your ranch gate offering to pay you $4000 an acre for 160 acres to sell all of your Eagle Ford shale mineral rights, ($640,000,) there is probably a pretty good reason why they would pay so much money. They have good scientific knowledge including seismic data that tells them that there is oil and gas under your property. On the other hand, you could keep your mineral rights and lease your 160 acres to an oil company for $2,000 per acre. That’s a net gain to you of $320,000 up front. Suppose that in a couple of years they drill one good well on your property. If that well produces 900 barrels of oil per day of initial production in the first 30 days, (not unusual for the wells they are making nowadays in the Eagle Ford shale), at seventy dollars a barrel, that’s $472,500 that could have gone to you if you had not sold all of your mineral rights. Already you are ahead of the game after one month, with hopefully several years of production (though not as robust as the first 30 days,) ahead of you.
There are always situations where you might want to take the bait and sell your Eagle Ford shale mineral rights for a lump sum. Situations might include needing money for back taxes, medical expenses or to enjoy the last couple years of your life to the fullest. However, you must realize that if you sell your Eagle Ford shale mineral rights and several big oil and gas wells are drilled on your land, you may be very sorry. Ultimately you should consult an oil and gas attorney and weigh all the options before selling all of your mineral rights in the Eagle Ford shale play area of South Texas. So when the phone rings and someone says ” Hi, I’m Joe Bob and I buy Eagle Ford shale mineral rights”, you might want to do some hard and serious thinking about why it might not be a good idea.
The author is an energy industry blogger who maintains an informational website about the Eagle Ford shale at www.EagleFordShaleBlog.com Click on the highlighted link to visit the site and view current drilling activity and news.
If you would like to reach a registered oil and gas landman (who can act as negotiator between you and an oil company) please contact us at survivalstore @ gmail.com for more information.