If you own mineral rights, knowing how to read oil and gas activity on your acreage is one of the most valuable skills you can develop. Permit filings, test wells, and new drilling units don’t always come with an explanation — but they do tell a story. Understanding what’s happening nearby can help you evaluate a lease offer, anticipate contact from an operator, and make more informed decisions about your minerals.
Here’s how to interpret the most common signals.
Step 1: Start With Permit Filings
A drilling permit is the first public signal that an operator intends to drill. In Texas, permits are filed with the Railroad Commission of Texas (RRC) and are searchable by county, operator, and lease name at rrc.texas.gov.
When you see a permit filed near your acreage, note:
- The operator name — who is actively leasing and drilling in your area
- The well type — oil, gas, injection, or disposal
- The target formation — which zone they’re drilling into (Wolfcamp, Spraberry, Cotton Valley, etc.)
- The surface location and direction — this matters more than most mineral owners realize (see Step 3)
A permit doesn’t guarantee a well gets drilled, but a cluster of permits in your county is a strong signal of operator interest and is often followed by lease activity.
Step 2: Understand What a Test Well Means
A test well — sometimes called an exploratory or wildcat well — is drilled to evaluate whether a formation is commercially productive in a new area. If you’re seeing updates about a test well near your acreage (like the Expand Lavinski 1 referenced in Stephens County discussions), pay attention to the completion report.
What to watch for:
- Initial production (IP) rates — reported in barrels of oil per day (BOPD) or Mcf of gas per day. A strong IP rate signals a productive formation.
- Formation tested — confirms which zone the operator is targeting and whether your acreage may be in the same play
- Whether the well was completed or plugged — a plugged test well isn’t necessarily bad news; it may mean the operator is narrowing their target zone
Test well results often precede a wave of leasing activity in the surrounding area. If a test well near you reports strong production, expect lease offers to follow.
Step 3: Slant and Horizontal Drilling — What It Means for Your Minerals
This is where mineral owners get confused most often — and where the stakes are highest.
Horizontal drilling means the wellbore turns and travels laterally through a formation, sometimes for a mile or more. A well with a surface location on a neighbor’s property can be drilled horizontally under your acreage and produce from your minerals. If you’re not leased when that happens, you may be force-pooled — included in the drilling unit at terms set by the operator or the state, rather than terms you negotiated.
Slant drilling is a variation where the wellbore is intentionally deviated at an angle. It’s used to reach a target that’s offset from the surface location, or to drill under obstacles. In areas like Upshur County, slant drilling has been a point of confusion for mineral owners who see surface activity nearby but don’t understand why their acreage is involved.
What to do: If you see horizontal drilling permits in your county, check whether your acreage falls within the proposed unit. In Texas, proposed pooling units are filed with the RRC. A landman or mineral manager can run this check for you quickly.
Step 4: How to Read Production Numbers
Once a well is producing, production data is publicly reported. In Texas, operators report monthly production to the RRC, and the data is accessible through the RRC’s online portal or third-party platforms.
Key numbers to understand:
- Gross production — total oil or gas produced from the well
- Your net revenue interest (NRI) — your royalty fraction of gross production. A 1/5 (20%) royalty on a well producing 10,000 barrels means 2,000 barrels attributed to all interest owners in your unit
- Decline curve — production typically peaks at first and declines over time. A well in early production is worth more than one that’s been producing for five years
Production data also helps you verify your royalty statements. If an operator reports significantly more production than what your check reflects, it may indicate an error — or a suspense issue worth investigating.
Step 5: What Activity Near You Means for Value and Offers
Operator activity is the single biggest driver of near-term mineral value. Here’s how to connect the dots:
- New permits filed nearby → operators are actively developing the area; lease offers likely incoming
- Strong test well results → formation is proven; your acreage has increased value
- Horizontal units being formed → you may be included; act before force pooling locks in your terms
- Active production on offset acreage → your minerals are in a productive zone; bonus and royalty negotiations have more leverage
If you’ve received a lease offer and there’s active drilling nearby, that offer price reflects what the operator thinks your acreage is worth — which may be considerably less than what you could negotiate with the right information.
Contact Valor Today
If an offer is sitting on your kitchen table right now, the days before you respond are when it matters most to have someone in your corner. Contact us today for a free, no-obligation review — our mineral management team will verify what you own, evaluate what the developer is really paying for, and flag what the offer isn’t telling you before you sign anything you can’t take back.
The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.