Two hundred years, three owners. That’s the simplest narrative to the mineral interests for a 193,000-acre ranch in Colfax County, New Mexico.

The third and most recent owner is Lockhart Oil & Gas LLC, a two-year old Austin-based investment company that acquired rights to the ranch via purchase of the original land grant in 2014. Lockhart had been looking to enter the oil and gas space, and explored opportunities in distressed or undervalued assets from service companies to midstream before it came across the Raton Basin opportunity. Historically, land grant acreage in New Mexico can encompass a byzantine ownership legacy that is better suited to dramatic historical novels spanning generations. True to form, Lockhart discovered that the prospective mineral interest came with a complex set of legal issues and litigation.

The company employed a multiperson landman team, which spent a month in the Colfax County courthouse and another month running down leads for the varied intricacies interwoven into 200 years of northern New Mexico history. In the end, Lockhart perfected title and gained 100% mineral interest in the parcel.

Lockhart’s new mineral interest resides in a good zip code. Atlas Resource Partners LP owns mineral rights to 605,000 net acres on the neighboring Vermejo Ranch in the western Raton Basin. That parcel contains 320 billion cubic feet (Bcf) of proved reserves and generates a net 76 million cubic feet equivalent per day (MMcfe/d) of gas out of the Raton and Vermejo formations, according to company presentations. North, across the Colorado state line, Pioneer Natural Resources Co. has 2,300 producing wells on 198,000 acres that source gas from the Vermejo and Raton coals as well as the Pierre Shale.

The Raton Basin faded from the oil and gas spotlight over the last decade after a flood of natural gas production from the mega-shales back East swamped the market, placing a lid on natural gas prices.

Once title was perfected, Lockhart hired DeGolyer & MacNaughton to evaluate potential gas reserves on the acreage. No doubt readers saw the press release in February 2015 just before the North American Prospect Expo, touting a potential 8.8 trillion cubic feet (Tcf) of gross raw natural gas resources on the Colfax County property. DeGolyer & MacNaughton produced a range of estimates, from 1.2 Tcf on the low side to 8.8 Tcf on the high side with a mean estimate of 4.5 Tcf and a best estimate of 3.5 Tcf.

Lockhart subsequently employed a geological consulting company to evaluate cores from wells drilled on the ranch and neighboring property over the past century. Like most land grant stories, a twist rankled the plot and the narrative headed in an unexpected direction. The geological consulting firm found oil shows from four shale formations as well as different gas shows spanning a stacked stratigraphic column of 15 separate formations. The geologic column includes the Niobrara Shale, with a mean thickness of 60 feet, and another 1,800 feet of the Pierre Shale.

“When we started, there was virtually no information and then, after we spent a couple months with our geologist, it went from something that was maybe marginal to something that was a very real opportunity,” said Matt Hainline, Lockhart’s CEO. “That got us really excited about it.”

Lockhart hired a mapping firm and began negotiations with a regional oil and gas company to sublease the property and pursue a development program, which is where the story is currently.

Whether or not the world needs another shale play is an open debate as the industry grapples with the consequences of an oversupply in new tight formation oil during a time of slow demand growth. In the meantime, Hainline points to other energy opportunities. The region has a solar farm and wind farms, a sort of mini-West Texas where oil and gas and alternative energy exist side-by-side in a larger energy province.

Hainline sees the Raton Basin as underexplored even after decade-long efforts to develop coalbed methane out of the Raton and Vermejo formations west of Trinidad, Colorado. It is scenic country, whether a visitor’s interest is in geology or the coal mining efforts that brought Italian nationals to the area more than a century ago, making Trinidad a fascinating diversified jewel of a town.

“Coalbed methane is pretty much continuous drilling and low operational expense, low lifting costs,” Hainline said. “I see that continuing on, and it just gets better the more you produce it.”

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