As a ranch broker with 25 years experience in South Texas, and a Certified
Wildlife Biologist specializing in the red sandy country, my business has
been directly impacted by the recent developments over the Eagle Ford Shale.
I remember the last oil boom, AKA the Austin Chalk. Although on a smaller
scale, that boom occurred over much of the prime quail country of Frio, La
Salle, Dimmit and Zavala Cos.
Suppose you own a 3,000 acre ranch in fee simple, 100% of the surface estate and 100%
of the mineral estate. You have the opportunity to profit off of your mineral estate in
several ways. Texas law allows us to benefit from the value of our minerals by separating
them from the surface and allowing us to have fee ownership in each.
A pooled unit is a device to combine a part or all of the lands covered by a mineral lease or leases with other land for drilling purposes. Suppose White Acre has leased all property to Company X and Black Acre has done the same. Company X does not have a unilateral right to pool White Acre and Black Acre. Private agreements or contracts of the parties involved usually determine the outcome of the unit designation so it is important to realize what you are dealing with when approached about your land being pooled with additional land(s).
When I started hunting deer in 1959, supplemental feeding, such as it was, consisted of either corn thrown by hand into a killing zone, or planting an oats patch. I distinctly remember my dad taking a pillowcase full of corn from the communal feed barrel and throwing it out in clearings around the blind we used. I also remember a joint effort to scratch and plant the only oats patch on the ranch, a job usually done with an old gate dragged behind a pickup and boys like me throwing oat seed before the gate.
Within the last eighteen months or so, getting a ranch real estate transaction closed is much more of a battle than it was in previous years. Less than two years ago I can remember when a signed contract pretty much meant that you could "chalk that one up as a done deal." With the downfall in the economy, there are many more steps to overcome to ensure that a pending ranch sale closes.
Quail season thus far has been disappointing . . . again. Since 2006, quail hunting in the Rolling Plains has been sub-par by Texas standards. Roadside counts at RPQRR were down 72% from 2008. And the dim prospects have hunters, landowners, and at least one wildlife specialist, scratching their heads for an explanation.
My last communiqué on the market was in April and I thought I’d take a moment and bring you up to date on the ranch market as I see it. As I’m sure you are aware, starting in October of 2008, the ranch market slowed and then stopped. The economic meltdown caused buyers to back off, some pulling out of deals already at the title company. Supply was down at that point, and what was for sale simply sat. Now, a year later, with the bailout and a new President in place, what has the ranch market done and where, in my opinion, is it headed?
The Barnett Shale play has been an interesting ride for me. I have had the fortunate opportunity to work during its climb, at its peak and where it presently rests. Working the play during and after its peak gave me a chance to observe oil and gas businesses’ successes and downfalls.
The current demand of energy in the U.S., coupled with the awareness to minimize our dependency on foreign oil, has alerted many landowners to take notice of the value in mineral ownership. More and more real estate transactions are coming with mineral reservations, no matter how big or small the property. Texas law allows heirs to benefit from mineral reservations made over 100 years ago because the surface estate is separate from the mineral estate and, there is no statute of limitations.
Many clients come to me looking for quail hunting ranches and the Bobwhite quail is probably the second most important species (after whitetail deer) for recreational ranch buyers in the State of Texas. While the Bobwhite has seen unprecedented losses in populations over the past 30 years throughout much of its range, several areas of Texas have held onto good populations and continue to provide excellent hunting.
There are many different goals involved in owning or buying a ranch. One would have to guess that if you’re actually on this website, then one of your goals may be to have an investment in the mineral rights. Some may place more emphasis on income producing ventures like running cattle or leasing, while others want to own a ranch purely for enjoyment.
Most of the land owners and buyers I work with are interested in accomplishing several different types of goals, but the single most sought after goal is growing huge whitetail bucks.
With the elections behind us, I thought I’d take a moment and bring you up to date on the ranch market AS I SEE IT. As you may well surmise, with the mortgage meltdown, the ranch market slowed and then stopped. Buyers that were actively looking have backed off with comments like, "I’m going to wait and see what happens." or "I’m not sure of the future right now with my business, I better wait." Now, with the bailout and a new President in place, what will the ranch market do?
Water is probably the most effective addition to rural property in Texas that will increase its value over the cost of construction. If your property can hold water, building ponds, lakes and wetlands will instantly increase its market price. With wetlands in particular, due to the great loss of this ecosystem throughout the country, there are many public and private groups that are designed to offer landowners technical and financial assistance to enhance and/or create wetlands on their lands.
Ranches in North Texas seem to be a tougher sale than they were in the previous two or three years. The phone is still ringing on all sizes of properties, but the larger ranches are much harder to "close the deal" on than smaller tracts. Since the downturn in the economy, buyers seem to be taking much more time to make a decision on a farm or ranch, with many "falling off the face of the earth." This can be very irritating when a lot of time has been spent doing research for them and not to mention lots of driving. Many prospective buyers seem to show up and be excited about looking at property, but later express they are waiting to see if prices are going to fall.
