What is my water worth?

I own a ranch in the northern part of Karnes County. EOG has leased my ranch as well as other members of the family. We have approximately six sections of land that make up the northern part of Karnes County and extends into Gonzales and Wilson counties.

I have a flowing water well. (3,000 feet deep, 12 inch casing) (approximately 1,500 gallons per minute)

I have sold water to drillers in the past, but that was long ago. I sold the water by the truck load. I hear that fracturing uses a lot of water.

Since it looks like there will be many wells in my vicinity should I charge by the well? How much should I charge?


A good situation you're in likely... Like all negotiations, consider (realistically) all the elements of a possible transaction, and do what you can to discover who all the likely buyers are, and make your resource known to them. Don't be in too much of a hurry to do a deal, as this play is unfolding over time, and likely will continue for a considerable time into the future. Remember that ease of access is an important part of a deal of this sort. For your own understanding, try to discover what other alternatives might be available to the oil companies. In the end, they'll do what's most economic for them. Best of luck.

I think if you sold water by the truckload before and it was acceptable to you, you have a working business model. I would continue to do that. If you had a set fee per well, the matter of verification of where each truck delivered the water might complicate things, and not to your benefit. You might also stipulate the size of the truck. You might set the price for a truck thinking of an ordinary 5,000 gal. truck and the driller decides to use 9,000 gallon articulated trucks to save on the per truck price. You will have to negotiate the price of the water. The lease language may entitle them to put in their own water well, possibly on your own land. I’d consult an attorney about this before starting negotiations. I’d also stipulate that your water could not be resold to a third party. Things to consider , just off the top of my head. RWK

In LaSalle County: thirty cents ($0.30) per 42 gallon (metered) barrel if they drill the well and provide all equipment and power to pump the water, or fifty cents ($0.50) per 42 gallon (metered) barrel if pumped from your existing well powered by you. If the county where the water well is located has an underground water conservation district, check with them first to find out if there are any restrictions on the quantity you can pump and sell. Water is precious and the operator has to get it somewhere to frac these wells.

Good luck.