Can't We All Just Get Along?

OK, so I'm about to do two things that I really don't like doing here: talking outside the scope of the oil and gas business and pertinent topics, and talking about myself here. My usual better judgment is being overwhelmed by something that has struck me of late here at GHS.

My concern is the amount of inflammatory rhetoric that I have both witnessed and experienced as of late. Particularly, my concern is to how quickly such give and take can devolve into the personal or petty, or both. To some, it may seem odd that such a comment may come from me - with all of my best intentions to maintain good manners, when I feel someone steps over the line with me, another longtime member or someone offering good or well-intentioned advice, and don't get the hint, I've been known to throw an elbow or two. Not exactly the shrinking violet. Recently, I've had such a dustup with another member who I feel has extended an olive branch in the form of a post that also revealed reasons and motivations that rang true with some of the earliest themes that were discussed on this forum.

Why did most of us end up here in the first place? Certainly they were some then, as I am sure is the case now, that came here purposefully to advance a particular agenda, or to gain some intel from "the folks" that were and are part of this community. One would hope that these elements remain at the fringes as they have in the past. Most of us did come wanting to share our knowledge and experience and perhaps learn something from others, as well as gain some larger perspective. As an industry person that had some friends and in-laws in the broader HS area, I fielded some questions and gave advice to those who reached out to me. Like many people, I was impressed at the speed which the leasing unfolded once the lease boom began, and amazed at the level of competition which led to increasing bonuses to stratospheric levels. I was irked by the many stories of misinformation, mistreatment of lessors, disregard for their interests and lack of professionalism and ethics shown by some, albeit some of that originating from lack of experience shown in many people that suddenly claimed the title "landman". Unfortunately, many successful lease acquisitions were made possible by a combination of such activities and behavior and a lack of knowledge on the part of many prospective lessors, some of which were being counseled by other nearly-as-experienced "experts". I felt drawn into this community to hopefully educate and inform in a pragmatic manner, albeit one informed by industry experience and perspective.

I was kept "drawn in" by some of the amazing personalities and discussions that I have had the privilege to interact with and participate in. Even when becoming involved in heated, passionate discussions, the variety of perspectives and substance of the discussions yielded mountains of information, which benefitted the community as a whole, but most of all supplied those looking for information and education a great place to come, and join, and be.

I for one would hate to lose that spirit here. I realize that the Haynesville is not necessarily the "hot hand" as it was five years ago, but I still would like to encourage others and support this forum as a continued "go to" place. I am disappointed at some of the departures of other regular contributing industry members, but I can understand it, particularly in light of some bashing of industry professionals seemingly for the industry affiliation. I would like to extend an invitation to some of those folks to return, realizing that it would be a difficult request if, upon their return, they become the subject of renewed personal attacks.

Obviously, this isn't my site, or should I say, it's not just my site. It belongs to all of us, for as long as we keep it alive and foster good discussion and good content. I have been part of online forums that deteriorated into "flame fests" - they sometimes reboot or reincarnate, but many just end up folding, which I obviously would not want to happen to GHS. So, I realize recalling Rodney King's famous phrase post-LA riots may come across dated and corny, but... Please?

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1kw6x71km1v37Permalink Reply by 1kw6x71km1v37 on October 14, 2013 at 5:39

I don't really see much of a problem here. GHS is fairly informative. It's the internet. It's free. Any way you cut it, you're getting more than you paid for. Some selective judgement may be required. No surprise there.

Permalink Reply by Steve on October 14, 2013 at 9:37

 Kumbaya ?  Interesting !

Permalink Reply by Dion Warr, CPL on October 14, 2013 at 18:29
Steve:

Anything wrong with a call for kumbaya? We can all (should) have our own opinion, just asking for folks to put away their maces. At least give one's arm a break from holding one for a while.
Permalink Reply by Steve on October 15, 2013 at 0:59

Nothing wrong with kumbyya. Congress should try it. Everyone could use a little honest inward examination to determine where their cynicism and skepticism comes from. Most will find it comes from being burned. The oil companies bring a lot of distrust on themselves. Landowners can't expect a fair lease from an operator, just like you don't walk in a high crime neighborhood after dark - not everyone in that neighborhood is going to rob you but the odds are that you will get robbed. the WalMart EBT fiasco this week is an example of what you can expect from certain people. That is unfair to some but it is what you get when your group loses the public's trust. My personal experience in the TMS is: my mineral agent had to add a 5 page addendum to modify a 3 page boiler plate operator's lease form in order to get fair and equitable treatment for me. Why didn't the operator just start with a fair and equitable lease form for its landowner partners?

Permalink Reply by Skip Peel - Mineral Consultant on October 15, 2013 at 1:59

In my personal experience working with attorneys crafting Exhibit A language for mineral owners as an addendum to a standard lease form, every case is different.  Some land companies still use Bath forms that have been around for decades with slight modifications over time.  Some operators draft a standard form for a particular prospect.  The time and cost to customize a lease based on the details of the mineral estate and the surface estate and taking into account the lease form language can be significant.  Throw in considerations based on the target formation(s) and the type of development, especially horizontal drilling, and the formula for a protective and beneficial lease gets complicated.  Experienced O&G attorneys generally know what is most important and what is less so based on facts.  As with any initial contract offered by a buyer the wording will be what serves their interest although some standard clauses on behalf of the lessor are now often included such as horizontal and vertical Pugh clauses.  For some lessors a single page Exhibit A will suffice.  For others it takes many more.  5 pages is certainly longer that the usual but once again it depends on the details of the surface and sub-surface estates and the skill and diligence of the attorney.  Exhibit A language can run to dozens of pages.  The lease form offered by a lessee is merely a starting point for negotiations.  Neither the land company nor the operator that they represent would know what each individual lessor would consider fair and equitable.  That definition in addition to be subjective would vary across a wide range of land/mineral owners.

Permalink Reply by tc on October 15, 2013 at 3:52

Steve your question is like asking why don't grocery & retail stores just sell there goods at the sale price all the time.  It is called a profit margin.  Are stores evil if they don't offer everyday sale prices, is it wrong to sell those same bananas for $.69 when only yesterday the were $.59. 

Permalink Reply by Steve on October 15, 2013 at 5:10

I am not sure I follow your logic when it comes to negotiating a fair lease with an O&G operator. I am not talking about the bonus and the royalties they offer as much as the terms of the lease that usually start out extremely one-side, favorable to the operator and unfavorable to the landowner. Chesapeake has been sued for example for its arbitrary interpretations of  ambiguous and confusing lease language to exact huge deductions from landowner's royalty payments. I think you will find it a hard -sell to convince mineral agents and attorney's (that make a living negotiating unfair clauses out of leases for landowners) that a landowner doesn't need legal representation because the landowner can trust the operator not to try to screw him out of every single dime possible. There are fair profit margins based on economics and there are profit margins that are unfair, when they are exacted by taking advantage of a landowner's gullibility. You can't say that doesn't happen and it happens regularly in this industry, This is the reason of course almost everyone who knows anything about mineral leases will advise a landowner not to sign a lease without legal representation. To answer your question - Yes, it is evil to steal from people whether it is by a gun or using an ink pen. At least when they rob you with a gun they don't pretend to be your friend.

Permalink Reply by Skip Peel - Mineral Consultant on October 15, 2013 at 5:32

I don't see anyone in this discussion advocating the avoidance of qualified legal representation.  Quite the opposite.  As I like to say, entering into a lease is not a morality play, it is a business transaction.  And should be approached as such.  Emotion is best left out of the equation.

Permalink Reply by Steve on October 15, 2013 at 5:49

All I can say is that landowners should be cautious when signing a lease of any kind offered by anyone and should not count on their best interest being part of the other party's agenda - especially true of mineral leases. That is just my observation from having reviewed hundreds of leases. I also have never heard an operator 's landman recommend that the landowner hire an attorney - usually they arrive with a lease in one hand and a check in the other and a ink pen in their teeth - and in a hurry to get a signature  - am I wrong?

Permalink Reply by Dion Warr, CPL on October 15, 2013 at 6:09

Steve:

Anecdotally, personally: you are wrong.  I have advised landowners of this for years.  When I start to see vague puzzled looks and glazed stares, I will always ask if [they] have someone to look this over for them, if I can answer any questions or try to explain it in a different way, or if they need some time to think.  Some owners will ask about attorneys; I will generally point to local attorneys with specific knowledge that I have worked with in the past, although I cannot recommend specific attorneys.  My offer should be able to stand up to independent scrutiny, and I look at it that my credibility is bolstered by having a professional confirm my work, my statements and suppositions.

 

IMO, it's the difference between being a professional landman and being a "lease hound" or "ink getter".  Then again, I want the consummation of a lease agreement to be the first step in a relationship with the owner, not the only step.

Permalink Reply by Steve on October 15, 2013 at 7:11

I am sure there are a couple of people like you inking leases out there that have a conscience and always advise landowners to call a lawyer before signing. Maybe I'm just unlucky and haven't run across one. I wouldn't count on someone like you being the one knocking on the average landowners door - what I would count on is a guy looking for a commission or a bonus or to meet a quota  in-and -out as fast as possible with a signed lease in his pocket. I still think it is good advice to say to any landowner out there that you can't trust anyone, so seek counsel before you sign a lease. I don't think this is bashing operators unjustly - the industry just earned the public's distrust by some's past actions and my free advice should ring true as common sense to any landowner in the TMS.  If that advice hurts some industry advocates feelings on this forum I am sorry.

Permalink Reply by Dion Warr, CPL on October 15, 2013 at 9:08

Steve:

I can understand apprehension in being "burned" previously.  I have had to work in areas where landowners have felt "burned" or just plain run over by the oil and gas industry.  When it has occurred, it takes months if not years to be able to regain some semblance of "trust" in landmen, brokers, WI owners and operators.  I have had to disseminate lease offers broadly and make repeated contacts until finally, enough owners, leaders, and attorneys have discussed, vetted, and communicated to become trusted, and that my offers and explanations would not variegate just to obtain one arbitrary lease over another.  Without some degree of trust, most people will not engage in commerce (at least as to O&G) no matter what the offer.  That said, for me to do my job, one must be able to trust, but verify, and even then, there must be good follow-through on the part of the client.

 

My observations are as follows, hence the reason that I behave professionally as I do:

 

(1) Landowners / mineral owners generally don't mind oil and gas leasing, as long as they are treated with respect, in a fair manner, and with fair and equitable terms are provided for those in similar situations,

 

(2) Landowners generally don't mind oil and gas operations and development, as long as they are properly compensated in accordance with their agreement(s), and such operations and development don't unreasonably interfere with their personal goals and use for their property,

 

(3) People desire an open channel of communication, and a sense of good faith and fair dealing on the part of lessor and lessee.  People can be reasonable as to certain information being maintained as confidential if one explains why one must do so; however, people do not want to be completely in the dark either.

 

(4) If you get caught in a lie, disregard all of the above generalizations, they are no longer applicable.  Your name is "mud".

 

(5) People hate being pressured.

 

It may not be the fastest way to lease up a prospect, but it generally ensures that if I darken someone's door in the future, I can knock and not have a shotgun shoved in my face.  And I might be able to do business with them in the future without being run off.

 

It's not like I don't get something out of it either: I get paid, I can continue to get paid, and I don't have to constantly travel from one locale to the next because I can only work an area once before being run out of town.

 

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