Carpe Diem

The shale revolution is creating thousands of new millionaires from the billions being paid in royalties to private landowners

Month Texas Oil (bbls.) Price per barrel Royalty Payments @ 25%
January 53,695,000 $100.27 $1,345,999,413
February 51,609,000 $102.20 $1,318,609,950
March 56,011,000 $106.16 $1,486,531,940
April 56,263,000 $103.32 $1,453,273,290
May 59,476,000 $94.66 $1,407,499,540
June 58,565,000 $82.30 $1,204,974,875
July 61,846,000 $87.90 $1,359,065,850
August 63,524,000 $94.13 $1,494,878,530
September  62,499,000 $94.51 $1,476,695,123
October  65,100,000 $89.49 $1,456,449,750
November  64,180,000 $86.53 $1,388,373,850
Totals 652,768,000 $15,392,352,110

From the article “Life on the Shale” in the San Antonio Express-News that profiles Karnes County, one of the counties at the center of the Eagle Ford Shale boom in Texas:

“In the last four years, more than 1,200 drilling permits have been approved for Karnes County and about 2,000 miles of new pipeline have been laid. Karnes is now one of the top crude producers in Texas. In November, it was first again, with almost 3 million barrels pumped.

“Simple math shows the staggering wealth pouring into the county [MP: previously one of the state's poorest counties]. With oil in November bringing about $97 a barrel and with typical royalties of 25 percent, roughly $70 million was paid to local landowners for just that month’s production, not to mention the many millions more spent here monthly by energy companies and their employees.”

MP: The table above displays estimates of the monthly royalty payments paid to private landowners in the state of Texas from January to November of last year, based on: a) estimates of monthly oil production in Texas from the EIA (data here), b) the average monthly price for West Texas intermediate crude oil (data here), and c) royalty payments of 25%.

In the first 11 months of last year, it’s possible that more than $15 billion of oil royalty checks were paid to landowners in the Lone Star State, which is more than $1 billion every month, and more than $40 million every day.  A similar analysis shows that more than $5 billion in royalty payments were made over the same period last year to landowners in the state of North Dakota, America’s No. 2 oil-producing state – more than $14 million every day.

There’s been a lot of media (and blog) coverage on the oil booms in North Dakota and Texas, with a lot of attention on the jobs and businesses being created due to America’s shale energy revolution, but there hasn’t always been a lot of attention paid to the “staggering wealth” that is being created from the billions of dollars in royalties being paid to the fortunate landowners in oil and gas-producing states. The shale revolution has undoubtedly created thousands of new millionaires in Texas, North Dakota and Pennsylvania since the shale revolution started five years ago, and that’s another reason that the local economies in dozens of America’s oil and gas patches are booming. Welcome to America’s millionaire-creating energy miracle.

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12 thoughts on “The shale revolution is creating thousands of new millionaires from the billions being paid in royalties to private landowners

  1. Anyone who lives or has lived in the area knows that the influx of cash into the area is a mixed blessing at best. The picture painted by the above graphs seems pretty cheery: who doesn’t like the thought of getting rich, after all? But go there and listen to the stories of people suddenly being priced out of the home towns in which their families have lived since the late 1800′s. Or the families and friends pulled apart by disagreements and misunderstandings due to the legalities of royalty payments. These stories too are part of the Bakken oil rush. The stories of ruined infrastructure, the wave of robberies, and the general governmental confusion, also part of the new story of the Bakken.
    Sorry to rain on anyone’s financial parade, but the oil boom isn’t all roses by any stretch.

    • That happens in any boom, it happened in OK it happened in the East Texas Field, it likely happened at Spindletop, and even in the NW Pennsylvania boom of the 1860s. Some luck out and own the right land and rights and some do not. Booms are like that. Some win and some lose. That is the way capitalism works. Boom towns whether for oil gold or whatever exhibit governmental confusion, consider Ca after the 1848 gold discovery, for a while vigilance committees maintained order, as crime went way up, When there is lots of money to be made the low lifes will come it to take what they regard as their share, (as also the financial product salesmen will do as they sell their trash to the newly wealthy) It is just human nature.

  2. Of course there are negatives; there always are in any human endeavor. But what’s striking is that no one is howling about ruined water. Maybe someone should send this to uber-lefty Andrew Cuomo, who decrees further upstate poverty by refusing to move on Marcellus drilling.

    • I left the family property years ago and may never return full time….. but I will say this when I do return on the weekends to visit my mother I struggle less and less when trying to decide which is better looking…. the spring calves or those beautiful wells pumping money into the family hidey holes?? :)

      BTW, the water in the Karnes City area tastes just as bad today as it did 30 plus years ago and you havent lived until you watch your mother deposit a six figure royalty check in the local bank using the drive thru-window. LOL

  3. This is based on its 2008 consumption totaling 19,500,000 barrels per day.
    You should also check the local papers in the areas you’re interested in for classified ads and auction listings. Hundreds of residents and indigenes of the state, especially women, girls and youths have been gainfully employed at the Azara mining veins.

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