Water emerges as ‘the new oil’ in $32.5 million sale of vast Permian Basin ranch

Toby Darden stomped on the ATV’s gas pedal, carving through blustery winds to reach the far northern corner of his 37,000-acre West Texas ranch. He wanted to show off the crown jewel.

This wasn’t the spectacular views of the Davis Mountains or the herds of aoudad rams with their distinctive curved horns. It was a big hole in the ground, the first cut at a well — not to bring oil up but water, the precious commodity of the Permian Basin drilling play.

The ranch’s water rights were front-and-center in marketing the property, which just sold for a hefty $32.5 million to El Paso billionaire Paul Foster. A federal bankruptcy court judge in Fort Worth last week approved Foster’s bid for the ranch.

Broken down per acre, the price is higher than any similar sale in the area for at least a decade. Not many who are familiar with these parts were surprised.

“Water is the new oil,” said Laura Capper, a Houston-based oilfield consultant. “The value of water has changed.”

The reason is fracking, a technique that helped kicked off the shale revolution a decade ago. It is the last major step to completing a well, and it is a massive consumer of water. Ranches that can sell excess supplies get a steady revenue stream, which is having an impact on rural real estate appraisals.

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