Posted 8/27/2007 12:00 am
Updated 1 year ago
Lyndell Wyatt raises hay, sod, row crops and cattle on his farm north of Searcy. He also takes phone calls about a new line of business.
"Once a week, someone from the gas company is asking to do something with our land," Wyatt, 43, explained by telephone on a steamy August afternoon while atop a tractor in his hay meadow.
He's used to multitasking - more so since he, his father and a neighbor negotiated a lease with a subsidiary of Southwestern Energy Co. in early 2005 for access to 2,000 acres along Arkansas 16, about halfway to Pangburn. The five-year contract authorized SEECO Inc. to explore and drill for gas.
"We've got a business going with the farm. We sell sod and we sell hay, and this is like an added job," Wyatt said of the steady stream of inquiries.
"You have no choice but to keep up with it," he said.
Dwight Brown keeps up, too. The Wynne real estate appraiser is keenly interested in the potential mining of parts of Cross and neighboring Woodruff County - specifically several hundred acres south of Fair Oaks. Brown's family sold this land in 1991 but retained 50 percent mineral rights on most and 100 percent ownership on 160 acres.
"My father-in-law knew the gas and oil business," Brown, 54, said. "He instilled in us a need to hold onto such."
A partial payoff came in late 2005 when the Brown family signed onto separate leases: one with Maverick Oil & Gas Inc. for 450 acres in Cross County and a second with Chesapeake Energy Corp. for 200 acres in Woodruff County. The latter plot was combined for leasing purposes with about 50,000 acres that John Conner Jr. of Newport put together.
Each five-year contract included a $275-per-acre signing bonus with a 15 percent royalty stake in gas produced and an option to renew for another five years at the same terms.
"I was comfortable with it," Brown said.
No wells have been drilled, though. Brown thinks that could be four or five years away, citing a lack of transmission lines.
Brown and Wyatt both own land above the Fayetteville Shale Play, but the hydraulic fracturing of this underground gas reservoir hasn't extended to its eastern portions. A 2005 University of Arkansas study estimated that drilling in the basin that extends from north-central Arkansas to the Mississippi River will inject $5.5 billion into the state economy, creating 10,000 jobs by 2008 and generating untold wealth for property owners who lease land and mineral rights. More recent research, however, indicates an even greater economic impact.
Joe Whisenhunt goes a step further.
"The Fayetteville Shale Play will have the most significant impact that the state of Arkansas has ever had," Whisenhunt, 71, said from his home on Harmony Mountain in the Ozark foothills. "It's worth 15 to 20 auto plants."
The commercial real estate developer took an unconventional route in marketing the mineral rights to 4,000 acres he has accumulated on and around Harmony Meadows Ranch, primarily along U.S. 65 at Bee Branch and several miles east on the Greers Ferry Lake shoreline.
He first learned of the oil and gas industry's interest in the area about three years ago from a neighbor who asked if he had been approached. Soon he was hearing about signing bonuses of $600 to $700 an acre. After downloading a standard lease from the Web site of the Arkansas Oil & Gas Commission and paring the "onerous" language to the basic legal requirements, Whisenhunt decided to go proactive.
"I brought in a new company, fresh, and they started to work," he said.
Whisenhunt had gone to the Tulsa offices of KCS Resources, a company he knew was not involved in the Fayetteville Shale Play.
"We literally constructed our own lease, incorporating the legal requirements of the state of Arkansas," Whisenhunt said.
Conspicuously absent was a signing bonus. Whisenhunt wanted that money put into drilling - "they had a year to drill three wells" - but he received a royalty that he described as significantly different from the standard one-eighth share, or 12.5 percent. He said a confidentially agreement precluded him from disclosing the rate.
"Believe me, it's a good one."
Petrohawk Energy Corp., which absorbed KCS Resources, has since put eight wells in the pipeline on Whisenhunt land, producing, the landowner said, 21 million cubic feet per day. Three wells are in a section of land (640 acres) that includes a 110-acre subdivision of 32 property owners with plots of 1 to 4.5 acres. Whisenhunt said he had leased their land and then subleased it back to them with a royalty stake three times above the standard 12.5 percent.
That's where he draws the most satisfaction, Whisenhunt said, relating how a man in his 70s had shared his and his wife's excitement upon receiving their first royalty check: $700 for three months of drilling. Whisenhunt said he reminded the man that the check reflected only one well's production, that there were three in the section, and the payments would soon be $200 to $250 per month per well.
"If we put eight wells in Section 31, he'll get $1,600 to $1,700 a month."
Over in Wynne, Brown has heard these stories.
"You got folks who didn't have very much and now they have income coming in and they don't know what to do with it. It's more than they ever dreamed of seeing."
Becoming a Landman
Lisa Fields knew what to do with the higher income she began earning about 2 1/2 years ago, and she doesn't even own land in the Fayetteville Shale. Fields, 27, of Conway, is a landman for Griffith Land Service in Conway, which does contract work for two Houston-based companies: Alta Resources LLC and publicly traded Petrohawk.
Fields runs title searches preparatory to determining the ownership of mineral rights and securing leases. She does some leasing, too, and visits drill sites to talk with landowners.
"I had no experience. I had no idea what I was doing," Fields said, recalling her first days on the job.
"I didn't even know you could publicly go into the courthouse and get this information," she said by cell phone outside the Van Buren County Courthouse in Clinton.
Soon, the former insurance agent - pregnant with her son, Alec, when she took the job - was making enough money to support the soon-to-be family of three and allow her husband, James, fresh out of college, to start a heating and air-conditioning business.
She finds the work fascinating and fun.
"I like it a lot," she said. "I like math a lot and there's always an answer ... there's always a path."
Amanda Reves was similarly enthusiastic. The Pope County homemaker-turned-landman runs most of her titles at the Conway County Courthouse in Morrilton. Reves, also 27, was somewhat familiar with the terrain, her father having managed a leasing service.
"I really enjoy my job. It's different every day," said Reves, whose deed research has turned up century-old documents reflecting land transactions in which the seller, for whatever reason, reserved the mineral interests for himself and his heirs.
But it's the here and now of the Fayetteville Shale Play that's been good to Reves. Yes, she agreed, the work pays much better than a previous stint delivering beauty supplies.
"It's very much helped me to do things for myself," Reves said. "It's given me the opportunity to buy the home that I wanted."
Reves and her husband, James, live in Dover with their 4-year-old daughter, Zo‘.
"Seek Out Legal Advice"
Back in Searcy, Lyndell Wyatt said he wasn't living the dream. Not yet, anyway. He was back from a break in the interview, using the time to bale hay.
The 760 acres that his father, Sonny Wyatt, owns in White County are spread over seven sections - as few as 3 acres in one, as many as 400 acres in another.
In early 2005, the Wyatts and a neighbor negotiated leases for roughly 2,000 acres with T.S. Dudley Land Co., the leasing agent for SEECO. Terms of the five-year contract included a signing bonus in the $100-an-acre range, Lyndell Wyatt said, with a one-eighth (12.5 percent) royalty stake.
SEECO has yet to drill for gas on the Wyatts' property but has completed six wells in two of the seven sections that include Wyatt acreage, giving the Searcy farm family a fractional interest in production payments.
"We're drawing royalties on three of six [wells] at this point," Lyndell Wyatt said.
The payments, amounting to $1 a day per acre, are equally divided: "The more land you have in the section, the bigger your piece of the pie," Wyatt said.
SEECO did lay gravel pads as a precursor to drilling on the Wyatts' property - one in a sod field, the other in a hay meadow - but put the wells on hold. Wyatt now wishes the lease had set time limits for such inactivity.
"I feel that people ought to seek out legal advice when they do their original land lease, not so much for the big money or the big royalty check, but for the oil company's use of your property," Wyatt said.
"They're after what's underneath and we're trying to make a living from what's on top, and sometimes we butt heads."
Royalty Owners Form Group
Brown said landowners needed an advocacy group, explaining why he and three others established an Arkansas chapter of the National Association of Royalty Owners. A few days before the chapter's first annual meeting at Harding University in Searcy, Brown said membership stood at about 65. "Arkansas has had its share of snake oil salesmen and carpetbaggers with this push to get acreage leased," Brown, the chapter president, said in an e-mail.
"I get two to three inquiries a week from people in Arkansas asking me to look over their lease, and I tell them I'm not an attorney."
Wyatt sounded a similar theme.
"Up until this little gas boom hit, mineral rights was just something we had but we didn't talk about it," he said. "It was a non-issue."
Now, he noted, land values are through the roof.
"A fellow auctioned land off that a couple of years ago would have gone for $800 to $900 an acre; he sold it for $4,640 an acre, for nearly 100 acres of land."
Closer to home, Wyatt said, "some kind of investment company" offered him $8,300 for the mineral rights to just 2 acres.
"We were tempted but Dad and I talked," Wyatt said, and agreed that it was more than a "just-sign-at-the-bottom" deal. "If they're willing to pay that kind of money for the minerals, there's no telling how much they're worth. That $8,300 might turn into 30, 40 or 50 thousand over the life of the lease."
Despite his daily interaction with the industry, Wyatt said gas production remained a mystery.
"I have no way of knowing what's under the earth."
He's also not ready to rely on the Fayetteville Shale for his livelihood.
"The prospect's there. ... It's beginning to, since we started getting royalty checks, it begins to be a reality."
(Garry Hoffmann is a freelance writer living in Little Rock.)