A ranch in far West Texas once owned by a prominent Fort Worth oil and gas family has been tentatively sold for $32 million.
El Paso oil and gas executive Paul Foster has reached a tentative deal to buy the KC7 Ranch, although anyone who wants to outbid him has until Jan. 25 to make a higher offer, according to court records.
The KC7 Ranch is in the Davis Mountains near Balmorhea, about two hours southwest of Midland. It was previously owned by the Darden family, who owned the once-lucrative Quicksilver Resources gas exploration company, and is now part of a bankruptcy proceeding in Fort Worth.
KC7 Ranch includes 37,000 acres of tranquil land, plus extensive mineral and water rights that could be extremely lucrative to the oil and gas exploration taking place in that part of the state.
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Foster’s interest in the property — through an entity dubbed Franklin Mountain KC7 LLC, according to court documents — is known as a “stalking horse” bid. Anyone who wants the property must exceed his price in $500,000 increments, plus pay Foster a $1 million “breakup” fee — meaning the next bid must be at least $34 million.
A stalking horse arrangement, which is a common auction procedure, ensures an object sells for at least a certain price.
The broker for the sale is Icon Global Group, a Dallas commercial real estate firm that has become known for its ability to market Texas-size ranches. The bankruptcy case is under the supervision of Judge Mark X. Mullin.
“The inclusion of the previously unavailable but immensely valuable owned water rights in this property is a game changer and makes for an extremely unique and potentially revenue rich investment opportunity with predicted income streams potentially worth many multiples beyond any surface value acquisition price,” Bernard Uechtritz, Icon Global Realty founder, said when he announced the sale in October.
“I have seen data which indicates up to 400,000 barrels a day of water production is possible,” he said. “Current frac water rates in the area range from sixty cents to two dollars. Let’s say conservatively this water is delivered at twenty cents. This could mean a payback as much as $70M a year for decades. I might be married into an Aggie family and only have a 10th grade education, but even I understand that kind of math, and these are big, big numbers.”
The property also includes a nearly 10,000-square-foot stone lodge, which is more than a century old and was remodeled in 2007.
The ranch once owned by the Darden family is symbolic of the rise and fall of the Fort Worth area’s Barnett Shale natural gas play.
Thomas “Toby” Darden, who along with other family members ran one of the Barnett Shale’s most lucrative companies, Quicksilver Resources, filed for bankruptcy protection for the ranch in 2016, and for other related companies in 2017.
At its peak, Quicksilver Resources employed about 600 people and controlled 85,000 acres in the Barnett Shale. It also had nearly 500,000 acres of gas and coal bed properties in Canada along with an additional 90,000 acres in the Permian Basin.
But Quicksilver struggled with mounting debts and lower natural gas prices and filed for bankruptcy. At the time, the company stated that its assets were worth about $1.21 billion but that it was saddled with $2.35 billion in debt. In 2016, BlueStone Natural Resources II bought Quicksilver’s Barnett Shale assets in a bankruptcy auction for $245 million.
Although Toby Darden retired from the company in 2013, he continued to serve as an adviser. His brother, Glenn Darden, served as CEO and president, and his sister, Anne Darden Self, was vice president of human resources.
The KC7 Ranch also is considered a sportsman’s paradise for its surface-level amenities, Uechtritz said. The main house overlooks a spring-fed trophy bass lake. The perimeter of the ranch is fenced, and the interior is cross-fenced into 11 pastures.
Foster founded Western Refining in El Paso, and sold that company for $6.4 billion in 2017, according to Forbes. The Baylor graduate also has served as a long-time University of Texas system regent.
This report includes information from the Star-Telegram archives.