The theme of this week is Snake-Oil Salesman and making enemies.

The theme of this week is Snake-Oil Salesman and making enemies.

There seems to be a consensus among those with whom I speak to that there are a lot of people asking you to pay them millions of dollars to not do much. I was at one of these meeting in Sabine parish near Toledo Bend last Wednesday. The gentleman got up and essentially said, “My uncle is an Oil and Gas Attorney and he’s got a mean lease” now give me millions. The guy was unprepared as was evident when the older, but well versed oil & gas crowd started firing questions at him that he wasn’t prepared to answer. After leaving the meeting with my brother-in-law, we discussed how it seemed that none of the middle men that we had heard to date were informative let alone worth the millions they want us to put in their lap. My question. Why use them?

Also interesting was an “exchange” I had while visiting the great town of Natchitoches this week. I was in local store and a woman came in and asked, “Whose sign is that on the vehicle outside?” Of course, I proudly said, “mine, why?” The reply was downright cold as she walked past me without a response and certainly without the southern hospitality I have come to expect from this great state. The store clerk picking up on this said, “I don’t think she likes your sign….” I replied, “No, I don’t think she likes landowners communicating.” My hunch was confirmed when the clerk told me she did work for a seismic exploration company doing work in Natchitoches. Does this confirm a thought that I have had that the Oil & Gas Company’s (and their subsidiaries) do not like landowner’s communicating with each other?

Views: 66

Tags: Communicating, Exploration, Haynesville, Landowner's, Seismic, Shale

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Comment by Joel on August 11, 2008 at 11:02
My 2 cents. Anyone who hears from a landman that he/she is interested in leasing their property has valuable information - at least someone think their land is in the play. Even if it is an unacceptable offer. No need to get irriated or offended. Anyone ever give their highest price to the car dealer when asked what they'd be willing to pay? No, you start low when offering to buy. They do the same. What is unusual is how low they start. But what generates money is value (your minerals) crossed by competition. If you want action, telling land guys A, B and C that you have minerals and another land guy has made a lease offer on them.

So my advice is, don't get irritated. You are 'selling' and they are 'buying" and you are not locked into the guy who first comes calling. While there are incentives to getting leased before drilling starts, there aren't that many companies who know how to throw $6-8M down a hole and get monster wells back...and their rigs are pretty busy. So use your time and generate competition for your land.

Bottom line - if you're only talking to one landman, even if it's a friend, relative, acquaintance, old business partner, or expert, expect to leave money on the table. Competition is the name of the game....if a land professional says you have mineral rights and makes an offer, then he/she has given you the ante to play. Thank them for the information, even if it's lower than you think is fair. Then take that information and go contact 3-4 more landmen and see what they say.

Unless you sign something to the contrary, there's nothing secret about them having made you an offer. If you let that first one dictate terms - set arbitrary deadlines - etc. you'll probably regret it. Get them responding to offers from other landmen- that will give you more power in the negotiation and get you up fairly quickly to market value deals.

Hope everyone prospers - hope to hear about lots of fairly priced, low adrenaline transactions. I know landmen won't offer more than they can afford so this advice shouldn't hurt anyone. If it helps folks avoid below-market offers, than that's all I can hope for.
Comment by john schonfarber on July 27, 2008 at 9:42
glad to have you.wioll stay in touch. scho3671
Comment by Martin on July 23, 2008 at 19:37
Earl -- SF fan? "Something wicked ...." Is from one of my favorite authors.

Thumbalina -- From what I have picked up from this site and my neighbors is that the landsmen are checking the land titles in areas of intrest for current owner and for current lease status. Is it currently leased?
Comment by Tech75 B1 on July 21, 2008 at 7:04
Thank you, Haynesville, and every one else who takes the time to participate, for this informative site! What goes around, comes around, so I am confident you will be blessed for having been a blessing to so many others.
Comment by RONNY on July 21, 2008 at 5:43
So the activity in the Barnett Shale around Ft. Worth is all imaginary? Wow. That well in South Bossier must be spewing 16.8 million cubic feet of hot air each day.
Comment by Lerret on July 20, 2008 at 21:56
I do not attribute to conspiracy that easily explained by stupidity. The current crop of Oil & Gas people are selling a dream upstream to uninformed investors. If you get a chance pick up a book called "Funny Money". It's about financing these ventures.
First, the huge bonuses paid for "resource" plays are not "oil companies". They are speculators who are flipping these deals to what is commonly referred to as "mullets"...and the man doing the hawking of the deal is basically a pigeon stalker.
Among the very very few professionals left in the biz, are down right crooks.
Thumbalina asks the right question. How do they decide whose land to lease? Well the truth is they don't have a clue. They are just a bunch of clods chasing a big company like Chesapeake who is equally clueless. The average geologist at CHK is about 25 years old and totally without the kind of mentoring and experience that really finds oil.
These "resource plays" are not about finding gas. They are about making deals and selling MLPs (Multiple Limited Partnerships a.k.a. - Magic Little Pills) to wealthy Chinese who made their money selling crap to Wal-Mart that you all stand in line to buy...
The real oil men are sitting back and taking it all in. They are not leasing and never will be able to lease at $3000/acre. The shallow deals they do, which actually establish Long term reserves, cannot support them unless they do the same thing as CHK...hawk the stuff off onto the back of investors. How many BILLION dollars worth of deals has CHK sold in the past few weeks? A bunch. Did you ever ask yourself why you would find such a big bunch of gas, then sell it off after tooting your own horn? ??? Because the money is in the deal not the ground.
They just as well could hire a blind man with a forked peach limb to "find" Haynseville shale gas...they don't need geologists except to give their hokie deals some dignity that they don't deserve.
Comment by Susan Breeland on July 20, 2008 at 20:34
I had planned to email and thank you so very much for this wonderful, and
very much needed website that you have established, and now I really
would like to thank you. That lady must not own land and may be irritated
about that too!!!!
Comment by Alamo on July 20, 2008 at 13:34
thumbalina, regarding your question of the methodology driving the mineral leasing process it generally works like this:
Seismic surveys are conducted and then interpreted by geophysicists. That information is reviewed by geologists and a decision is made to lease property overlying trends developed by those initial studies. Assignments go out to land men or women to ascertain the owners of the mineral interest, get in contact with those owners and negotiate leases for a sufficient number of acres to see if the area possesses commercial amounts of oil or gas (or both). Next a drilling contractor is hired to drlll a test well to confirm if the productive capacity is commercially viable or not. If this well (or wells) have commercial potential there will be additional wells drilled to determine the perimiters of the "field" or productive area. And it's probable that additional acres will be leased iin order to gain control of the largest area of proven production.

But well before a mineral owner is ever contacted, the oil and gas people have a definite area that they wish to explore. It is hardly the risky "hit and miss" business that it was in the early days of wildcatting. With the sophisticated subsurface mapping technologies in place today, coupled with equally sophisticated drilling and completion methodologies, it has become much more a money game requiring huge amounts of capital. It takes money, lots of it, to get in the "game", but the payoffs are huge. It is not at all unusual for competent oil and gas operators to have a drilling success ratio near 100 percent--meaning that nearly every well results in commercial production.

Mineral owners need to keep all of this in mind when beginnng lease negotiations. That landman isn't there to help you and he didn't contact you without a compelling reason to have done so. Good luck and remember do not give those potentially very valuable minerals away. Keep reading and keep in touch and by all means ask any questions you have.
Comment by Russell Plilar on July 19, 2008 at 20:51
I was approached over two years ago by Petrohawk regarding a Landsman to enter property passed on from my grandmother and grandfather in Logansport/Desoto Parish. Close to 100 acres. Offered $1500.00 per acre to come on the property during a three year period. 3/16 royalty. Lease expires in nine months, thus far no wells or royalties coming to me. Curious if anyone has any insight to what is transpiring at Part of NW/4, Section 13: T11N-R16W. Thanks much.
Comment by thumbalina on July 19, 2008 at 17:50
I'm waiting for them to come on down my way..I live in northeast sabine parish and would love to see some of that golden money..haha hee hee..
how does it work? The oil companies have someone do research at the tax assessors office or clerks of courts and they decide whose land they want to lease or buy? Do they basically buy up the land that has the largest acreage of land or is there something they do to determine where the oil/gas might be? I am not up on all this stuff so if anybody could explain it to me, I would be much appreciative..

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