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. Overnight, ranches that were for sale with
minerals suddenly were taken off the market, were offered without minerals,
or the asking prices were greatly increased. The boom died out and over
time, ranches came up for sale with some minerals offered, some even
offering 100%, and times once again were good.
This time around, the oilfield activity is occurring over a much larger
area and predictions are the production will last for 100 years. As with the
last boom, it is impossible to find properties for sale anywhere near the
Eagle Ford with minerals intact even though there are still ranches for
sale, surface only, as derricks fill the horizon.
What is a prospective buyer to do? I suggest two things, either look
outside the Eagle Ford, or accept that there will be production on your new
ranch for which you will probably not be compensated. If you decide that you
can live with production, before making an offer ask for a copy of the
Surface Use Agreement (SUA). Even if the current owner does not own any of
the minerals, he can usually get a copy of this agreement. For the novice,
the Surface Use Agreement is part of the mineral lease and sets out the
rights and limitations the oil company has agreed to regarding the surface.
Sometimes, the surface owner, independent of any mineral ownership, is
compensated for surface destruction for roadways, pad sites, surface
gathering lines, etc. In addition, some of the better SUAs address
reclamation after the oil company no longer has a use for the land.
Remember, too, that not all oilfield activity is bad. As a surface owner,
you can claim “dry holes” as potential water wells and the oil company
will plug the bores just below the prevailing water-producing strata, most
likely the Carrizo aquifer. I recently converted two Austin Chalk wells in
Zavala Co. to water wells. Each produces 500 gpm for the cost of perforating
and a pump as three-phase power was already onsite; a savings of well over
$100K per well. Gravel roads make a nice ranch road once the activity dies
down as predicted over the next five years or so, and pipeline senderros can
be managed as food plots.
If you elect to shift your search outside the Eagle Ford, be aware that
even on the periphery, traffic will be increased for some time. Benefits of
this new traffic include new stores, cafes, and hotels in all the small
towns inside and outside the oilfield. I am sorry to say once again the
oilfield seems to be centered on the red sands of South Texas, but there is
good wildlife habitat to be found in Duval, Live Oak, Jim Wells counties and
further south; it’s just a question of drive time for most buyers. Most if
not all Brokers now carry a map of the Eagle Ford and can tell at a glance
if the ranch under consideration is inside or outside the region of probable
The fact is, the Eagle Ford is here to stay and buyers will have to adjust
to it. Brokers need to become conversant in oilfield jargon, know where
activity is headed, and develop a file on mineral attorneys so they can
refer their clients for good advice. Over time, the craziness will subside,
hunters will return to the solitude of the blind, and life, allowing for the
800 pound gorilla, will go on.