Land Grids. The Good, the Bad and the North 40

Land Grids. The Good, the Bad and the North 40

Typically children don’t look forward to going to the dentist but I did for one reason, Highlights Magazine. To be more specific, Highlights Magazine had a section where they cleverly hid common everyday items into a drawing.

I loved, and still do love, hidden picture games; So why is it that I hate Texas’ land survey system so much? One would think that the endless Where’s Waldo game we as landmen get to play every time our work lands us in a new abstract would keep me entertained for weeks on end but no, I want the subject area circled for me!

Luckily, I first cut my teeth with Abstracts/Metes and Bounds and I’m glad I did. Since I was thrown in the deep end (running title on logging companies in East Texas) and later moved to a state that used PLSS and quarter calls (LA), the shock in the difference between the two systems was in my favor. I can only imagine the whiplash when done in the other direction.

LaTex Land Grids

As any seasoned landman, I have had my taste of quite a few different land grid schematics over the years and have formed pretty strong opinions of each. My exposure and opinions have only grown stronger now that I manage several Land products for Drillinginfo making me responsible for capturing, mapping and designing software for data from pretty much every play in the country.

Each land grid has its pros and cons and I’d like to go over a few with you today to see how our notes compare.

Abstract/Metes and Bounds – Central, South & East Texas

Abstracts Land Grids

After my introduction, you may be surprised to hear that I have any pros to list with this system but I do.

After the task of finding your abstract out of the 1,000+ others positioned randomly somewhere in the county and then locating the 18” black jack in the middle of a field 2 varas N 44’ E from a 16” Hickory tree (in 1910), metes and bounds does have some strong attributes.

You can slice and dice, zig and zag your property into any shape you desire. So when it comes to getting a precise polygon, there are only few systems better than metes and bounds.

But, back to the cons.

Texas’ first surveys date back to when it wasn’t part of the United States. While surrounding neighbors were being defined by a Jeffersonian system, Texas was under Spanish and later Mexican Rule. Much of the early land grid was based on water supplies, which doesn’t always make for straight lines.

As I alluded to above, when the original surveys were created and abstract numbers assigned there was no standardized system in place with regards to size, shape or numerical location.

We are now left with the task of locating abstracts by clumsily sifting through a county abstract map or having to turn to a computer for help – which are not always readily available in a courthouse. The next step of plotting a metes and bounds description, is locating your point of beginning which are often outdated Landmarks/waypoints that are not easily found on a standard map.

Even after our point of beginning is found and we are ready to forge ahead with creating our polygon, we are left with two less than stellar options. One Requires manual mapping while the other, manual entry into clunky software program and pray there is no curve involved.

Finally, I’d liked to bring up the use of reference documents which can often be considered either a pro or a con.

The number one reason a legal document is voided is an improper property description. With its complex directions and distances, it is very easy for a person creating the document to make a mistake when transcribing the metes and bounds legal description.

For this reason, Texas is the only state that allows for the use of a reference document in lieu of a traditional legal description.

LegalDescrip Land Grids

To the person who no longer has to write out long metes and bound descriptions, the use of reference documents is a blessing. Not only for saving them time, but also relieving the stress of possibly voiding an important instrument by a simple typo.

The con, especially for people like me, is designing software around the constraints of this system. For example, when building online courthouses, we can no longer collect documents for a limited range of time, say 1980 – current.

A customer who comes across a deed or lease filed days ago may require a reference document from 1910 in order to plot their tract (see above). This puts companies in a position of having to obtain a fairly in depth warehouse of documents even if only wanting to research current filings.

PLSS – Central and Western US

PLSS Land Grids

Probably the most favored land grid system for its ease of use is the PLSS (Public Land Survey System), known by a couple of other names: STR (Section Township Range) & Jeffersonian (as in Thomas). In this system, two lines dissect a state; a baseline from east to west and a meridian north and south.

Their subsequent lines gain in number value as they move further away in their respective directions. In the end, we are left with a grid system. By naming the Township (N or S) value along with the Range (E or W), the intersecting cross area is then divided into sections (typically 36 but can be greater).

By stating a Section Township and Range (Ex. Section 10 Township 5N Range 32W), one can quickly identify the location of a property inside a state within one square mile (640 acres). Once the section is located, a quarter call (QQ) is usually given to describe what area of the section the subject property is found in (ex. NE ¼; S ½; SW/4 of NW/4).

If more detail is needed, metes and bounds can be used from this point forward. This system is fast, clean and most important for me, we can program a computer to map these tracts and build relational software around.

In the land classes I teach, one thing I do when going over land grids and the power they have; is to ask my students to observe the scoring of the earth the next time they fly across state lines or hop on Google earth. Look at Texas and then Oklahoma.

What you will see is that land is bought and sold in OK in square blocks whereas in TX, they take on a more random polygon characteristic.

That’s because people tend to sell based on the way they describe property. Even the roads are built accordingly (see below).


Hybrid – West, TX

hybrid Land Grids

In 1854, 8 years after Texas became a part of the Union, legislatures agreed that for every mile of railroad constructed, they would repay the Railroad Company with 16 sections equaling 10,240 acres. By 1882, over 32,000,000 acres had been issued through this agreement.

As the Railroad companies began grabbing up and surveying land in West TX, they brought with them the land grid surveying systems that they were used to. When these new systems merged with the Abstract based system common to the rest of TX, the result is what I call the West TX Hybrid System.

Nowhere in the country are land grids more confusing, or interesting for that matter, than in West TX.

One characteristic that I find intriguing from the varying land grid systems used throughout the United States is how many terms are shared between them and how they can have completely different meanings. I can understand ambiguity with terms in different industries but within the same industry…? A little odd to me and the frequency in which it happens, makes it even more of an oddity.

This lends itself to confusion when a landman moves into a new area or, for me, when my team is trying to build user friendly software to be used nationwide. For example, a “Township” in a PLSS land grid denotes the area between two vertical lines off the meridian.

Move up to the northeast and the term township is used to denote a municipality that resembles an East Texas abstract.

You don’t even have to leave a particular state to see this. In East Texas a “Block” is typically used to describe a small portion of land within a city development and is often divided up into lots within said block (e.g. A city block).

Make a trip over to the plains of West TX and not only will you find that “Block” is used in the same manner as East TX but that it is also used in two additional ways. You can even find examples of all three variations within the same county!

Glasscock County is a prime example of this. In one instance of the two new uses, “Block” takes the place of “Range” in a hybrid form of PLSS that is titled to a 45° angle; Section Township Block (with no E or W direction associated; I guess they’re all West out there).

At the Northeast corner of the county “Block” is also used to describe a large portion of land that is subdivided by sections that are now right side up. I also like to use Glasscock when describing this hybrid system because you can truly see the two land grid systems meeting (see above).

Another odd characteristic that I’ve come across in West TX is two tracts of land can have the exact same property description with only the name of the survey changing. Next time you get bored at night, hop on TX GLO and take their interactive map viewer for a spin over to Sterling County. There you will find two tracts of land described as Section 21 Block 2. One is in the H&TC RR Co Survey while the other is in the T&P RR Co Survey (see below). We kind find examples like this all over West, TX. Sloppy, at best.

west TX polygons Land Grids

The final attribute that makes West TX’s hybrid system intriguing, is that property descriptions make no reference to an Abstract number yet they do have them. A large portion of land grid based customer support issues I come across are due to this.

I lied, one more fun fact. The unit of measurement used most often in Texas land descriptions is the vara. It’s a Spanish word whose origin can be traced back to the ancient Egyptians. If you ask most landmen they will tell you, without hesitation, that a vara is 33.3333 inches. But prior to colonization, the vara was not as defined as it was after 1854. This is why it is actually longer in East TX (36 inches) than in West TX. Small difference by comparison but when you are mapping large tracts of land, this can result in large errors. So take this little gem and keep in the back of your mind the next time you whip out your scaled ruler and begin using the vara to plot your tract.

Marcellus – NE USA

When it comes to unique land grid systems, the Marcellus takes the cake. I have an endless litany of oddities I have found in this region but I will pick a couple to highlight.

When designing the software for capturing legal descriptions in the Marcellus, the list of possible fields was endless and the description itself could contain one or any number combination of them (Lot, block, section, township, range, quarter township, borough, tract, fraction, allotment, division, parcel, subdivision, etc.) Trying to map centroids for all these possible combinations was a logistical nightmare for my team.

Another attribute that has never sat right with me is that they actually allow for the use of a Parcel ID # as a legal description!

When a parcel is partitioned into smaller tracts, each of the newly created tracts is given a new parcel ID #. Without having access to a parcel map from every year prior, old parcel ID #s can no longer be located.

Finally, I’m still not sure I agree with the logic of describing a property by using the names of land owners to the North, South, East and West of the subject property. Again, much like parcel ID #s, when ownership changes it makes that reference point no longer a viable point of reference.

For these reasons, I really have to tip my hat to my Leasing Team for capturing this data set and to our GIS Department that has taken up the challenge to begin mapping leases in areas of the Marcellus.

Marcellus Land Grids

I just touched on a few of the land grid systems in the United States and cherry picked a handful of their unique attributes but I assure you there are many more worthy of discussion.

As my team and I build DI’s newest product (DI A&D), we are once again reminded of the hurdles one faces when trying bring order to a system that is fraught with anything but. Figuring out how to capture all of these attributes, yet keeping the user interface intuitive for customers to navigate, presents quit a challenge for us.

Private Equity Sets its Sites on the E&P Land/Lease Brokerage Business

Private Equity Sets its Sites on the E&P Land/Lease Brokerage Business


Private Equity is ubiquitous throughout our lives. It is almost impossible to go through an entire day without using a product or service controlled in one form or fashion by private equity dollars.

Despite private equity’s pervasiveness, I never thought I would see private equity dollars investing in Land/Lease Brokerage Companies.

How does private equity work in the realm of the landman

My first sighting of private equity in the Land/Lease Brokerage Business occurred at NAPE in 2012 with a company named Percheron. A quick Google search told me that Percheron was a merger of three large Land/Lease Brokerage Companies: Mason Dixon energy, OGM Land, and Percheron. The merger was facilitated by equity from Hudson Ferry Capital (HFC).

According to Hudson Ferry’s press release, “HFC brought together a bank group that provided a $55 million senior debt facility necessary to close the transaction.” While I have heard of other examples of private equity groups discussing potential deals with lease brokers, I have yet to come across another example of a deal actually closing. Time will tell how many more of these may be on the horizon.

The reality of the land/lease brokerage business

I understand the logic behind corporate roll-ups such as branding, operational and cost efficiencies, as well as the ability to service customer needs wherever they may be. My biggest concern for Private Equity is – will rollups of Land/Lease Brokers be a viable model? Just the nature of the highly fragmented business with such a low barrier to entry makes roll-ups incredibly difficult.

For those unfamiliar with the Land/Lease Brokerage Business let me explain how it works. An individual or group (Party A) obtains a customer who contracts them to work on a project. The typical fee for the work is a day rate plus personal expenses. After obtaining the contract, Party A then goes out and hires one or multiple contract field landman to perform the work (Party B). In exchange for supplying the work, Party A takes a cut out of Party B’s day rate.

The entire process is based upon relationships. There are little or no licensing requirements to become a field landman. Landman are not like doctors or lawyers. As long as someone is available to perform the work he/she can claim the title. As long as the work they do is acceptable to the customer they can continue to claim the title. For this reason, new Land/Lease Brokerages Companies start all the time throughout the prolific oil & gas regions in the United States.

What does the private equity buy?

There are very few direct employees or assets to purchase in the Land/Lease Brokerage Business. As previously stated, most brokerage companies are based upon relationships. While quality of work is important to customers, there are multiple competent people that can fulfill the work requirements.

Furthermore, the people that fulfill the work are not employees, they are contract laborers. There is not a patented process or hard asset needed to fulfill the work – just the ability to find a qualified contractor who is not required to have a license. Therefore, plowing profits back into the company does not have a significant impact on growing the company.

Similarly, debt, the jet fuel for growing a private equity controlled company, would not facilitate the internal growth of a company. The primary way to grow a Land/Lease Brokerage company through private equity money would be to purchase other Land/Lease Brokerage Companies.

As previously stated, new Land/Lease Brokerage groups appear all the time. Therefore, consolidation attempts are similar to playing whack-a-mole – only a lot more expensive!

Finally, it seems difficult to gain efficiencies by consolidating multiple Land/Lease Brokers. Unlike many industries, you don’t gain efficiencies in areas such as supply-chain or sales by consolidating Land/Lease Brokerage Companies. The only real advantage is that theoretically you only need to call one company to process all land brokerage needs throughout the US.

So many questions

Is this that great of an inconvenience? Would an oil company in Midland be more likely to use a nationwide firm to process work in the Permian Basin or would they turn to a local broker? Would it be possible to acquire and obtain enough brokerage companies to truly consolidate the Land/Lease Brokerage business into just a few companies? Only time and billions of dollars will tell.

Your Turn

What do you think? Does private equity have a place in the realm of the landman? What brokerage resources do you think could be consolidated for greater efficiency? Leave a comment below.

The Modern Landman: How To Leverage Today’s Technology

The Modern Landman: How To Leverage Today’s Technology

As we progress deeper into the digital age, we often find ourselves enamored with the new vocations that these uncharted waters continuously create. What I find even more interesting is how advancements in technology have completely transformed industries that were deeply rooted in the fabric of America before Bill Gates and Steve Jobs soldered their first processor.

You would be hard pressed to find an area where this is still a more prevalent yet divisive issue than in the Land Industry. There are several fundamental reasons why this industry constantly finds itself struggling between moving at the speed of innovation and being complacent with the processes of old. This slow transition allows us to speculate on what the future could look like as the Land Industry clumsily and inevitably succumbs to the pressures of a world that demands technological evolution.

Technology has Already Transformed the Life of the Landman

Let’s look at some of the areas where technology has worked its way into the Land Industry and proven itself valuable.

The first and most obvious benefit realized in the last 15 years is the speed at which communication and data is shared. The use of email and cell phones allows landmen to share data instantly with coworkers and colleagues across vast distances. I know these are invaluable in almost every facet of life, but it is worth mentioning.

Motel The Modern Landman How To Leverage Today's TechnologyOne facet of the landman’s life that causes the most personal anguish is life on the road. Landmen are used to going where the next big play is developing, but that doesn’t make it any easier.

Living out of hotels, going weeks without a home cooked meal, spending irreplaceable time away from loved ones, wasting hours traveling and waiting to access indexes, documents and copiers are just a few of the ailments that wear on field landmen. But through the growing expansion of online courthouses like County Scans or NDRIN, landmen now have the option to fulfill all their title needs from the comfort of their home or office 24 hours a day.

Another benefit is that many online courthouses build databases that make it possible to search by attributes not available to a landman using a courthouse index, tract book or abstract plant.

A more recent innovation that has brought the land industry value is the creation of mapping software. Landmen who have run title in Texas, and more specifically East Texas, know the pain of plotting tracts using metes and bounds. With the creation of software like Deed Plotter and GIS, this task has become much more manageable and efficient.

The Land Industry is Cautious about Innovations

Let’s focus on the factors that seem to fight against the progression of the digital revolution in the land industry.

One of the main factors inhibiting advancement is county courthouses that have no incentive to invest in technology – and in many cases are penalized for doing so. The cost to digitally copy an entire courthouse, transcribe the information into a database and build a user interface is not trivial and could takes years, if not decades, to recoup. If a county clerk lets a third party vendor tackle the task, the courthouse could potentially lose out on the profit made from copies. Also, landmen and abstractors wouldn’t have a need to travel the county and thereby stimulate the local economy by staying in hotels, eating at the local restaurants and doing business with the area’s merchants.

county courthouse deed
Another issue is the age difference. As with most enterprises within the oil and gas world, landmen took a big hit in the crash of the 1980’s. The land industry slowly gained traction over the following decades and then skyrocketed with the natural gas land grab of the early to mid-2000s. This resulted in a unique demographic with a sizable age gap between executives, department heads, and owners of brokerage firms on one side, and landmen in the field on the other.

Also, during the 90’s most industries were graced with a steady stream of new employees that brought with them solid standardized computer degrees and a drive to integrate that skillset within their respective companies. Since the Land Industry was essentially frozen, this advance of technology never fully materialized.

There are Problems That Can’t be Solved by Technology (Yet)

county courthouse volumes
The greatest barrier to the automation of Land tasks is that much of the data that needs to be processed and linked requires detailed interpretation that processors and databases just can’t perform at this time. While some landgrids such as Section Township Range (STR) and Quarter Quarter sections (QQ) can be mapped and linked to metadata using fairly simple software, more complex systems like metes and bounds are often too complex and require a skilled technician to plot them.

Arguably the greatest value a landman brings to the table is the ability to read complex legal documents, extract out the pertinent information, analyze it and make a decision about what needs to happen next. Creating software that is capable of replicating those functions will be years, if not decades, away.

And There are People Factors

busy county courthouse
Independent landmen charge a day rate which directly works against the notion of finding new and creative ways to achieve a final product faster for their client. I’m not implying that landmen in the field purposefully do slow work but I do want to highlight that there isn’t an incentive to innovate; in fact, quite the opposite. This is why most of the progress that will take place in the future will most likely be driven by In-house landmen looking to outperform their competition.

Having said that, I don’t feel that technological innovation and the success of independent landmen are mutually exclusive, but both will have to find new ways to fulfill the needs of the Land Industry.

The Future Landman

The above is a quick list of issues we need to solve in order to take the land industry to the next level. I’m going to provide one possible solution and then give you, the reader, a chance to begin thinking on how you would tackle them. My hope is that you will respond to this article with hindrances that I failed to mention along with possible products, solutions and insight into what you see the technological future looking like for the Land Industry.

My Proposal

We should incentivize the counties to change the manner in which they accept and file documents.

We need County Clerks to require more from the people filing land based instruments. Along with the original hard copy of a document, we need the person filing the instrument to provide a digital copy of the document as well as a shapefile of the subject tract/s.

By requiring this, the metadata can then be associated with the subject tracts on a GIS level (even if the county is not capable of processing this type of data yet). We could then search for the metadata from an interactive map (ex. Google Earth). We could slide a bar over a time line, and visualize the evolution of the tracts on your screen as they morph into their current or past states. We could click on a tract at any point on the timeline bringing back all documents associated with the subject tract to that point in history. As we build a database of shapefiles, when a new document is being drafted, the internal filing number of the shapefile can be used as an additional legal description. When a tract is partitioned and new shapefiles are created, the new filing numbers can be associated with the old thus linking the shapefiles and all associated documents. When entered into a search, these numbers will instantly give the landman access to all associated shapefiles thus providing them an accurate tract outline and precise location of the subject tract.

land tract
The end result is that obtaining supporting documents and tract location and outlines will no longer take days or weeks but will be instantaneous. This frees the landman to do what he does best and use his critical thinking skills to pore over the documents to extract out the pertinent data. When we think about the tens of millions of dollars that are lost each year performing one of the most primitive and mundane of tasks for computers and processors, searching for data, it’s mind blowing that for the most part we must still rely on old paperbound indexes and volumes for document retrieval. My team and I are already tackling this task for STR/QQ landgrids but the real prize is Texas metes and bounds landgrids. This proposal would most likely require an outside third party to retroactively create shapefiles for historical documents but to the company that does, a windfall of revenue would follow.

Your Turn

What do you think? What improvements do you see in the landman’s technological future? What should landmen be careful about? Leave a comment below.

Will the Gothic Shale ever Pan Out?

Will the Gothic Shale ever Pan Out?

Could the Hovenweep and Gothic Shales of The Paradox Basin be the next hot plays?

After five years the book is still out. Despite some successful completions by Bill Barrett Corporation, none of the wells produced for more than a few years’ time.

Currently, none of the wells are producing. Permitting and leasing activity has still only reached a fraction of the levels seen in other shale plays throughout the United States.

Looking Back

Operators in the Paradox Basin have had success over the past 50 years. The region has produced over 500,000 bbls of oil and over a TCF of gas. The source rocks for the Basin include the Chimney Rock, Hovenweep and Cane Creek Shales, with the Gothic Shale being the most dominant throughout the region. Most of the acreage is located on Federal or Tribal lands.

How the Gothic Shale Play Began

The leasing activity picked up in 2008 and quickly declined by the end of 2009, although some activity resumed again in 2012. Permitting activity followed similar trends.

As of 2013, very few of the traditional “shale players” had entered the region. To put the play into perspective, Cabot permitted one well in 2008 and Encana permitted one well in 2009. Over the past year, Encana permitted 371 wells in the Colorado portion of the Niobrara Shale Play alone.

Bill Barrett Corp., the play’s most active participant, has only permitted 12 wells over the past two years.

Bill Barrett Permitting Activity

Bill Barrett Permitting Activity

Anadarko has been the only new entrant into the region over the past year, permitting 5 wells in San Juan County, Utah during the summer of 2013.

Anadarko’s Gothic Shale Permits – Summer of 2013

Anadarko’s Gothic Shale Permits – Summer of 2013

In Colorado, only Bill Barrett Corporation has permitted the shale in the past 3 years. The two largest leaseholders in the region are Bill Barrett Corporation and Williams Companies. They possess an estimated 352,000 and 112,000 acres respectively and are currently awaiting the results of a seismic shoot in the region to determine future drilling operations.

So, Maybe Later?

The Paradox Basin covers over 8 million acres. As of 2013, it appears that less than a million acres have been leased or are HBP. Therefore, there is a lot of acreage still available for lease. The viability of the play from an economic standpoint is still contingent upon drilling activity. Operators are going to need to “crack the code” in the future to make the play economical. From an industry perspective, we are all hoping for the best.

Your Turn

What do you think? What else could be holding these operators back? What would convince you to hop into the Gothic? Leave a comment below.

Chainman Shale: Could it be the Next Big Land Grab?

Chainman Shale: Could it be the Next Big Land Grab?

With majors and independents alike constantly searching for the next big shale play in the United States, we have seen renewed interest in the Chainman Shale.

It’s a little known area encompassing the eastern central portion of Nevada and stretching into Utah. All totaled the area covers about 20 million acres. According to some estimates, the Chainman could contain over one billion barrels of oil.

The shale has both an oil and gas window. Exploration companies liken the oil window to the Bakken (Devonian) and the gas window to the Barnett. The Chainman Shale is the source rock for many of the larger fields in the region, such as the Railroad and Pine Valley fields in Nevada.

Skin in the Game

Currently, E&P companies have leased over 1.6 million acres. Noble Oil & Gas has leased over 350,000 acres. Cabot, EOG, SM Energy, Petro-Hunt, Newfield and several smaller entities have acquired the remaining acreage. About 70% of the minerals are managed by the Bureau of Land Management (BLM). The terms of most fee leases have maintained the characteristics of BLM leases – 10 years with a 1/8th royalty. Typical bonuses range from between $25 to $35 per acre, but some bonus payments on Federal lands have been as high as $80 per acre.

While the terms of the leases are generous compared to other shale plays, lessees must deal with myriad BLM environmental restrictions. The most notable of the restrictions have been in regards to the Sage Grouse. The BLM is trying to prevent exploration on the bird’s “priority habitats.” They claim drilling activity and subsequent traffic will disturb their vital habitat, which would open them up to attack by predators, such as the raptor. Somewhat ironically, raptor nesting areas are also protected by the BLM. If drilling activity in the Chainman Shale increases, there are probably more environmental regulations to come. Given the so-called environmentalist’s death by 1,000 cuts approach, I’m sure there are multiple snails and lizards peacefully residing above the Chainman Shale that will also need saving.

Doing the Numbers

So far, no wells have validated the Chainman Shale as an economic play. Cabot drilled one well that proved to be inadequately pressurized. Since then, they have begun shooting seismic in the region and plan to drill another well in the near future. 2013 will undoubtedly be a pivotal year for the Chainman Shale. It could turn out to be the next Barnett/Bakken, or the latest bust.

Now it’s your turn. What have you heard about the Chainman Shale? Do you think it’s a viable play, or another case of fools rushing in? Please leave a comment below.

Cracking the Code: Is the Monterey Shale the Next Big Boom or Bust?

Cracking the Code: Is the Monterey Shale the Next Big Boom or Bust?

California’s Monterey Shale could turn out to be one of the largest oil producing shales in the world. In fact, some experts believe it could hold more oil than the entire Bakken Shale. The Monterey Shale covers large concentrations of acreage in the San Joaquin, Los Angeles and Monterey Basins. Much like the Bakken Shale, the Monterey Shale is primarily oily throughout.

Setting Boundaries

In order to effectively outline the area discussed herein, we will limit the region to just the San Joaquin Basin (specifically, the region from Bakersfield heading North up to Modesto). The shale is thicker in the Southern Portion (over 400 feet thick in Kern County) and gradually reduces to thickness of around 150 feet in Stanislaus County. The shale is the source rock for the prolific oil fields throughout the region. Even within this region, the geological formations are diverse in makeup. An interesting point about the Monterey Shale is that geologists and engineers contend (with some controversy) that vertical wells might be as effective at extracting the oil as the horizontal hydraulically fracked wells which are common in most North American Shale Plays.

There has been a significant amount of leasing activity throughout the Southern Portion of the play. Kern, Kings and Fresno are by far the most actively leased counties. The most prolific Lessees in the region are as follows:


  • Aera Energy, Inc. – 10,000 acres
  • Maverick – 10,000 acres
  • Onshore Exploration Corp. – 40,000 acres
  • Venoco – 100,000 acres
  • OXY – 40,000 acres
  • Western Energy Production – 125,000 acres


  • Zodiac Energy – 90,000 acres
  • Western Energy Production – 100,000 acres
  • Venoco – 40,000 acres
  • Onshore Production – 10,000 acres
  • Lonetree Energy – 15,000 acres
  • Hess – 15,000 acres


  • Maverick – 45,000 acres
  • Venoco Inc. – 40,000 acres
  • Onshore Exploration Corp. – 20,000 acres
  • West Coast Land Service – 10,000 acres
  • Western Energy Production – 10,000 acres

Drilling Down

Many areas of the Southern Region are currently held by production (HBP). By far OXY is the largest acreage holder in the region with over 1.1 million acres, followed by Aera (controls over 25% of all oil production in CA) and ChevronTexaco. According to company press releases, Venoco controls just over 50,000 acres in the tri-county region.

Despite the large amounts of leasing activity, there has been very little drilling into recently leased acreage. In fact, over 95% of all wells drilled in the region during the past three years have just offset or in-filled existing production. Similarly, the vast majority of permits in the region cover acreage where existing production has been present.

Drillinginfo map of Kings and Fresno County. Leased acreage is shown in purple and active permits are blue. Most of the permits are on currently producing leases.

Geologist and Engineers still have not “cracked the code” for Monterey Shale Production. Therefore, the economics of the play are inconclusive. While some exploratory wells have been drilled, the really significant activity required to truly understand drilling and producing the Monterey Shale has not yet occurred. Most exploration companies with an active presence in the region expect to increase exploratory drilling throughout the shale during 2013 (Aera, OXY, and Venoco all plan to drill over 10 Monterey Shale wells). 2013 should be a pivotal years for the Monterey Shale. Most of the “core” acreage has been leased and is waiting to be drilled.

So, will the Monterey Shale be the next Bakken or the next bust? Only time will tell.

Now it’s your turn. Do you think is the Monterey Shale will turn into the next Bakken? Please, leave a comment below.