Have you been contacted by an attorney, oil company or others regarding mineral rights in South Texas which you didn’t even know that you owned? Did you just get a check in the mail along with an offer to purchase those rights and are tempted to cash it? If so, you’re not alone. You might want to read this article before you sign any offers.
The Winter Garden Area Of Texas, Now One Great Big Oilfield
In the early 1900′s, land promoters lured farmers to an area of South Texas they dubbed the “Winter Garden.” Towns such as Gardendale, Brundage, Millett, Los Angeles, Derby, Divot, Woodward, Prince, Fowlerton, and Schattel Texas all sprang up as direct or indirect result of the relentless efforts of South Texas real estate promoters. Agents such as the Hurst And Brundage Company, The Fowler Brother’s Land Company and others advertised the Winter Garden area heavily in the Southern and Eastern United States and recruited many families to move west to their “farming paradise.” Most of these early settlers, who at one point numbered more than 40,000 in the four county Winter Garden area (comprised of Frio, LaSalle, Dimmit and Zavala counties,) eventually left their farms and returned to where they had come from. Early Texas Winter Garden settlers soon realized that the climate of the area was better suited for large scale ranching than for vegetable crops. The exodus from the area intensified in the 1930′s, as a severe drought and the Great Depression compounded the problems facing settlers. Although some of the towns mentioned above are still marked by highway signs, many are now just empty fields and farms.
Below is a map of the Winter Garden Area Of South Texas and new oil and gas wells in the Eagle Ford Shale discovery. Green dots represent oil wells, red dots indicate gas wells.
In an around these small communities, such as in the Gardendale Colony Lands Subdivision in LaSalle County, there lie small parcels of land ranging in size of a city lot to ten acres or more which are either still vacant and unfenced or now part of larger ranches. In some cases, the original owner’s walked away and the family forgot about them, and on other parcels property taxes were paid over the years, although they might have been fenced and maintained by an area farmer or rancher who also paid taxes on the land. In some cases, the land may have been sold, but the subsurface mineral rights retained by the seller. Simple phrases inserted into deeds when the land was sold, such as “I reserve for myself, my spouse and all future heirs, all rights to oil and gas which are discovered, etc…, are all that it takes for you to be an heir to oil and gas riches in South Texas. Because of this, opportunistic lawyers, mineral rights buyers, oil companies and many others are now pouring over decades – old deeds and wills to locate the heirs who inherited the land or mineral rights in order to make them an offer. In most cases the offer is to buy all of the person’s mineral rights outright. The buyer can then turn around and sell the rights to an oil and gas company or investor for many times the purchase price. There is nothing wrong with that, per se, but the amounts being offered to unsuspecting persons are downright criminally low. Because Texas counties do not send out tax bills for mineral rights only, many owners forget they even own the rights. In the case of the Texas Winter Garden area, several generations have gone by while forgotten language in land deeds such as “I convey the surface only…” remained forever scribed in ink on hand drawn deeds buried in countless boxes in county courthouses.
Why Not Just Cash The Check?
Many mineral rights buyout offers appear to be little more than borderline scams. The buyer often makes a ridiculously low offer, of something such as a few hundred dollars per acre, and even offers the dumbfounded minerals owner a check which they can immediately endorse and deposit after signing away all their mineral rights. In many cases, the owners of the land live out of state, and haven’t even heard about the Eagle Ford Shale oil discovery in the Texas Winter Garden area. (This major new oilfield covers approximately 20,000 square miles, and there are few, if any, “dry holes”.) In addition to the Eagle Ford Shale oil discovery, a deeper shale rock formation, called the Pearsall Shale, has also been identified as being valuable. (In recent news Osaka Gas Company of Japan paid Cabot Oil more than $14,000 per acre for the rights to drill only the Pearsall Shale, located 2,000′ below the Eagle Ford shale, while retaining all rights to the Eagle Ford Shale.) This most recent Pearsall Shale transaction could place the value of mineral acreage in some of the Winter Garden area as high as $40,000 or more per acre, if rights were sold outright. (Note: This is a rough estimate, based on transactions such as the one last year by Marathon Oil, where around $21,000 per acre was paid for Eagle Ford Shale leases. Be sure to contact an area attorney for updated information and do not rely on this article as financial advice.)
Below: Twin pumpjacks in motion at night on Eagle Ford Shale Wells in Winter Garden Area Of South Texas.
How Much Are My Minerals In The Eagle Ford Shale Area Worth?
While the Eagle Ford shale oil and gas discovery covers an area more than four hundred miles long by fifty miles wide, not all areas are as valuable to oil companies at the present time. Natural gas prices are currently very depressed, and areas of the Eagle Ford Shale which contain more valuable liquids such as oil and condensate are currently the most sought after. Additionally, the eastern side of the Eagle Ford Shale, from McMullen county northeastward into Karnes, Gonzales and DeWitt counties, has so far produced the highest volume and therefore most profitable wells. The Winter Garden area of the Eagle Ford Shale is still very valuable to oil and gas companies, it’s just that instead of wells initially producing 4,000 barrels per day they may produce 1,000 per day. In June of 2012, lease rates in the Gardendale area of South Texas were as high as $3,000 or more per acre. This is only for leasing, mind you, not for purchasing your minerals. A typical oil lease involves a three year “primary term,” with the option to extend the lease for two more years by paying the same price per acre again at the end of year three. In the Eagle Ford Shale, mineral owners often receive one quarter royalties, or one fourth of the proceeds of any oil and gas ever produced from the property. If you have only recently found out that you own minerals in South Texas, it’s because you as an heir to the mineral rights have only just been located.
What To Do If You Get A Check For Your Mineral Rights In Texas
If you receive a check in the mail for mineral rights that you own in Texas, whatever you do, do not simply cash it without first talking to a lawyer in Texas who is familiar with the Eagle Ford Shale. Cashing any checks that are sent to you could mean you sign away all rights to future royalties if a well is made. If your land is located anywhere, and I mean anywhere, in the Eagle Ford Shale region of Texas, you should sit tight and proceed with caution. Contact an attorney in Texas that understands mineral rights and have them advise you on how to proceed. If you are determined to be the true owner of South Texas mineral rights, but have not yet received a lease offer, then in many cases the attorney can advise you on who to contact.
Check Out Mineral Rights Forums
One good source of potential information about fair mineral rights offers, lease bonus amounts, royalty percentages, and other issues is to join a community of other landowners and minerals owners. You can often find advice from professional landmen and other landownerrs on sites such as Mineral Rights Owners Forum as well as on other similar forum sites.
Pass This Scam Alert On
The Winter Garden region of South Texas is not the only area where there are many long – lost heirs to mineral rights. If you have been contacted about mineral rights on land you didn’t even know you owned, please feel free to comment below this article. If you know friends or family who may own mineral rights in South Texas that they may have forgotten about, feel free to pass share this article with them via Facebook or other social media.
Note: This article does not constitute legal advice of any kind. Contact a qualified oil and gas attorney, preferably in South Texas, before making any decisions on what to do about your mineral rights.