For the full annual 2018 Texas Petro-Wealth report in pdf click on the following link: 2018-Petro-WealthReport
Produced by Blackbeard Data to outline the demographics of Texas oil and gas ownership.
Executive Summary
For the 2018 year Texas has a total of $79 billion worth of petro-wealth. The largest percentage of wealth is held by corporations which own $62.6 billion worth of petro-wealth, followed by individuals totaling a cumulative wealth of $11.4 billion, and trusts which own $2.8 billion. The remaining $2.2 billion of petro-wealth is divided among non-profits, educational institutions, the government, and various religious organizations.
Overview
An extensive decline curve analysis was done on a county by county basis to get the total amount of petro-wealth. Based on our calculations we estimate that Texas holds roughly around $79 billion in proved producing reserves. The price of oil was at $65.59 per barrel when our calculations were performed.
It is important to note that this report will only focus on proved producing petroleum reserves. We did not include the non-producing, probable, and possible classed reserves in this report.
Below a graph illustrates the wealth of the proved producing reserves based on interest types. If you are unfamiliar which the terminology used in this report there is a section at the end of the report defining each interest type.
Ownership Of Total Petro-Wealth By Entity Class
Royalty Interests, Working Interests, and Override Interests have been grouped by entity class to show how the petro-wealth is distributed by entity type.
The amount of petro-wealth held by corporations is the highest value but it will need to be taken into consideration that working interest values are owned by corporations. Working interest is usually a higher dollar value compared to a royalty or override interest.
Ownership Of Royalty Petro-Wealth By Entity Class
In the next graph working interest has been removed from the calculations of petro-wealth by entity. With working interest removed we now have a more realistic view of the distribution among entity types of oil & gas wealth in Texas. Please note that wealth among individuals decreased by only 8%, while wealth held by corporate entities drastically decreased in value by almost 82 percent.
Ownership of Royalty Interest By State
Geographically speaking, there will be a higher ratio of Texans owning the interest of an asset located in Texas than people living in other states. The next graph supports this theory.
We have also created a second graph that does not include Texas, since the concentration of petro-wealth is disproportionally higher in Texas than other states. The second graph allows the viewer to get a better glimpse of the distribution of petro-wealth in other states.
Bulk of wealth owned by Texans
Texans own roughly 84 percent of the total override and royalty interests of producing oil and gas property located in Texas.
The highest percentage of petro-wealth ownership outside of Texas is Oklahoma a only 8.1 percent of petro-wealth then followed by Colorado at 3.9 percent. The rest of the states are at calculated to be smaller than 1 percent of ownership per state.
Petro-Wealth By City
In our final series of graphs we have selected the top 20 cities of petro-wealth. All interest types were included in the graph below. Since working interest has been included in this graph there will be a bias to Houston and Midland because many oil companies are located in these cities.
Texas Petro-Wealth By City – Royalties Only
In our second graph we have removed working interest from our calculations in the next chart. There is a slight shift in the top cities.
Terminology
There are three types of ownership for oil and gas assets:
Working Interest – WI ownership is comprised of individuals or corporations who invest in oil and gas drilling. Typically, working interest owners receive 70-90% of the value of oil produced because of the risk assessed with working interest, the risk being having the financial responsibility to pay for all the operating costs.
Royalty Interest – RI ownership receives a risk-free payment. This payment is paid to the mineral owner by the operator. Typically royalty owners combined receive between 10-25% of the value of the oil produced.
Overriding Royalty Interest – This interest is similar to a Royalty Interest, but the owner does not own the minerals. Overriding royalties disappear if the lease expires. Typically 1-5% of the value of the oil produced.
A typical oil lease 20 years ago would be:
87.5% Oil Company (owns 100% WI)
12.5% Mineral Owner
These numbers represent the NRI or Net Revenue Interest which is the division of the revenues from the oil. The Oil company has to pay 100% of the bills, hence the 100% WI.
Modern leases are closer to:
80% Oil Company (owns 100% WI)
20% Mineral Owner
The higher royalty is due to lower risk using modern methods in drilling.
About Blackbeard Data
Blackbeard Data is a data service provider offering lease ownership data for properties throughout Texas, Kansas, Arkansas, and Ohio.
Located in Austin, Texas, it has provided lease ownership information, geospatial lease data, and analytical services to oil investors for over 20 years.
For more information, or to purchase lease ownership information, contact us at 800 762 3057 or visit us at www.BlackbeardData.com