I-10 stretches a staggering 877 miles across Texas, encountering countless different cities, speed limits, potholes, and restaurants along the way. In the GLO’s recent offering of over 115k net acres across 335 tracts across the state, the vast expanse of Texas’ mineral wealth comes into focus. The acreage is scattered across 20 different counties meaning companies of every scale will be looking at it.
- Permian Basin headlines the marketing sheet for this offering
- With acreage scattered through Reeves, Culbertson, and Pecos this deal has a decided Delaware lean. The Reeves and Pecos Acreage is bracketed by Chevron and Centennial’s acreage serving to ignite higher bidding with the recent acreage swaps and sales in the area by the two drawing more eyes. Centennial’s latest 8,600 net acre sale came out to $16,400 per acre, closing this month, shows interest in the area.
- South Culberson tracts draw the most intrigue (read: speculative) with a 2014 State sale to John Wollcott hugging the Apache acreage on the border of Culberson and Reeves. Apache currently has 2 rigs running just over the border with 7.5 miles of the closest offered GLO tract. While there has been a well that came on very modestly to the south of the offered acreage, it was brought on 10 years ago and currently there is no recent production around the tracts. Apache continues to permit clusters of 16000 ft permitted wells on the SE to NW trend, extending just over the county line. They have dubbed this area their ‘Northern Flank’ and with well costs between $4-$6 million and EURs in the 2bcf+ range, their economics look great. These new wells are boasting a 2 year breakeven period and higher oil cuts come into play in the northern tracts.
- Haynesville/Cotton Valley
- Tracts in Harrison and Rusk offset better recent production, but lack size at 37 and 4 acres respectively.
- Marion county seems to be the jewel of this offering with Herd Production having a rig on location, drilling a wildcat, just to the North East of the 514 acre tract. Here the Cotton Valley has been de-risked in the southern offsets and this acreage sits in a nice 500-1,200 ft updip of the more core areas. The wildcat could offer upside drilling a shallower horizontal well permitted to 7000 ft.
- Galveston Bay
- Torrent and Linc serve as the two recent operators to drill in Galveston Bay, west of the offered blocks. Their efforts have largely targeted Frio and Miocene reservoirs to a standard measured depth around 7000 ft. Average EURs, for bay wells first produced in the last 5 years, are around 118k bbls and 63k mcf. The type curve indicates 3-4 years to breakeven and comes with the conventional disclaimer that well performance varies greatly.
- Onshore, Hilcorp drilled the closest economic well, 12k+ ft down to the Vicksburg. Currently about 3 years into production, the EUR looks to be around 2 bcf with steady oil figures staying between 10k and 18k bbls a month during that time period. These figures hammer home a sub 12 month breakeven and spectacular returns. Again, this well is over 5 miles away from the nearest offered tract.
As more public lands come up for lease, the GLO is the latest to offer up acreage scattered across Texas with a good mix of conventional and unconventional acreage. Currently marketed on EnergyNet, prominent shale counties are listed as the main draw for this offering but there are other offerings that are high traffic areas. With New Mexico’s latest 2100 acre offering taking place last month, Texas is looking to improve on the $1,000 per acre mark of their neighbor to the West … smart money is that they will!
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