The Barnett Shale has seen better days
In the year 2000, Tarrant County only had 83 mineral accounts. By 2005 that number had grown to 5,500. By 2007, the number was over 18,000 then jumped to 41,000 by 2008. It continued to grow exponentially over the next six years to a record number of 774,000 accounts. Amazed by a quarter of a million mineral accounts, the 2015 tax year added more accounts and we topped out with just over 971,000.
Taxable Values grew in a similar fashion. The total taxable value in 2000 for Tarrant County was only $651,000 thousand. By 2005, the value was over 520 million, but in 2009, we saw the high watermark with values rising to over 4.8 billion.
However, 2010 was the year values in the Barnett Shale began to fall. Within three years, mineral accounts lost a billion dollars and went on the tax rolls at 3.6 billion. Two years later, another billion came off the roll and we certified 2.6 billion. As we prepare for the 2016 appraisal year, property values for natural gas wells in Tarrant County is expected to take another plunge.
According to a petroleum engineer-appraiser with a local appraisal firm, “The upstream business of producing natural gas is currently in distress due to an abnormally and persistently low price environment.” Natural gas prices began declining in February 2014 from a price of over $4.00 per thousand cubic feet to eventually fall below $2.00 per thousand cubic feet in early 2016.
The petroleum engineer-appraiser went on to say, “The decline is due in part to the economic supply and demand for natural gas. There is simply too much supply for the current demand.” As long as natural gas prices remain low, drilling companies will likely not consider producing new wells.
Mineral values are determined based on three primary elements – price, production and anticipated reserves. Prices being down has a direct negative effect on production. In addition, as a well grows older with age, production will naturally decline. Reserves make up the remaining gas in the ground. As long as price is low, and becomes less profitable to retrieve, the reserve gas will likely remain in place until prices rebound.
Without any anticipated change in current pricing, the distress in the current energy markets will have a significant effect on 2016 mineral values. It is anticipated that mineral value for Tarrant County and other counties in the Barnett Shale could decline as much as 30 to 50 percent from the 2015 levels.
Don’t Have an eAccess PIN?
Did you know that you can still view your basic property information or any Tarrant County property’s information by clicking the ‘Property’ link located on the TAD.org homepage - even if you don’t have an eAccess PIN? While TAD encourages property owners to take advantage of the expanded functionality using eAccess, there are still plenty of features to explore on TAD.org without logging in. For the past several years TAD has included an eAccess PIN on your Notice of Appraised Value.