Produced by Blackbeard Data to outline the demographics of Texas oil and gas ownership.
For the full annual 2021 Texas Petro-Wealth report in pdf click on the following link: 2021-Petro-Wealth-Report
Executive Summary
There is approximately $105 billion in Texas petro-wealth for the year 2021 based on our calculations. Corporations hold the highest at $81.6 billion, individuals second at $16.5 billion, trusts at $3.3 billion, and the rest of the petro-wealth divided among non-profits, educational institutions, various governmental agencies, and religious organizations
Overview
To get the total amount of petro-wealth we did a decline curve analysis on a county-by-county basis. We found that,Texas has around $105 billion in proved producing reserves. The price of oil was at $61.72 per barrel.
This report focuses on proved producing petroleum reserves and doesn’t include the non-producing, probable, or possible classed reserves.
Below our graph shows the wealth of the proved producing reserves based on the three main interest types, working interest, royalty interest, and override interest.
*If you have any questions about the terms used there is a definition section at the end of the report.
Ownership Of Total Petro-Wealth By Entity Class
We’ve grouped together each entity class to show the distribution of petro-wealth. In the graph below the classes include royalty interests, working interests, and override interests.
It is common for working interests to be held by corporations and have the highest value of petro-wealth. Working interest is typically a higher dollar value compared to other interest types.
Ownership Of Royalty Petro-Wealth By Entity Class
Notice how we have a more realistic view of the distribution among entity types of oil & gas wealth when we remove working interest. We get a 35 percent decrease in wealth held by individuals, and wealth held by corporate entities has decreased in value by about 79 percent. There is a large difference in the corporation class total once working interest has been removed.
Ownership of Royalty Interest By State
Our next two graphs support the theory that there is a higher ratio of Texans owning the interest of an asset located in Texas than people living in other states based on simple geographics.
The second graph shows ownership of interest by state but excludes Texas. We can get a better glimpse of the spread of Texas petro-wealth among other states. Based on the figures, petro-wealth is much higher in Texas than other states.
Bulk of wealth owned by Texans
Approximately 80 percent of the total override and royalty interests of producing oil and gas property located in Texas is owned by Texans.
The second highest state of ownership for Texas petro-wealth is Oklahoma at 11 percent of the total petro-wealth, followed by Colorado.
Petro-Wealth By City
The next two graphs show the top 20 cities of petro-wealth. We have included all interest types in the graph below. Many oil companies are located in Houston and Midland and working interest was factored into the first graph. Both cities have a higher concentration of petro-wealth because of the oil companies.
Texas Petro-Wealth By City – Royalties Only
We removed working interest from our totals in the following graph. Houston and Midland are still top cities but there is a small shift.
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