Replies to This Discussion

Permalink Reply by BIGWOOD66 on August 29, 2008 at 2:18

Kassi I just wanted to comment on your post really quick. First I understand your concern over rights in land and minerals. I have worked as a RE professional and been involved with it for several years. I think the RE laws in LA are adequate to protect the buyer and seller as far as rights in property and minerals. The laws in Louisiana differ from every other state. Property Laws, state to state are very diverse. Ours are unique in the fact that they are rooted in the rich history of the state. Like everthing else, from your toaster, to your SUV, purchases are always and will always be "buyer beware". My job as a RE pro is to make the best deal possible for my client period, buyer or seller. We term this as a fiduciary relationship. We are also required by RE law to deal with others fairly. As with all negotiations there is give and take. The ultimate outcome is and must be according to law satisfaction of both buyer nd seller. A contract must be AGREED upon by both parties. RE Agents and Brokers are accountable to their clients. Our job is to insure that our client is informed of the consequences of EVERY action and inaction involved in a transaction. This is the LAW and is overseen by our commission. In as far as protection, it is there in RE. Individual buyers and sellers make desicions based in knowledge provided by their respective agents. All information is diclosed. No secrets. If one or the other gets a better deal it is known at the time of the contract signing. In my experience one party will concede to the other party to aquire what they want. This concession is made with knowledge (thanks to the RE pro) of the repercussions then and future. The law in RE is there, utilized, and overseen.
The Mineral Code is adequate to protect the lessor and lessee. Knowledge of the code(or lack thereof) is one thing that gets the lessor in trouble. There is no fiduciary relationship between lessor and the agent(landman) of the lessee. The agent of the lessees' job is to get the best deal for his client. RE agents protect the interests and rights of their clients in transactions. If the lessor does not consult a competent agent(or seek advise) before he enters into a lease and gets a bad deal it is simply his/her fault. There are a lot of other factors now with knowledge of HS. L/O's now knowing of the HS and the potential value should find someone to represent them in contractual negotiations. We can't change the fact the O/G companies knew of the HS before we did, or that a few capitalized on the foreknowledge. I hate the fact that people were taken advantage of. This has and will continue to happen as long as man draws his breath. The law is not the current problem. Individuals will continue to capitalize on the lack of knowledge of others. Knowledge is power. Information, and education are the only ways to level the playin' field. If you want a suggestion lobby for "lesion beyond moiety" in mineral leases....

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Permalink Reply by BIGWOOD66 on August 29, 2008 at 3:59

I never discussed LOC #1. The Mineral code is adequate. The LOC doesn't make the laws..... The laws are the laws..... L/O's are equal to O/G per the law. If the LOC usurps a law to pander to big O/G, then there is a problem. Where in Title 31 do you see the LOC makes the laws. Freedom of contract and limitations thereon
"Unless expressly or impliedly prohibited from doing so, individuals may renounce or modify what is established in their favor by the provisions of this Code if the renunciation or modification does not affect the rights of others and is not contrary to the public good."
If you want "equal footing" with big O&G make a contract that places you where you want to be. No law says you have to be shafted by O&G, infact it states just the opposite:

Liability to others with interests in common reservoir or deposit

A person with rights in a common reservoir or deposit of minerals may not make works, operate, or otherwise use his rights so as to deprive another intentionally or negligently of the liberty of enjoying his rights, or that may intentionally or negligently cause damage to him. This Article and Article 9 shall not affect the right of a landowner to extract liquid or gaseous minerals in accordance with the principle of Article 8.

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Permalink Reply by getoverit on August 29, 2008 at 9:35

Amen!

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Permalink Reply by Ed Hill on September 9, 2008 at 10:37

KB:

How about we amend the mineral code to do what states like Texas, Oklahoma, New Mexico, etc.. currently allow an operator to do. There is no "force pooling" as you stated (the term is compulsory unitization in La.) in these states. These states allow the operator to simply cut out the landowner who does not want to sign a lease. The landowner then has the opportunity to either drill his own well to prevent drainage or contact with another company who will drill a well for him. I'm sure that most operators would favor this system than what is currently in place in Louisiana.

I think that after you have done your homework in regards to the effectiveness of the Mineral Code for the State of Louisiana as opposed to numerous other states, Lousiana's system is far more favorable to the individual landowner than that of the majority of other states. At least if you are "force pooled" in Louisiana, the landowner is mandated by law to receive royalty payments after the well pays out. You could be living in Texas where your only recourse is to drill your own well.

The reality of all of this is that the state collects too much money from severance taxes. They will not kill the golden goose (being oil companies) ad hoc to appease the wishes of a select group of landowners. There could be and probably should be some tweeking of the system (i.e. limitations on how long non-unitized acreage can be HBP) but I cannot forsee any wholesale changes (at least in my lifetime and I am 52 years old) being made to the mineral code as a result of the current Haynesville Shale frenzy.

You, Kassi and the other individuals who have posted on this thread are mistaken about one thing. The landowner is the one who has the ultimate power in all of this. They have the right to not sign a lease.

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Permalink Reply by Wilmer Sparks on September 9, 2008 at 12:31

KB:

I don't think that Mr. Hill was attempting to be derogatory to you. I don't want to try to put words in Mr. Hill's mouth, but I think that he was simply highlighting the differences between the laws governing the drilling and production of hydrocarbons in law with those of other energy producing states. Louisiana's system is geared to favor the landowner much more than that of other states.

In regards to force pooling in Louisiana, the unsigned landowner will still benefit (in some cases, very handsomely) if the well pays itself out which is more than can be said in other states. IMHO, I think that Louisiana's mineral code is a far superior system than that of several other states.

Can you elaborate on your statement as to how those who are not landowners or not landowners of property in producible areas are impacted by what is and what is not regulated about the O & G industry?

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Permalink Reply by Kassi on September 9, 2008 at 14:08

very well said

Permalink Reply by Kassi on September 9, 2008 at 11:23

I have no issue with force pooling. I understand the practicality of it. What I do think needs to occur is an automatic verticle and horizontal pugh clause and a 3 day waiting period before signing a lease to have time to consider it.

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Permalink Reply by keb on September 9, 2008 at 17:45

to the uneducated in the area of oil & gas, a 5 day waiting period wouldn't hurt. It is all so confusing.

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Permalink Reply by Kassi on August 29, 2008 at 10:55

I very much appreciate your comments. The only way to learn, grow and figure out what really needs to change is via dialiogue. The main issue I have regarding real estate is that the Haynesville Shale has forever changed the way people will look at real estate deals. There needs to be some disclosure of things like 50 year old leases that may hold ones land in production. Title searches should be clear as to how far they go back and people need to discuss mineral rights in the deal early on so there will be no surprises at closing.
The mineral code is a different story. It was, as all laws are, written by those with an interest in the subject, the O&G Industry. Most of the mineral code has not been updated since 1975. I have read it multiple times and there are some simple but profound changes I feel need to take place. For example, horizontal pugh clauses should be automatic. Unfortunately many people are undereducated and/or cannot afford representation or do not know where to seek it. Having automatic horizontal pugh clauses like many other states are now doing would make things much more fair to the land owner. There should also be a clear definition of what production in paying quantities means. Many people are HBP for years by wells they are receiving pennies for. I had one man show me a check for $0.10 and he said he had 3 acres. There should also be more difinitive rules regarding environmental and quality of life protections. The O&G Companies have shown they can do things in an environmentally and land owner friendly way if they are forced to by a tough lease. They need to be compelled to do so regardless of the lease. (Yes, I know many companies are very conciencous but not all are.) As to the rest I would like to see some dialogue between land owners, environmental experts, O&G folks and real estate folks to try to come up with solutions before they are significant problems.
Please keep the comments comming!

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Permalink Reply by TCB DS3 on September 21, 2008 at 0:45

Kassi, Another wonderful idea. You can count on me to join and help. Let me know what I can do. TCBDS3

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Permalink Reply by Kassi on September 21, 2008 at 1:42

Thanks, I hope to have time soon to pull together a meeting of those interested in making CAN-LA happen!

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Permalink Reply by Blenda T22 on August 29, 2008 at 22:35

That is a wonderful idea Kassi. All of us "little people" could really benefit from your experience/research. Have you posted copies of the various documents I have seen you recommend? If so, how do I find them?
Thank you

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