Buyers and Sellers of both residential and commercial properties in the North Texas area of Dallas Fort Worth are now negotiating mineral rights as an addition (or deletion) from the bundle of rights transferred at closing, making for a dramatic swing in dollar amounts, (and tricky transactions.)

Specifically, property owners in Tarrant County, Parker County, Wise County, Johnson County, Denton County, Jack County, and to some extent Palo Pinto county, are now the benificiaires of a drilling boom in a geological formation known as the Barnett Shale located approximatley 5,000 feet below the surface.  The wells are typically drilled from a drill site over a mile away, and diverted horizontally though the formation, allowing access to the natural gas trapped below.

Many large natural gas producers have moved into the area with an active mineral rights leasing program.  According to some experts, less than 40% of the viable acreage within the formation has been leased.  Some of the most active companies are Chesapeake Energy, XTO Energy, and Quicksilver Resources.

Consequently, homeowners who have been blissfully unaware of mineral rights are now actively researching the chain of title to find out if they actually own the minerals under their house.  Neighborhood groups have been formed to negotiate bulk leases with safeguards, restrictions, and even provisons to improve parks and common amenities in their area. 

Every day there is some higher figure to report, but right now the big neighborhood leases being signed pay about $25,000 per acre to the homeowner as a signing bonus, with a 20% royalty on any future production based on the pro-rata share of the acreage covered by the well. Estimates vary on the life of the well, but many believe the gas wells will produce for 10 to 15 years before eventually tapping out. 

Apart from some delusional Jed Clampett visions of retiring on income from the backyard, buyers and sellers of residential and commercial properties are finding creative ways to meet the needs of all parties while maintaining the stream of income that minerals now can add to even the smallest property.

Buying or selling property now in the Fort Worth area involves a separate calculation that homeowners have not been too familiar with in the past.  Instead of trying to figure out how much the mortgage payment or insurance will be, Buyers and Sellers are trying to place a value on the mineral rights included or deleted from the transaction.  Sign the lease, keep the bonus?  Retain the minerals and wait for a higher royalty?  Sell the whole house, convey all minerals because it would not be fair to own a part of someone else's family home after the closing?  These are all dilemmas that our clients and agents have dealt with in the last few years, and every day it gets a little trickier!   

For Questions about your Real Estate Transaction and the impact of the Barnett Shale, you may contact us at the address below.

www.brantsrealtors.com