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Tuesday, March 18, 2008

Arlington neighborhood gets record deal for Barnett Shale rights

By Pegasus News wire

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A neighborhood group in southeast Arlington whose land is on the Barnett Shale got a record offer for drilling rights: $25,000 per acre. The crazed thing about the deal is that they'd already signed one offer for $22K per acre when Carrizo Oil & Gas came in after the fact with a higher one. The FWST compares it to Let's Make A Deal and attributes the crazed spending on the fact that there's competition between producers, rising gas prices, and a pretty good supply of gas throughout the Barnett Shale, which lowers the risk of hitting a bad spot.

The neighborhood in question is bounded by Interstate 20, Matlock Road, Texas 360 and Arkansas Lane.

Posted by T.G.

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Comments

ch0

ch0 Anonymous

Wow, that IS a great offer. Carrizo gave our 'hood a nice rate too, once we banded together in greedy solidarity. Not a bad stock either... CRZO

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

Kay

Kay Anonymous

When you consider that many homes are on an eighth of an acre, that doesn't amount to much IMO. My understanding is not everyone is even entitled to mineral rights on their property besides...

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

Scott Doyle

Scott Doyle Verified

Not entitled is exactly right; having the deed on a house doesn't necessarily mean you own subsurface rights. With all the black gold in TX, it's reasonable to assume the mineral interests were severed from the estate at some point...especially if your home is in a development.

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

jtmbls

jtmbls Anonymous

The only way a land owner will profit without owning the mineral rights is if the oil and gas company leases the land from them for the actual rig or passage to the rig site. Probably not something you would want in your back yard. Scott is right about the mineral rights. In most cases, ownership goes back 100 plus years and have been handed down from generation to generation. So, if you didn't inherit them...you're probably out of luck.

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

Scott Doyle

Scott Doyle Verified

They normally don't have to lease the surface to access minerals they already have rights to, btw.

A lot depends on the agreement drawn up to sever mineral rights from the estate, and there's plenty of precedent on reasonable extraction methods. Regardless, getting to the minerals goes hand-in-hand with owning them.

Quick googlin' yields a more thorough explanation.

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

jtmbls

jtmbls Anonymous

That's not what I said mr.smartypants. They do have to lease the land (surface area) at the drill site, which is not necessarily the surface area directly above the mineral rights. There are also severability issues concerning ownership at various depths of the available resources. In Texas the rights of the owners of the mineral estate do trump that of the surface estate, as they have the right to use as much of the surface as is reasonably necessary for the full use, development and enjoyment of the mineral estate.

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

Scott Doyle

Scott Doyle Verified

Right, I figured it would only be a diseconomies of scale type thing for them to lease a different surface area in order to access their minerals - are there that many instances where it costs less to lease elsewhere and drill from an angle than to drill down?

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

jtmbls

jtmbls Anonymous

As I understand it, you can have multiple completions in one borehole (one going straight down, others snaking off to the side). The costs associated depend on depth, composition of the earth, environmental conditions, regulations and location. The shale itself presents difficulties concerning its extreme density and honestly, I couldn't tell you how they will go about drilling for it. Texas regulations state that a Barnett Shale well and all its associated drills and pipes must run at least 330 feet away from any unleased property so if they have any hold-outs, they would have to go around.

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

Scott Doyle

Scott Doyle Verified

Interesting. Wonder if there are any holdouts...and whether their brake lines are cut yet.

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

jtmbls

jtmbls Anonymous

Ha! No kidding! If they were smart, they took advantage of the opportunity. That is some sweet deal!

3 months, 3 weeks ago ( Link to this comment | Suggest removal )

ch0

ch0 Anonymous

Holdouts don't affect the final outcome, at least beyond the minimum thresholds for contract benchmarks, which are easily attainable in all cases, given the greed/poverty of us middle-class heads of household. Holdouts only hurt themselves, once the neighborhood has come into agreeance, not before. And if you think $3000 is something to sneeze at, then you shouldn't even be posting in this thread. Personally, I could really use it.

3 months, 2 weeks ago ( Link to this comment | Suggest removal )

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