As oil prices continue to remain stable, the industry has turned back to an old friend – West Texas. Over the past 2-3 years, we have witnessed an upturn in leasing in traditionally prolific Oil & Gas counties. We have also seen gains in counties that haven’t been active in several decades. The players range from small independents, all the way up to the majors.
Here are 3 hot West Texas areas, and 1 that has fallen flat:
- Peripheral Counties: While interest in the central counties of the Wolfberry,
WolffolkWolffork, Bone Springs, and Wolfbone has been well publicized, perhaps the most significant areas are the peripheral counties that haven’t seen much activity. These are counties, such as Lynn, Terry and Hockley, as well as Lubbock to the north. With all the talk that the Wolfberry might extend all the way up to the Texas Panhandle, leasing activity is gaining steam.
- Cline Shale: In the counties to the east, an area that has been dubbed the Cline Shale is picking up. As a result, Fisher and Nolan counties have emerged from the dead. To put this new-found interest in context, we have been collecting leasing data for 12 years. We add counties based on customer requests. Until this year, not a single customer had ever requested either Fisher or Nolan County. But, given the number of requests this year, we will be adding them shortly and look forward to the results. There has also been a significant increase in leasing activity in Tom Green and Irion Counties on the Southern end of the play. But, very few wells have been drilled, and the economics remain to be seen. It will be interesting to watch the Cline Shale over the next year to see how the play pans out.
- Delaware Basin: The Delaware Basin is by far the most highly sought after acreage in the area. In fact, given the amount of activity, it is difficult to even locate open acreage. Loving, Ward, Winkler and Reeves Counties have had the most promising results to date.
WolffolkWolffork Shale: While returns in other areas have been promising, the WolffolkWolffork Shale is one play that has come up short. Throughout 2011, there was consistent leasing in Crockett and Pecos to the south. But, the wells that were drilled are proving to be marginal. Adding to the play’s trouble, the area primarily produces gas. And, with prices predicted to remain low for the next 2-3 years, it’s not likely leasing will continue in the region.
This is an exciting time to be active in a unique region. As a testament to the increased interest, rumor has it there is a six month waiting list for an apartment in Midland/Odessa. And, it looks like activity will continue for the foreseeable future. But, I don’t want to be the jinx, so knock on wood!
Now it’s your turn. What area do you think holds the most promise in West Texas? Leave a comment below.