South Plains land owners receiving big offers from oil companies - KCBD NewsChannel 11 Lubbock

South Plains land owners receiving big offers from oil companies

By Michael Slother - email

LYNN AND TERRY COUNTY, TX (KCBD) - Advanced methods and technology have oil companies interested in drilling throughout several counties in our area. Land owners are receiving offers to lease mineral rights to the companies, and many of them are seeing big offers.

Geologists think there is oil and natural gas in large shale formations underneath Hockley, Terry, Gaines, Dawson, and Lynn counties, and they want to get it out. If they're right, the economy of communities in these counties could change forever.

"I don't think I'd have an opportunity in 3 or 4 lifetimes to see this," Bill McGowan said. He handles leasing agreements between oil companies and property owners.

Farming is what drives the economy in towns like Brownfield but there's new business in town. Big business. The same can be said about Tahoka and O'Donnell in Lynn County. "There's big smiles on everybody's faces," said Lynn County Clerk Susan Tipton.

Oil and gas company representatives from across the country are in offices like Tipton's, scouring property records to find out who owns mineral rights to areas they're interested in leasing. They negotiate a price per acre and royalty payout in a contract.

None of the oil companies would talk to us on camera, but Tipton says they've told her advancements in technology made companies look to drill. "This has always been there. It's very deep underneath Lynn County but they have found a way to extract this oil and gas in an economical way," she said.

An economical way for oil companies means big dollars for landowners. "I have personally worked on more than 6 million dollars in oil and gas lease bonuses in the last 3 months," McGowan said.

Advancements in technology including hydraulic fracturing and directional drilling worked in similar projects throughout the country. "That shale in other places has produced oil and gas," McGowan said.

McGowan gave us an example of how lucrative the business could get if they can extract oil. "If  I own 100% of minerals under that land and lease it for a 1/5 or 20%, and it makes 100 barrels per day; that's going to pay me $45,000 a month."

Ryan Smith said he started getting offers in January and they've continued to go up. "First offers were $75 to $150 an acre and 3 to 4 times that is where we're at today," he said.

Some landowners have hundreds of acres that companies are taking a growing interest in.

"They told us it could be anywhere from 3 years that they would be searching these land records," Tipton said.

"I think we'll see our first well drilled in May or June. I think we'll know by the end of the summer how good, bad, or indifferent it's going to be," said McGowan.

 ©2011 KCBD NewsChannel 11. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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