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An Encana well pad in the Permian:

Encana-mega-pad

Here is another, EQT’s Cogar pad in the Marcellus:

Marcellus-pad

 

The-rise-of-super-padsArticle from Post Gazette on mega pads in the Marcellus here.

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I recently ran across an article on Investing.com“The Problematic Truth About U.S. Shale Oil Production,” by Dr. Ellen Wald, who hosts a podcast about global energy. Dr. Wald reports on her recent podcast discussion with Art Berman, a geology consultant and frequent speaker and author. It reminded me that I wrote about Mr. Berman several years ago, when the shale gas plays in the Marcellus and Barnett were getting started. He told Dr. Wald that the Permian shale plays have much smaller reserves than others — including the Energy Information Administration — have estimated, as little as 3.8 billion barrels.

In 2010, I wrote about Mr. Berman’s attendance at a conference in Washington sponsored by the Association for the Study of Peak Oil & Gas – USA, of which he is a director. At that time he argued that the gas reserves in the Marcellus were much smaller than were being predicted. A year earlier, Mr. Berman created a stir when he published a gloomy analysis of the Barnett Shale. He was then a contributor to World Oil, a trade publication, and World Oil refused to publish one of his articles, causing him and his editor to resign and creating a stir.

Mr. Berman was on a panel hosted by Texas Monthly in 2013, along with Scott Tinker of the UT Bureau of Economic Geology, and Kenneth Medlock, then an energy fellow at the Baker Institute. He continued to question estimates of shale oil and gas reserves.  (Dr. Tinker created a wonderful website for those wanting to know more about world energy, the Switch Energy Project, worth exploring.)

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I have often received calls from clients who receive unsolicited offers to buy their minerals. In the past, mineral owners have generally ignored these offers, reminded of their grandmother’s admonition to “never sell your minerals.”

That has changed. The buying and selling of minerals has now become common. Investment monies have flowed into funds that acquire mineral interests. Companies have been founded with that objective. Some of the largest mineral portfolios have been assembled by purchase over the last decade. Black Stone Minerals, for example, has evolved from a family-owned East Texas lumber company into one of the largest mineral owners in the country. Energynet, founded in 1999, conducts online auctions of minerals and now handles more than $1 billion per year in transactions.

Investment in minerals, especially in Texas, has several advantages.  Holding costs for minerals are minimal. Taxes are assessed only on producing minerals.  Severed non-producing minerals cannot be adversely possessed.  No liability risks attach to mineral and royalty interests.

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Native Texan and Austinite Lawrence Wright, longtime journalist and Reporter at Large at the New Yorker, has written about Texas’ love affair with and dependence on oil, in the January 1 issue of the New Yorker. “The Dark Bounty of Texas Oil” is a 10,000-foot flyover of Texas’ oil business, from Spindletop to the Permian Basin. An excellent read.

When I began this blog, US oil and gas production was just beginning to rise out of a 35-year decline.

US-oil-production-graph
While Texas oil production is not back to its levels of the 1970’s, its rise since 2019 has been meteoric, fueled by the resurgence of production from the Eagle Ford and more recently the Permian.

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Every year I look forward to receiving William Osborn‘s holiday photo. William is an Austin oil and gas attorney, an amateur historian, a historic preservationist, an alley gardener, an all-around renaissance man, and my cousin. Every December for the last twenty-five years he has sent a photo to his clients and friends documenting the history of the oil and gas industry in Texas, along with an article explaining its historical context written by William. He has collected all of those photos and articles on his Texas Compound website, and you can view them here. Below is one of his photos:

1993-Photo
Of this photo, William wrote: “On July 29, 1918, the Fowler Farm Oil Company S.L. Fowler Number 1, located on the northern edge of the Wichita County community of Burkburnett, blew in at a rate of 2200 barrels of oil per day from a completion depth of 1,734 feet. Within three weeks there were more than 50 drilling rigs operating in the immediate area. The Fowler Farm Oil Company drilled a second well on the same lease and then sold its entire interest in the tract to the Magnolia Petroleum Company for the sum of $1,800,000.00.” By June 1919 there were more than 850 producing wells in “the world’s wonder oilfield.”

William, whose interests include the history of railroads in Texas, has also built the Texas Compound on Highway 290 West, west of Austin. Since 1986 he has moved several historic buildings onto his compound, including a Santa Fe Railroad Depot from Dumas and Texaco bulk fuel warehouses from MCamey and Spur. He has also restored several old railroad cars on the property, including three “Texas Zephyr” railroad passenger cars and two Southern Pacific “Sunset Limited” passenger cars.  William’s Texas Compound website includes historical photos of his restored buildings and passenger cars. A visit to his compound is worth the trip. He has also written a history of Jim Crow laws and Texas Railroads, “Curtains for Jim Crow: Law, Race, and the Texas Railroads,” published in Southwestern Historical Quarterly, which can be found here, along with his other writings. Below is a historic photo from William’s collection showing the inside of the coffee shop in Southern Pacific Railroad’s “Pride of Texas.”

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I got the idea to start this blog after I made a presentation to a landowner group in which I distributed a checklist for negotiating an oil and gas lease.  Soon thereafter, I began receiving calls from people who had found the checklist on the internet. The organization that sponsored my presentation had posted it on their website, and people searching for help on negotiating a lease found it.  I decided that I should investigate this internet thing more closely, and that led to my decision to start this blog.

I have updated my checklist, and you can find the new and improved version here:  Checklist for Negotiating an Oil and Gas Lease

And on a sadder note, I would like to mourn the passing of Tommy Nobis, the best linebacker ever to play for the University of Texas. He played for UT 1963-65, and was a member of its 1963 national championship team.  He had a great professional career with the Atlanta Falcons, where he was the franchise’s first draft pick in 1966 and was known as “Mr. Falcon.” He still holds the record in the NFL for most tackles in a season, at 294.  Nobis died December 13. He attended the football banquet at St. Stephen’s Episcopal School in 1965 where I was a sophomore and played defensive guard and center. My jersey, like Nobis’s, was number 60. He and I both sported a flat-top haircut, and for the rest of my high school football career my nickname was “Nobis.”  Requiescat in pace, Tommy.

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Last Tuesday the Texas Supreme Court heard arguments in three cases on oil-and-gas-related topics.TexasBarToday_TopTen_Badge_Small

Murphy Oil v. Adams, No. 16-0505:

Our firm represents the Herbsts in this case.  Murphy owns a lease on their lands in Atascosa County, shown in blue below. While the Herbst Lease was in its primary term, Comstock drilled the Lucas A Well on the adjacent tract, shown in green.

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I ran across a blog post by Andy Nold, a surveyor, about his research into a large subdivision of land in Reeves County. It provides great incite into the challenges faced by surveyors in West Texas. Here is his post, with permission:

Today’s surveying challenge is the garden spot of northern Reeves County, Texas. Mont Clair is a dusty little burg miles from civilization and services that makes Orla look like a major metropolitan destination. Mont Clair was platted in 1911 over several sections of Blocks 57 and 58 of Township 1 of the T&P Railway Company Survey, bisected by the Pecos River Railroad (later the Panhandle and Santa Fe). Speculation on a great land rush brought by the development of canals and cheap farmland, Mont Clair joined many other now defunct towns along the railroad like Arno, Angeles, Dixieland, Riverton, and Patrole. Unfortunately, the sales of Pecos River water rights far exceeded the actual quantity of water that the river could provide especially with the development of dams and lakes in New Mexico that reduced the flow.

The subdivision plat was signed by J.L. Walker, president of the Pecos Valley Interstate Livestock Company whose principle place of business was Groesbeck, Limestone County, Texas. The partnership included L.B. Cobb, Jr., W.W. Brown, R.L. Reese, R.M. Cralle, L.L. Brown and F.F. Brown. The plat purports to be based on a survey made by L.B. Cobb. It is a very large map and has no recording information. The plat is kept in a big folder at the courthouse and all the deeds referencing it just cite “Lot #, Block # in the Town of Mont Clair, Reeves County, Texas as shown by the map or plat of said town of record in the Deed Records of Reeves County, Texas.”

The town is aligned to the railroad, occupying most of Section 18 and portions of Sections 13 and 19. The north town limits are annotated N 70°20’ E. The east line of Section 18, Block 57, Twp. 1 is annotated NS and the Pecos River Railroad slices through the east third of town on a 50-foot right-of-way. There is no call for any monumentation and no ties to the section corners. The blocks are 250’x250’ with 20-foot alleys and 60-foot street rights-of-way.

Several other sections adjoining the town lots and in the vicinity are also platted into farm lots, 80 equal sized lots on the typical section ringed with an apparent right-of-way of unknown dimension. It is my belief that the sections were presumed to be 640 acres oriented to the cardinal directions.

A Reeves County history says that a Post Office was organized for Mont Clair in 1911. I do not know if any buildings or residences were constructed at all. I have found nothing indicating a railroad depot was ever here, although several of the other ghost towns listed did have a depot at one point. Lot and farm sales must have been good because in 1952, G. E. Ramsey and G. E. Ramsey, Jr., sued over 1,000 property owners and won a judgment in a Trespass to Try Title suit.

http://law.justia.com/cases/texas/supreme-court/1961/a-7892-0.html

While the Ramseys did gain title to close to 6000 acres of land, some landowners successfully defended their title. Other landowners successfully sued for the return of their property a few years later. My company has been hired to locate 2 of the town lots and 2 of the farm tracts. You may wonder why anyone would be concerned about a few acres of scrub desert land that can barely support cattle or farming in the middle of nowhere. You might be surprised to learn that the commuter adjusted daytime population of the ghost town of Mont Clair is much greater than zero as various people pursue their daily occupations. The town sits atop the Delaware Basin oil shale formation which has some of the most active oilfields in Texas. I’m sure the landowners who sued to reclaim their property were more concerned about maintaining their mineral interests than the surface use.

In talking to one of the Reeves County officials, the plat has never been vacated. No field work has been scheduled yet but I am not optimistic about finding any evidence. We have previously tied the railroad right-of-way through this section and there are several different opinions about where the section corners are supposed to be as evidenced by multiple monuments at each corner. Continue reading →

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Dragon v. Trial, from the San Antonio Court of Appeals, No. 04-16-00758-CV, decided November 8, is a case that may be of interest only to title attorneys and landmen and those of us who delight in the minutiae of land titles. It is also, like many title disputes, the story of a dispute over land whose minerals have become fantastically valuable. The case involves 237 acres in Karnes County, in the heart of the Eagle Ford play.

TexasBarToday_TopTen_Badge_SmallIn 1932, the 237 acres was conveyed in equal shares to eight siblings. One of the siblings died, and the property was thereafter owned by the remaining seven. One of the siblings was Leo Trial. In 1983, Leo conveyed one-half of his 1/7th share to his wife Anna Ruth.

In December 1992, Jerome and Patricia Dragon purchased the property from Leo Trial and his siblings. They financed a part of the purchase with a 15-year note. Also, the grantors reserved the mineral estate in the 237 acres for a term of 15 years, after which title to the minerals would go to the Dragons. But Anna Ruth Trial did not sign the deed – an oversight that was not discovered until years later. Continue reading →

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Sent to me by a friend:

Edgar Freeman Smith was the youngest child of a circuit preacher. By age eleven he had to work in a coal mine to support his widowed mother. When he was eighteen they lost their home to foreclosure. People told him to learn a trade if he wanted to get by. Edgar’s ears were plugged to that. All he ever wanted to be was a lawyer.

He sweated all day and studied into the night. This was back when you could read for the law. After six years of reading, Edgar took the bar exam. He passed. Edgar Freeman Smith was a lawyer.

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