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Permalink Reply by Catfish on August 24, 2009 at 1:50

I'm cuorious about the independent landman. Maybe Skip could share how this works.

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Permalink Reply by Skip Peel - Mineral Consultant on August 24, 2009 at 2:10

I've been waiting on one of the "old hands" to answer this one. Ask Les, Or Two Dogs. Or Cottontop. A list of landwork will be a long one.

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Permalink Reply by ELLIS HUGH on August 24, 2009 at 2:15

There are Independent Petroleum Landmen that provide services to mineral owners. Although, they usually are also providing contract services for Oil & Gas Exploration companies. They have to be very careful of conflicting interest.

I have negotiated lease terms for mineral owners in the past, free of charge. I have also performed mineral title searches for owners, free of charge. I did this to establish a good relationship with the owners (who could not afford an attorney), but others do it for a living.

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Permalink Reply by Dion Warr, CPL on August 24, 2009 at 2:57

Mac:

Independent landmen typically work for various clients, predominantly O&G companies, but also landowners and institutional landholders (timber companies, agricultural entities, etc.) On occasion, some large landholding families will employ a full-time landman in order to assist with their negotiations and lease and revenue tracking on their various properties.

Independents typically work on a contract or 'as needed' basis. Although the hourly service charge is gaining some increasing amount of foothold, the typical billing unit consists of a dayrate based upon days worked (or half-days, or other incremental subunit) on an actual time basis, plus reasonable expenses (lodging, meals, mileage, copies, recording costs, courthouse fees, etc.).

What do we do? In the case of a 'full-service' landman, the question would best be answered by asking what do we not do. We do not practice law (unless the landman is also a member of the state bar), but we are allowed to negotiate on behalf of our clients on a good-faith basis, and can also prepare contracts and legal documents specific to our legally recognized scope (e.g., OGMLs, Ratifications, Amendments, Affidavits of Death and Heirship, Use and Possession Statements, etc.) which are inherent to our work. We generally work as our client’s advisor and/or agent, and not as his proxy or attorney-in-fact (although this does sometimes occur as the situation warrants).

Landmen research surface, mineral, and leasehold title, and are commonly used to build and assemble abstracts of title for same. In LA, this also entails the research and assembly of mineral histories which will generally be required, in conjunction with examination of the abstract, for a oil and gas title attorney to opine as to the surface, mineral, and leasehold ownership of a subject tract of land. While real estate abstractors commonly possess the skills and knowledge to accurately research the chain of title, in many cases they are seldom utilized by O&G companies because of (1) lack of knowledge in the area of mineral law and (2) lack of experience preparing and/or interpreting mineral and leasehold agreements, which prevents many an abstractor from efficiently (on a time basis) preparing a surface, mineral, and leasehold abstract.

Independent landmen are typically knowledgeable about many phases of the oil and gas production cycle, and become specialized in various disciplines of the entire scope of the work (including lease analysis and maintenance, due diligence, acquisition and divestiture of producing and non-producing properties, [including farmouts and subleases], royalty acquisition, right-of-way acquisition, title curative, and research and preparation of abstracts), but probably the best definition I have heard (and generally use) to explain what an independent landman is, or what he does, is “We’re the guys that the oil company comes to with a prospect map (with an area circled in red or colored in yellow) and they say ‘we wanna drill and develop here, put this area together for us’, and we do all the research, paperwork, and landowner contacts and acquisition that makes that happen.”

Unfortunately, many landowners in a leasing frenzy don’t get the chance to meet a landman; they meet a ‘leasehound’ who has little knowledge of anything in the oil and gas business except finding you and getting a contract signed. And even though independent landmen still take orders from the client, they are generally knowledgeable enough to know what they can and cannot offer (or what will nor will not be acceptable to their client), and possess enough experience and discernment to be able to offer practical alternative solutions to individual problems, hence being able to better act as a broker to an agreement, rather than just a paid go-between.

Additionally, although independent landmen (being versatile as we generally are, or learn to be) can work for anyone, much like any ‘hired gun’, few private landowners find the necessity of retaining a ‘gunslinger’ on any regular basis. For much the same reason as most private citizens do not retain a lawyer on a regular basis (or for that matter, a plumber or an electrician), because (1) you only really need one when you need one and (2) they can be pretty expensive just to ‘keep hanging around’, there are comparative few independent landmen that offer their services to the general public. Their time is usually taken up by folks who require their services on a regular basis (such as O&G companies, attorneys, and large landholding entities).

I’ll get off my soapbox now (and get back to my client’s project), but when I need a mental break, or have some free time, I’ll be happy to provide some marginal oil, gas, and mineral advice (in the sense that I am getting paid, hopefully not in what I offer).

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Permalink Reply by Sean McFadden on August 24, 2009 at 9:17

Skip, is it possible I could contact you directly? I have a question concerning family gas rights holdings.

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Permalink Reply by Mac Davis on August 24, 2009 at 7:51

Thanks.

Do they ever "audit*" production figures, royalty payments, etc. for lessors or UMO?

Seems like a lot of lessors or UMO's could use a service of some sort to help prevent getting shafted on payments. This leads back to the "Mineral interest cooperative" idea again, but is a slightly different tack.


*"audit" is probably a legally charged term, but hopefully you get the idea.

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Permalink Reply by Dion Warr, CPL on August 25, 2009 at 2:51

Mac:

Sometimes, but that is a job usually best left to an oil and gas accountant. Many experienced landmen can review a royalty or revenue statement and qualitatively observe 'this charge seems a little high..., that price seems a little low', but if you wanted to challenge one of these (ie. audit), you will want quantitiative analysis; an oil and gas accountant will best fill the bill.

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Permalink Reply by Mac Davis on August 25, 2009 at 5:30

Good point. We've usually mentioned attorneys or landmen, but haven't considered the O&G accountant. Perhaps more mineral interest owners should have their statements checked out by an O&G accountant on a regular basis.

"I think I can say, without fear of contradiction, that the ideal job for you is chartered accountancy." - John Cleese

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