Saturday, March 17, 2012

Oil & Gas Operators Took Advantage Of Eagle Ford Landowners

In case you haven't noticed it the price of crude oil has been on a tear lately, trading steady well above the $100 a barrel mark. That's both good news and bad news for Eagle Ford landowners. The good news is that when wells are produced landowners will receive nice royalty checks. The bad news is that the Eagle Ford Shale requires such intensive drilling on such tight spacing to extract all the oil in place that it will require many decades to drill and produce it all. Experts predict that it will take perhaps 40 to 50 years. A little know fact is that most oil and gas leases do NOT provide any shut in royalties or delay rentals for oil wells. With rare exception, "Delay Rentals" are for the most part reserved for gas wells only. Few in the oil industry talk about the fact that there are so many thousands of wells to be drilled that the majority of those wells won't be developed for decades into the future. Equally depressing from a landowners point of view is the fact that as the Eagle Ford is developed many wells will be shut in for ages due to lack of pipeline capacity. Despite the growing number of pipelines being constructed there will not be enough capacity to carry the vast quantities of Eagle Ford crude oil to refineries in quick order. There will be hundreds of thousands of acres simply held by production with very few wells drilled on many production units for the foreseeable future. There quite simply are over 30,000 additional Eagle Ford wells to be drilled and that will take many decades. This predicament will inevitably lead to the dilemma that many landowners, wishing to to monetize their acreage, will have to either sell their royalty interest at huge discounts to the vultures who trade in these financial transactions or see their future production go to their heirs. In any event, there is little chance that the majority of wells drilled to date, or that will be drilled in the near future, will be flowed and produced at capacity any time soon. The oil companies strategy is quite simply to use the enormous Eagle Ford reserves being developed as a hedge against currency debasement. If the experts are right and crude oil continues to rise, the Eagle Ford Shale will turn out to be the "steal of the century." The technology to exploit shale is relatively new. When it was developed and proved capable to crack the code of tight oil and gas shale’s that opened up enormous previously known areas with excellent source rock hydrocarbons. Like a thief in the night, big oil and gas operators moved into the Eagle Ford Shale and leased up acreage on the cheap. They knew it was rich in hydrocarbons and too big to be developed by a single company. They then set out to carve out their areas of interest and then proceeded to lease that acreage for practically nothing. Collectively they now own the premiere oil reserve in the US with the lowest finding and development cost. To deflect criticism that they took advantage of landowners, operators bemoan that there is much risk in developing a new play such as the Eagle Ford. That contention is just PR intended to hide the fact that they took advantage of landowners.

Monday, March 5, 2012


                   Minerals No Longer Available
             Accepting Offers For Surface Use Only


Eagle Ford Volatile Oil Window PUD Status Acreage
High-Grade 45-50 degree API Volatile Oil w/88% Liquids
DeWitt County In The Heart Of The Best Acreage

contact owner Mike Green at 361-648-5800 email

       70+ acre tract in the high grade Eagle Ford overpressure volatile oil window near Hochheim, Tx.  This irregular shape property should allow for a drilling program with multiple laterals. Tract is located in the Simon Bateman A-4 Survey in DeWitt County,  virtually straddling the DeWitt/Gonzales County line and adjacent to the Enterprise pipeline.  It is believed that EOG Resources has proved up this area with adjacent PDP acreage in the Meyer Unit, that it is thick shale, and that the reservoir quality contains high quality 45 degree API volatile crude oil. This acreage is highly strategic and prospective for volatile oil. Nearby EOG wells are PDP  77% Oil, 88% Liquids (Crude, Condensate and NGLs). Repeatable high IP well results are being seen across the trend with some wells having IPs of 5,000 bopd. This property is located on a major highway, US 183, and is directly across the road from the EOG Meyer Unit. Tract has over 1,600 ft of US 183 highway frontage, approximately 1/2 mile Guadalupe River frontage, it is very close to the Enterprise pipeline, and comprises the only substantial acreage in the area that does not flood for approximately a mile in all directions. This land quite simply has multiple superior strategic advantages for developing the Eagle Ford in the Steen Plain area of the Eagle Ford oil and NGL windows. All adjacent tracts are leased to EOG Resources.  Notable is the fact that very little land in the immediate area did not flood in 1998 with the notable exception of a good portion of this property.  All depths and horizons are available, including the Pearsall.


  There is extensive drilling being done in the immediate area and the 70.15 acres tract available is located right in the sweet spot middle of several drilling units in the area.   

High Grade Area
The Meyer Unit is across the road on US 183 and Burrow B Unit next door from the subject property, indicating PUD status. This property is sandwiched between leased property nearby.

Irregular shape should allow for more lateral's

High Ground elevation in large flood plain.  Potential drilling site above historic flood level of 1998

Major highway frontage on US 183
Meyer Unit across highway and Burrow B Unit on property line

Area is being rapidly developed with infill drilling

High ground on US 183