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Texas' Substantial Petro Wealth Mainly in Texan Pockets

The Lone Star State -- home of the Permian Basin, Eagle Ford and Barnett shales -- has $140 billion worth of proved producing reserves, and corporations hold the lion's share of that wealth, according to an analysis by Blackbeard Data Services LLC.

The Austin, TX-based firm compiles data on oil and gas leasing. It said in its report the $140 billion figure is derived from "extensive decline curve analysis performed on a county-by-county basis" based on an oil price of $94.89/bbl. The analysis excludes proved nonproducing, probable, and possible reserves.

Corporations account for $110 billion of the proved producing reserves wealth, while individuals own $22 billion, trusts have $5 billion, and the remaining $3 billion is spread among nonprofit organizations and religious organizations, educational institutions and the government.

Blackbeard looked at working interest, royalty interest and overriding royalty interest. The value of working interest is $105.39 billion, followed by royalties at $35.5 billion and overrides at $4.67 billion. Since companies own a disproportionate amount of the working interest value, Blackbeard also looked only at royalty and overriding royalty interests.

After excluding working interest, individuals top corporations in petro wealth: $17.16 billion versus $14.35 billion based on royalty interests and overriding royalty interests. Trusts come in third at $4.54 billion.

Texas contains about $40.2 billion worth of royalties and overrides, and Texans own about 80% of that, according to the analysis.

Among cities, Houston leads the pack by far, followed by Midland, TX; Oklahoma City, OK; Dallas; and Rowlett, TX (an upscale Dallas suburb), when working interest and royalties are considered. Stripping out working interest from the data shows that Houston again leads by far but then is followed by Dallas; Midland, TX; Austin; and Fort Worth, TX.

"Of note is that there is very little [Texas] petro wealth owned by non-U.S. citizens overtly," the report said. "Some domestic companies may own minerals which are in turn owned by foreign nationals or foreign states via the stock shares."

The analysis also looked at today's oil and gas lease agreements versus those of 20 years ago. These days, mineral owners typically enjoy a higher net revenue interest (20% versus 12.5% 20 years ago) in wells due to the fact that there is lower drilling risk for oil and gas companies using modern drilling methods, Blackbeard said.

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