By Younas Chaudhary
My ancestors were landowners in Pakistan who kept their land and passed it on through generations. So, I was raised to hoard land and rarely sell it. In essence, my family was land rich but cash poor.
Our people never sold land and believed in a simple idea. They felt that every piece of land had a fixed boundary, however, the population around it would grow without limits making it desirable and more valuable in the long run.
Inspired by this common-sense logic, whenever there was an opportunity, I too would buy land here in the West thinking that it will be valuable and useful for future generations.
Since the 1980’s to the current time, our team continues to purchase oil and gas land properties in Texas and other states, especially when energy prices are low. Nobody could predict the current shale boom and how it would drive land values up several fold from just a decade ago. I held on to the land and its value grew over the years.
In playing the game of hoarding land and other assets, one needs to have a lot of commitment and patience.
For instance, in 1997 I purchased an oil well lease in West Texas that was producing just a few barrels of oil per day. My engineering team noticed that one of the wells was located on a high structural area of the sweet spot, but the previous operators never perforated the sweet zone in that well.
My team thought it was unbelievable that an old well was never opened in the very top 10 feet of its sweet spot zone. So, we perforated (opened) it and the well immediately started flowing 1,200 barrels of oil per day! It was a shocking, God-given, surprise gift that landed in my lap. This low producing oil well suddenly showed nature’s potential three decades after it was drilled. I still own that lease. The art of hoarding definitely has its benefits, doesn’t it?
If you buy or lease land in the sweet spots that bring in additional revenue, there is nothing wrong in hoarding land. If your land is in a structurally high area of a known oil and gas pay formation area that is not currently producing, wait a few more years and it may benefit your grandchildren and their children.
Nature and what lies beneath the earth is totally unpredictable even with the latest technology. So, hoarding can be advantageous if it is thought out well.
I rarely sell land that has good potential because I know it will help the next generation when I am gone. For example, I have certain properties in and around Vancouver that I am not inclined to sell because prices are going to stay high there. Though, I do sell properties in other areas where there is low potential and poor cash flow.
Every time I plan to buy properties, I think of the future of my family. I really believe future generations will benefit from what I do now. I do not have any selfish reasons to accumulate cash by selling the land that I own, even though not a week goes by without oil investors, speculators, and their lease-hounds asking my team if my land in Texas and other good areas are up for sale! Blessings.
The views, thoughts, and opinions expressed in this article are my own and do not represent the opinions of any entity with which I have been, am now, or will be affiliated. Further, I make no warranty regarding the accuracy or effectiveness of my recommendations, and readers are advised to consult other advisors as well as their own judgments in making business decisions.