The 1960 Giddings Austin Chalk discovery, the 1970s boom, the first U.S. horizontal play, and what 60+ years of Giddings production means for current mineral interests.
Get a Free Mineral ValuationThe Giddings field was discovered in November 1960 in Lee County, Texas, when Union Producing Company's well in the Austin Chalk produced commercial oil from natural fractures at approximately 8,500 ft TVD. The discovery established that the Austin Chalk — long known as a non-reservoir-quality carbonate — could produce commercially where natural fractures provided the permeability. The play was named for the town of Giddings, Lee County's seat.
Initial production was modest. Vertical wells targeted natural fracture sweet spots; results were highly variable. The field developed slowly through the 1960s.
Following the 1973 OPEC oil-price increase and again after the 1979 Iranian Revolution, oil prices rose dramatically. The Giddings field — previously marginal — became economic at scale. Operators flooded into Lee, Washington, Burleson, and Fayette counties drilling vertical Austin Chalk wells. The 1970s-early 1980s Giddings boom was one of the largest U.S. onshore oil plays of its era.
Most current Giddings-trend mineral interests trace their original lease bonus back to this era. The 1970s leases — many at 1/8 royalty rates — established the chain of producing leases that operators have been extending and re-leasing through every subsequent production cycle.
As oil prices collapsed in 1985 and remained weak through the early 1990s, vertical Giddings drilling declined sharply. The field appeared to be in long-tail decline. Then, in 1990-1991, Oryx Energy and Anadarko Petroleum independently demonstrated that horizontal drilling in the Austin Chalk could economically extend the productive section through multiple natural fracture corridors that no single vertical well could intersect.
The Austin Chalk became one of the first commercial horizontal-drilling plays in the United States — predating the Bakken (2008), the Marcellus (2008-2010), and the Permian unconventional renaissance (2010+) by 15-20 years.
For 15 years, operators drilled 2,000-4,000 ft laterals across the Giddings trend. Per-well economics were dramatically better than vertical wells of the prior decade. Operators in this era included Oryx (later Kerr-McGee, later Anadarko, later Occidental), Burlington Resources (later ConocoPhillips), Hunt Oil, Enserco, and dozens of smaller independents.
Many original Giddings vertical wells were re-completed as horizontal sidetracks during this period. Mineral owners who had seen royalty income decline in the late 1980s often experienced a second income wave during the short-lateral era.
Petrohawk Energy's 2008-2009 discovery of the underlying Eagle Ford Shale's commercial potential redirected operator attention. Through approximately 2018, the Eagle Ford absorbed the bulk of central and south Texas drilling capital. Giddings Austin Chalk activity slowed; many leases that covered both Austin Chalk and Eagle Ford depths saw operators target the Eagle Ford instead. Mineral owners with stacked-pay leases received Eagle Ford royalty income during this period from wells that bypassed the Austin Chalk entirely.
Around 2018, EOG Resources and Magnolia Oil & Gas demonstrated that modern long-lateral horizontal techniques (8,000-10,000+ ft laterals with high-density slickwater completions) could produce dramatically better Austin Chalk wells than the 1990s short-lateral era. The renaissance has revitalized Giddings-trend mineral interests — particularly in Brazos, Burleson, and Washington counties.
For mineral owners with century-old or 50-year-old chains of title in the Giddings trend, the modern long-lateral era often represents the highest-economic production cycle of the lease's entire history.
A Giddings-trend mineral interest that has been continuously held through the field's history will have produced — or have the potential to produce — through every era described above. A current valuation should account for the entire production history (decline curve from prior wells), the current operator activity (rigs, permits, recent completions), and the forward long-lateral redevelopment optionality.
Free written valuation grounded in 60+ years of Giddings production history.
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