Following the U.S. Energy Information Administration’s prediction that production from the Eagle Ford Shale will peak in 2021 before flattening out until at least 2050, the San Antonio Business Journal sought insights from Jackson Walker associate Reagan M. Marble regarding the potential impact on landowners.
“These are all farmers and ranchers who, for the most part, weren’t used to massive amounts of wealth. So they have saved a large portion of it over the past eight years,” Reagan said.
In his practice, Reagan focuses on complex energy litigation and transactions. In his energy litigation practice, he regularly represents oil and gas operators, mineral and royalty buyers, high‐net‐worth family trusts and partnerships, and renewable energy developers in their litigation matters throughout South and West Texas. In his energy transactions practice, Reagan frequently drafts and negotiates agreements affecting all aspects of upstream oil and gas exploration and production including oil and gas leases, purchase and sale agreements, farmouts, and joint operating agreements.
Since prices and production in the Eagle Ford plummeted at the end of 2018, Reagan said that conversations with his clients have centered around the impact of the recent downturns. With their focus on recent events, that leaves little concern for what will happen as far out as 2021.
Reagan added: “The one issue we don’t really talk about is: You’re going to have a lot less money coming in the door.” His advice to landowners is to check their pay stubs.
“One of the things I’d advise higher-net worth clients to do in anticipation of a downturn is to pay attention to whether the oil and gas company is in any sort of distress,” he said. “From a financial perspective, times of distress for a lessee are often advantageous for the lessor, the landowner.”
To read more, view the San Antonio Business Journal article “Eagle Ford 2021: What happens to South Texas when oil well flow flattens?” (subscription required).