Fair Or Not Fair
I have kept up (somewhat) with the discussions on this board for a while now. I have seen constant complaints about contracts being unfair to the land owner. So I ask, what is fair?
If you own 100 acres of land and lease it to a farmer, would he be required to pay thousands of dollars per acre for the right to farm.
On that 100 acres of land the farmer is using, will he keep his crops down to only a few acres and allow you to use the rest?
Will the farmer give you one quarter of the value of his crop?
The fact of the matter is, these wells are extremely expensive to drill. Most companies (including HK & CPK) will require investors to get the job completed. In addition, not every well produces. Just because the wells to date have done well, doesn't mean they all will. It only means they drill the best prospects first, when they get down to the less favorable well planned, their success rate will go down.
Everybody is in this to make a profit. Profits on oil and gas (per barrell or per Mcf) are low, even when prices are high. The more you produce, the more you make, as in any industry. Thats the only reason Exxon/Mobil makes billions, not because they are screwing the public, but because they are producing billions.
And yes, I am a landman, I have been one for 15 years. I consider myself ethicle and honest, as do most working in NW Louisiana. You will have the usscrupulous landmen taking advantage of the uninformed land owner, but they are few and they don't usually work long in the industry, most never become seasoned landmen.
The simple fact is, I have seen more unscroupulous land owners and land owner representatives than landmen. I have seen countless contracts prepared by legal representation that are really just filler and no substance and for that the rep charges hundreds or thousands of dollars. Bottom line, you need to pay more attention to who is actually trying to take advantage of the unaware. The o&g companies aren't hiding anything, can you say that about your agent or representative.
My suggestion, if you need legal advice on a legal document, find an attorney that specializes in that area. If you are buying a house, ask an attorney familiar with real estate, if you have questions about an oil & gas lease, ask an oil & gas attorney. He will charge you, but he will not ask for a percentage of what you are making (always a warning sign). If you have dealt with a landman in the past, give him or her a call. Most landmen are happy to answer questions from landonwers. They will always preface their advice with "Now keep in mind that I am not an attorney", but they will probably help when they can.
I have rambled on long enough now, I am sure only the serious readers have actually gotten to this point, so I should probably say so long, not good by, because as a sesaoned landman, I know that I will be dealing with you, the landowner, for many years to come. That is one of the reasons I will try to be as fair and honest as I can be, I will be the one you call to yell at.
So in closing, have a good day, a merry christmas and a wonderful new year. And remember, don't take any wooden nickles from those bad landmen.
lando
P.S. Forgive the spelling, I am a landman, not a writer.
If you own 100 acres of land and lease it to a farmer, would he be required to pay thousands of dollars per acre for the right to farm.
On that 100 acres of land the farmer is using, will he keep his crops down to only a few acres and allow you to use the rest?
Will the farmer give you one quarter of the value of his crop?
The fact of the matter is, these wells are extremely expensive to drill. Most companies (including HK & CPK) will require investors to get the job completed. In addition, not every well produces. Just because the wells to date have done well, doesn't mean they all will. It only means they drill the best prospects first, when they get down to the less favorable well planned, their success rate will go down.
Everybody is in this to make a profit. Profits on oil and gas (per barrell or per Mcf) are low, even when prices are high. The more you produce, the more you make, as in any industry. Thats the only reason Exxon/Mobil makes billions, not because they are screwing the public, but because they are producing billions.
And yes, I am a landman, I have been one for 15 years. I consider myself ethicle and honest, as do most working in NW Louisiana. You will have the usscrupulous landmen taking advantage of the uninformed land owner, but they are few and they don't usually work long in the industry, most never become seasoned landmen.
The simple fact is, I have seen more unscroupulous land owners and land owner representatives than landmen. I have seen countless contracts prepared by legal representation that are really just filler and no substance and for that the rep charges hundreds or thousands of dollars. Bottom line, you need to pay more attention to who is actually trying to take advantage of the unaware. The o&g companies aren't hiding anything, can you say that about your agent or representative.
My suggestion, if you need legal advice on a legal document, find an attorney that specializes in that area. If you are buying a house, ask an attorney familiar with real estate, if you have questions about an oil & gas lease, ask an oil & gas attorney. He will charge you, but he will not ask for a percentage of what you are making (always a warning sign). If you have dealt with a landman in the past, give him or her a call. Most landmen are happy to answer questions from landonwers. They will always preface their advice with "Now keep in mind that I am not an attorney", but they will probably help when they can.
I have rambled on long enough now, I am sure only the serious readers have actually gotten to this point, so I should probably say so long, not good by, because as a sesaoned landman, I know that I will be dealing with you, the landowner, for many years to come. That is one of the reasons I will try to be as fair and honest as I can be, I will be the one you call to yell at.
So in closing, have a good day, a merry christmas and a wonderful new year. And remember, don't take any wooden nickles from those bad landmen.
lando
P.S. Forgive the spelling, I am a landman, not a writer.
Views: 149
Replies to This Discussion
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Permalink Reply by Snake Stewart on
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Hey Les,
Gez! I thought all of those were examples.
Just as soon as you answer my questions in regards to Big O&G's applying their big thumbs to the back of our shirt tales , I would be forced to come up with more concrete proof. I am afraid that no amount of concrete would solidify hard enough for you to change your mind tho. Thats O.K. with me, I am sorta hardheaded myself. Or so thats what my mom tells everybody. Well I guess my wife does too. Oh well, you get the picture. Thanks and have a good one Les.
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Permalink Reply by Les Bamburg on
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KB, Exxon Valdez occurred prior to the ExxonMobil merger. Exxon Valdez caused by the incompetence of one individual, not the company. Exxon spent billions on the clean-up after the incident. There is no permanent damage related to Exxon Valdez and the area has been restored.
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Permalink Reply by Les Bamburg on
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GD, I did not say that Exxon was not responsible as you are right that a company is always responsible for its employees actions. This is the reason Exxon spent billions in clean-up and compensation. My response was in relation to ExxonMobil screwing the public so no BS intended.
BTW. I think the industry did learn from the Exxon Valdez and implemented a new set of proceedures and business practices including how oil tankers are constructed. It was a very painful lesson but unfortunately companies and governments are not always aware of where there are flaws in the system.
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Permalink Reply by Les Bamburg on
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KB, generally punitive damages only go to line the lawyers pockets without serving much good to the public.
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Permalink Reply by Grice on -
Les, I am going to disagree with your synopsis.
The courts are debating if the company could be held liable for damages, due to their allowance of a 'recovering alcoholic' to captain the ship. In my personal belief; this would be no different than with any other form of business, whereas the company is held accountable for the acts of its employees. Exxon has already been held accountable, due to the earlier judgment against exxon. Now, the courts must decide if secondary actions can be imposed on the company, without violating of their primary rights.
While the original punitive damages was for billions of dollars, it was later reduced to 500 million. Part of that reduction could be related to the evos council claiming the site had been cleared. Exxon petitioned the court that the punitive damages was in exaggerated quantity, and the courts found cause to reduce the claim to a 1:1 rate. Relating that decrease in damages, to the yearly profits claimed by exxon, could one honestly claim fairness has been rendered.
While the evos council did proclaim the area cleared, it was later discovered that the original finding was not complete. While the agent used did recovery visible damage, it has been discovered that it failed to recover in less visible area. To date, oil continues to burden the area, and recovery efforts continue. The original judgment provided a reopening of the case, and the evos council has already sent a demand for 100 million dollars to aid in future recovery.
From my personal perspective, I do not fault exxon completely. I believe evos played a vital role in releasing unfounded information, which also released exxon of its full liabilities.
I offer this, not in support of the suggested "screwing" by exxon, but simply for clarification purposes.
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Permalink Reply by Les Bamburg on
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Grice, as you say Exxon was found accountable and paid the judgements. Most companies will fight punitive damages since they go well beyond the actual damages incurred.
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Permalink Reply by Les Bamburg on
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KB, I am sure many of the top O&G companies CEO's were at the Cheney meeting. I would hope Cheney would talk to the industry in getting input for the Energy Policy. But still no evidence of wrongdoing by ExxonMobil or other major O&G.
BTW, check out the National Petroleum Council which works closely with government in understanding energy issues.
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Man you guy's sure do type faster then me. (LOL)
KB, that legal sounding jargon sure does sound cold at times. I sure am glad you dont like to play hard.(wink,wink)
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Permalink Reply by BirdDawg, plain ole' idiot on
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I can't figure out what an "unscroupulous landowner" is. In my opinion if you are a landowner and you own the minerals, anyone wanting to purchase or lease any part of your land (minerals) would be at your mercy. Bacically the landowner calls the shots. If they don't like your offer, they don't have to take it. To me that is not "unscroupoulous". Sure, the landowner can then be left out, so be it, it was their own decision.
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Permalink Reply by insomniacnla on
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It will never sit right with me when one landowner with 40 acres receives $250 per acre in a signing bonus and another landowner with 17 acres receives $20,000 per acre, with both pieces of property being in the same section and the both leases signed within 5 months of each other and both with no surface use.
Mr. Shane, you ask what is fair and not fair. I just gave you an example of what I believe is "not fair".
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