Texas Land and Market Update | RR District 1-6 | Q3 2023

Originally published in AAPL Landman Magazine 

Activity and Updates

Drilling activity in RR District’s 1-6 comprises sixty-four (64) rigs in Eagleford/Eaglebine and twenty-nine (29) in the gas-rich Haynesville Shale. The activity in RRD 6 has slowed due to low gas prices but based on new drilling permits filed by the most active operators, the rig count is expected to pick up in the winter. In East Texas, Magnolia Energy is actively drilling wells in the Eaglebine Formation located in Washington County, Aethon Energy in the Bossier Formation in Angelina, St Augustine, and Nacogdoches counties, and RockCliff and TGNR in the Texas Haynesville located in Panola and Harrison counties. Chesapeake closed two sales in the Eagle Ford shale. The first to INEOS Energy for one billion four-hundred million($1.4B) consisting of 2,300 wells, 172,000 acres, and 36,000 BOED. The second sale was to Silver Bow for seven hundred million ($700,000), covering 42,000 acres and 540 wells in Dimmit and Webb counties. Also, Cresent Energy purchased Mesquite Energy’s Eagle Ford assets for $600M.

CO2 Project Development

In Southeast Texas, several CO2 storage projects are underway along the Texas Gulf Coast because this area's petrochemical and heavy industries are some of the country's largest emitters of CO2 and other GHGs. A joint venture carbon capture and storage project between Talos, Chevron, and Carbonvert, called the Bayou Bend Project, covers 140,000 acres and is in the Port Arthur/Beaumont area of Texas. Exxon has a CO2 storage project in Liberty County with landmen going door-to-door explaining CCS to the residents. Exxon’s purchase of Denbury, the leader in Carbon Capture Utilization and Storage (“CCUS”), for $4.9B gives Exxon Denbury’s 3,000-mile pipeline from Mississippi to Texas and an extensive CO2 infrastructure along the Gulf Coast with access to many of the refineries and heavy industries. Most analysts believe Exxon paid $1.9B for the CO2 portion of the $4.9B purchase price and $3B for its production.

Energy Transition Legislation

Lastly, I read the AAPL Connect Member Forum to understand what landmen are interested in or concerned about. The Forum is a treasure trove of ideas and information I recommend to all landmen. The one community that caught my attention is Russell Cohen’s Governmental Affairs updates. In every state, legislation for the energy transition, which includes wind, geothermal, solar, hydrogen, and CCS, is being proposed by State leaders and passed at an alarming rate. Once passed, capital will flow to these projects, and landmen will be in demand to secure the land rights and permits to develop each project.