Texas Land and Market Update | RR District 1-6 | Q4 2024

Originally published in AAPL Landman Magazine 

I styled this update around how activity in RRD 1-6 has been impacted since the president-elect’s declaration of “Drill, Baby, Drill” and Billy Bob Thornton’s casting as the lead in the TV series 'Landman'.

If you’re considering drilling more wells in Districts 1-6, it’s important to note that most of the reserves in East Texas and the Gulf Coast are natural gas, a resource that has long been weighed down by low prices and oversupply. So, how does the economics of a “Drill, Baby, Drill” strategy pencil out here? One possible answer is catering to the energy demands of data centers owned by hyper-scalers like Amazon and Google. But the most likely driver is natural gas feeding the LNG export terminals along the Gulf Coast, such as Golden Pass LNG, Texas LNG, Rio Grande LNG, and Corpus Christi Stage III.

However, in January 2024, the Biden administration paused LNG permits, causing chaos for gas producers, exporters, and European and Asian importers who had bankrolled these projects with expectations of deliveries by 2027. To make matters worse, the U.S. Court of Appeals for the D.C. Circuit vacated the permit for NextDecade’s 27 mtpa LNG facility—already under construction—following a lawsuit by the Sierra Club and other environmental groups.

We anticipate that when Trump takes office, he’ll not only lift the pause but also reinstate vacated permits and expedite LNG infrastructure development. If there’s any doubt, consider that European players like Repsol and Total Energies recently acquired assets in Texas’s dry gas window. Their strategy? Secure LNG supply for export to their home countries.

Meanwhile, the TV series 'Landman' has added an unexpected twist to Cinco’s field operations. When our landmen approach landowners about leasing, they’re met with a barrage of questions about the show’s accuracy and whether all landmen are as “wild and crazy” as depicted. After a couple of glasses of iced tea—or their beverage of choice—and meeting the family, they’re ready to discuss the lease. A few landowners even asked our landmen to come back and watch the show with them to separate fact from fiction. One memorable request? A mother asking if we could teach her kids to become landmen. The influx of new members in the AAPL, as seen in the latest Landman magazine, seems to reflect this Billy Bob-inspired curiosity.

M&A activity in the region has been slow this quarter, with U.S. Energy Corp. selling its East Texas oil and gas assets to 84 Resources Holdings as the sole transaction of note. Still, rumors persist that TG Natural Resources—a subsidiary of Tokyo Gas—is negotiating to acquire Chevron’s East Texas assets. You’ll recall TG’s $2.7 billion purchase of Rockliff’s East Texas holdings last year. On the other hand, leasing activity is booming in Robertson, Leon, and Freestone counties, thanks to “monster wells” completed by Comstock and Aethon in the burgeoning Western Haynesville Play. With initial production rates of 22–34 MMcf/day, these wells are spurring continued leasing as operators map the play’s limits.

I’m optimistic about the future for all land professionals—whether working in oil and gas, solar, or other energy sectors. The optimism stems not only from new leadership in Washington but also from Le’Anne Pembrooke Callihan’s appointment as AAPL’s EVP/COO, signaling a bright path forward.