Replies to This Discussion

Permalink Reply by GoshDarn on June 26, 2012 at 6:40

layla & Henry:

Yep, why does it not surprise me that "the cult of Aubrey (McCl.)" would -- besides flat out lying on so many other issues, i.e., such as their so-called "free royalty clause" (which was a blatant fraud) -- would also try to collude to fix lowball lease prices?

Why does that not surprise me one iota, huh?

Such cheating, lying, crooks at CHK.  So it didn't take a rocket scientist to see the writing on the wall when Henry uncovered CHK's 25% sleazy vig on the payments for NG wellhead pricing (in the La. HA) a number of years back.  Once a crook, always a crook.  And where there's chicanery with one cheat, usually there's much more being swept down the drill pipe.  Liars/con men don't seem to be able to help themselves.  It appears to be in their DNA to grab as much as they can by any means possible.   

In other words, this certainly seems to be a solid class-action to me.  I know my family was harmed by this unlawful "arrangement."  Indeed, folks didn't even have to sign a lease with CHK, ECA, or HK or whomever to have been taken advantage of per these particulars.  Legally, the general climate of such price-fixing colluding -- for the whole area -- could stand up in court, if you ask me, since CHK was involved in so many peanut offers and shady arrangements in a number of parishes and had employed a number of brokers and landmen -- like the Mark O'Neal landmen in Baton Rouge -- Mark A. O'Neal Associates, etc. -- to do their lowball/peanut bidding for 'em.

Folks should call their lawyers and the La. AG.

The attorney to contact at the La. Attorney General's office  in Baton Rouge is:  Ryan Seidemann.  225-326-6085.  Email:  SeidemannR@ag.state.la.us

And if the La. AG's office doesn't take up the ball on this and run with it (since it's quite obvious that probably hundreds, if not more, of La. landowners were harmed by such a crooked price-fixing agreement -- then that ain't right.  Something is amok.  So if our own state lawmen don't act, then don't be surprised by what the feds might do.

That said, it's sad to see ECA caught in this snare.  Surely those canucks knew better.  And I'd lay odds that, knowing McCl.'s M.O. -- then it also smells bad for HK and a few other HA operators.  Yet, I'd also lay odds that a certain Utah company's gonna come out smelling like a rose.  Very doubtful if they took Aubrey McCl's bait.

Yep, "there oughta be a law."

Oh, wait.  There is a law.

Gotcha.

 

 

Permalink Reply by Dion Warr, CPL on June 26, 2012 at 11:35

GD:

OK, far be it from me to be ringing a bell for CHK, but some of what is being "reported" as allegedly illegal behavior by Reuters and/or some of the pro-DOJ attorneys don't pass the muster of collusion.  In fact, interspersed throughout some of the telling of the circumstances and anecdotes in this article even discloses same.

 

Mining partnerships, as well as the usual corporate linkages of these types of relationships are rife with opportunities to engage in unseemly or even illegal behavior, including violations of anti-trust law.  However, companies are allowed to form agreements around areas of mutual interest (AMI's) which do recognize, amongst other things, an area of mutual interest in which company(ies) disclose their relative lease positions.  In truth, the groundwork of such disclosures usually result of the admissions of companies' acreage positions that may have known about for quite some time, provided that their field brokers are doing any type of quality surveillance inside their respective clients' prospect areas.

 

The truth is, there is almost no way of not knowing about it.  If you're checking records for lease checks, or updates of title, or even adverse leasing, a good field broker will find out about competition in an area, and advise their client accordingly.  Even if you just have the stereotypical presence of "warm bodies" in the field and in the courthouse, when the record rooms and vaults start mysteriously filling with new people, and your prospective mineral owners are more or less telling you of who else is there and who has approached them and their neighbors, you'd have to be professionally dense to not figure out what is going on, and generally judged to be remiss in your duties to your client if you don't follow up and timely report same to your client.

 

Before I start hearing the "stinking landman" comments, let me attempt to illustrate for those not working in this business how such things unfold, and then one can determine whether it looks like collusion or just responsible business.

 

(1) Your field brokers are thrown into the midst of a huge play that has been already announced to be the "next big thing" by the nearest authority figure with a megaphone.  Your ability to lease at terms that seem attractive just a couple of weeks ago are now getting you laughed out of people's homes and offices.  You communicate this to your client so as to advise and seek advice as to what to do next (e.g., up terms, add lessor-friendly provisions, deal or not deal with landowners or groups on your current mineral owner lists).  Your client asks you to put together a lease status map of your prospect area, checking the courthouse for the latest leases taken by identified companies and brokerages working the area.  Additionally, they ask you to try and find out what these other owners are being offered, since they are not receptive to our offer.  The results of that exercise makes it clear that in certain areas, a company adverse to your client's position have acquired leasehold of the lion's share of certain blocks in your prospect.  The client advises you to either offer "best terms that [the client] will bear", or pull out of those areas outright, possibly rescinding any standing offers at a certain short-term date.  Is this "price-fixing", collusion, or independently derived educated business decision?

 

(2)  Two companies, aware of each other's leasehold presence (and/or of their major field brokers) enter into discussions to form an AMI and formalize an agreement.  Parties stipulate that they are not forming a partnership or joint-venture.  On the table for discussion: In areas in which the parties each own an interest, parties amicably determine operator and non-operator status in units based upon leasehold of public record, and agree to standard provisions for contracts in the AMI (including participation, farm-in / farmout arrangements in cases of non-participation accounting procedures, fee and risk-penalty assessments (for point of argument, stipulated to be at least as stringent as state law allows), gas marketing and gas balancing, etc. (standard Joint Operating Agreement terms).  Parties do not agree on leasing of outstanding interests, however, as a result of diligence performed in the AMI, parties are acutely aware of units in which each party has established a controlling interest.  Parties independently direct their field agents to cease and desist leasing in blocks in which each respective client determines that they have "no hope" in establishing operational control.  Once it becomes apparent that each respective company has "stayed in" or "pulled out" of certain areas, they each direct their field brokers to retool their current offers.  The parties may end up consummating their AMI agreement or not, for the purposes of the discussion.  Price-fixing, collusion, or independently derived educated business decision?

(3)  Classic "boom-bust" scenario: Competitive leasing begins in earnest in a new area for a hot new play.  Product prices are strong and have every indication of staying that way for the near future.  At some point, the market overheats, and both connected and outside economic issues weigh downwardly on prices which puts the economics of the E&P investment into question in a matter of months.  Suddenly, offers that have not been already accepted are pulled back or revised dramatically in the face of the precipitious downturn.  Seemingly all parties have pulled their offers nearly overnight.  "price-fixing", collusion, or independently derived educated business decision?

 

(4) Companies move to substantially shore up their private mineral ownership positions by engaging in public-bid procedure for state and federal lands.  Many tracts are nominated for bid for leasing of mineral rights.  In the "heat" of the play, record-setting auctions become commonplace.  As the play matures and in the face of market, the record-setting pace and competitive bidding slows, then slows dramatically, drawing a shadow of the interest that they had previously.  The states, BLM, and/or political entities accept the highest bids on each tract, albeit at somewhat lower terms than in previous auctions.  Price-fixing, collusion, or independently derived educated business decision?

 

Granted, there are some issues brought up in the article which apparently were researched and evidence found ("black and white") that points to real issues that must be addressed if not refuted in any possible further legal proceeding.  That being said, IMHO and my cold reading the article, some of this points to materials sourced from, if not lead by individuals and/or parties which would stand to gain from changes in corporate governance, command and control.  Other rival groups and/or individuals?  Icahn?  Parties that would benefit from CHK short?  When it comes to money to be made or power to be gained, a third party cannot look at any potential rival interest entirely through the lens of altruism.

Permalink Reply by Skip Peel - Mineral Consultant on June 26, 2012 at 12:57

Good explanations, Dion.   IMO, it's beneficial for mineral owners to know something of the basics of lease strategy from the lessee/operator perspective.  And how leasing activity and offers can change rapidly with little warning.  Negotiating an O&G lease is business, not a morality play.  Demonizing the industry can lead some mineral owners to make poor decisions.  Those of us who have been here (on GHS) from the early days of the Haynesville Shale Play witnessed that happen to a disappointing extent.

Permalink Reply by GoshDarn on June 26, 2012 at 13:55

Dion, your "landman" perspective is duly noted, and your speculating on possible hypothetical rationalizations/scenarios for such above-board (legal) sharing of info/intel is, no doubt, legit.

Granted.

But then again, punching holes vis-a-vis such hypotheticals per the reading of a few news report to defend a reference to hard evidence in regards to the investigation of price fixing via possible high-level colluding as it affects leases can't be dismissed too easily, IMHO.  Even ECA, by its corporate action to put a lid on a response, demonstrates that the Canadians are taking the allegations very seriously, as they should.

Indeed, the laws are very specific on price fixing and colluding.  You may want to review them, if you haven't done so in a bit.

Also, if you want to go on the record and state specifics of your work where you know hard facts of landmen and/or their higher-ups (e.g., the principals of certain broker companies) discussing keeping lease offers low, i.e., discussing quid pro quo benefits to the opposing landmen/brokers/operators -- then please feel free to enlighten us, Dion.

Or, y'know, if you happen to know some landmen working for Mark O'Neal (or happen to know Mark himself, since you both live and work in Baton Rouge), please step up and disclose that info so as to offer that understanding in regards to your thinking.

Yep, we're all ears (or maybe it should be stated -- "all eyes"). 

Of course, it is sorta possible that the attorneys working at the DOJ kinda do know the law fairly well (one would assume).

 

Permalink Reply by GoshDarn on June 26, 2012 at 21:05

Well, y'know, growin' up out in the sticks in Bossier P., don't remember no one talkin' 'bout no rocks.

But, I mean, I do remember us kids knowin' enough to stay out of the woods when the city slickers would come trespassin' and actin' like big shots, shooting at everything that moved.

Yep, us dumb country hicks knew not to go out in the woods when the well-off city boys would come in, trying to show off by plinkin' a bunch of lead at the game out of season.

Yep, we knew to stay out of the woods, and not once did anybody mention nothin' 'bout pickin' up no rocks.  'Course, we also knew some of dem city slickers liked to drink before they loaded their 12 gauges.

Permalink Reply by Dion Warr, CPL on June 27, 2012 at 8:05

GD:

Why do I sense derision in the phrase " 'landman' perspective " in the context of your usage?

 

You have pointed out that "the laws are very specific on price fixing and colluding" - I would largely agree with you, provided that one can prove specific acts that were committed; it is not enough to infer cause based upon perceived effect.  Insofar as terms for mineral leases, I would also point out to you that there is a statute in the LA Mineral Code that specifically limits a lessor's recourse to pursue claims against "lesion(s) beyond moiety" such that if one accepts an offer of x, and everyone around them if is subsequently offered 2x, 5x, 10x, 100x, or even no offer, no lessor has a case against any lessee as a result of any of those events.  The effect is that mineral rights are worth whatever two parties agree that they are worth, irrespective of any other offer made in competitively or in proximity thereof.  Most states and jurisdictions also allow for public entities to not only allow for the letting of mineral rights for public bid, but to also provide for certain reserves to be met by any bid to be accepted (ie, minimum bonus, rents, and royalty).  If there is no reserve to be met, the winning bid is solely determined on the best offer submitted, whether someone else judges that to be sufficient or not.

 

As far as "specifics": part of the reason that I have been as free to speak about certain events that have been covered on this forum is because I have no vested interest or conflict in espousing my views.  I do not work for CHK, therefore I have no conflict in commenting on them.  I have not actively engaged in leasing on behalf of any industry client for Haynesville rights, thus I have no conflict in commenting publicly about such activities.  If faced with the "need" to comment upon a situation in which I may have specific knowledge, I attempt to confine my commentary to facts made available as a matter of public record.  When approached by parties that have knowledge of any particular project and my affiliation therewith or on a "professional basis", I take that communication off of the public forum and into private correspondence, per the rules of this forum.  That way, I can comment as a knowledgeable, impartial individual, and not as a "shill" or a "plant" for any particular party.

 

Where I work, and the way that I work: We generally recommend to our clients to avoid the "lowball and then raise" tactics in leasing.  It engenders neither trust nor respect in areas in which many times a significant number of the owners know each other personally, or at least seek advice from the same people.  Coming in with a "fair, across-the-board" offer that treats owners with similar acreage and similar situations in similar locations fairly makes for better success in putting a lease block together.  Of course, working as a "full-service" landman, our lease offers, if successful, typically serves as an opening act to what will likely be an ongoing relationship with owners - thus, if owners have a bad taste in their mouths from the beginning, you can count on their willingness to cooperate with you in the future to be limited, as best.  Weighed against this "fair across the board" style is the brokerage cost of putting the area together - the less it costs to put the area together, the more viable the prospect can be.  There is by and large a balance to this type of thing.  It is important to realize, however, that when a "gold-rush" mentality sets in, the balance can get tossed aside in the throes of competition.  That is exactly the point where the base elements of greed, envy, and gluttonous behavior can overtake any sense of reason or regularity as to anyone's conduct in a situation.  In such a scenario, there can be big winners and big losers, but guaranteed, there is a whole lot of hurt feelings and mistrust.

 

You only ask of me to discuss specifics which underline your point.  How about some facts:

I know Mark O'Neal - he belongs to our local landman association (BRAPL), he is a member of AAPL.  As there are 80 members in our local organization, and he has been a lead broker for 30 years, it would be hard for someone in our area not to know of him.  And for as long as I have known him (even when working for competing clients), I have not once seen him dress up in a black suit and top hat, or tweedle his moustache, or bind up young damsels and deposit them on train tracks.

 

Most landmen (Mark O'Neal, included) and/or their brokerages work on a day-rate basis, as do I.  On rare occasion, I receive compensation other than by dayrate - it usually involves relatively small matters where there is no significant budget for my services, and room to compensate in the form of a "piece" of a well or production if such a deal is successful.  This is has been the norm in our business for over 30 years.  Most landmen are ill-equipped to give or "donate" weeks and months of their time and/or compensate others (subbrokers, etc.) out of their own pockets for the promise of an override - non-productive ORI does not feed you.  Also, most landmen are given little flexibility in their offers to owners: they offer what they are authorized to offer, and have to go back to their client for virtually any material change to a lease proposal.  When terms go up, they are told to raise their offers; when they are told to rescind their current offers, they are obliged to do so.  That's simple fact.  The quid pro quo that you seek is by and large "a day's work for a day's pay", nothing more.

 

It is amusing that when provoked, you tend to go back to good-ole boy country thinking and common sense.  I would caution you that one tactic used by companies back to the "there will be blood" days was to enlist the assistance of some local "man about town" to sign everyone up for a price good for the company in exchange for some "piece of the pie", unbeknownst to his "good friends and neighbors", so you don't always have to go by "city" license plates to find the scalawag.  One may need to look no further than certain "advisors" championing mineral owner's causes that ended up with substantial compensation and overrides in looking out for the "common man's best interest" to find their modern day equivalents.

 

Also:  If you know anything about the DOJ, you should know that their personnel don't have to necessarily feel "right" to pursue their ends to an intended effect.  ECA is just as likely trying not to say something that would draw further scrutiny as much as they may be covering up for some genuine wrongdoing, and are probably "clamming up" at the advice of their legal counsel.  Knowing people who have gone to battle against the DOJ (and won, if not just succeeded in making them go away), they (the DOJ) may be the ultimate purveyors of "actin' like big shots, shooting at everything that moved" because they have the police power of the state at their beck and call.  One doesn't have to be right to play the role of "the heavy".  There is a whole industry in inciting such allegations just for the sake of living on the spoils and settlements made by trying to get such parties to "go away".

 

In parting, I also find it funny that some of the same people that laud AKM's and Chesapeake's current troubles and find it difficult to trust him any further than they can throw him will also cite him as a prophet from the mountaintop when it came time to "blowing the lid off and telling the truth about what one's minerals are truly worth".  Is it possible that if you think you should be advised to wearing tall boots when standing around a man when he speaks, that maybe should you be wearing them for EVERY time that he speaks?  Is it possible that after AKM's land-leasing machine had acquired leasehold in much of the area at a low relative price that he can afford to testify as to "the true worth" of his investment so as to intimidate any adverse competitors and eliminate any "pain in the arse" latecomers looking to scoop up remaining choice areas, with only a mild correction in his "per acre" acquisition cost?

 

Or are you just looking for input that just happens to support or substantiate your opinion?  Being a child that grew up in a land of cane field and woods, became an adult and young working man in the city and in industry, married a girl from Bossier, and went into the land profession, which takes you to live and work and deal with people in town and country - IMHO, truth is where you find it, and not necessarily where you want to look for it.  I give my opinion as my perspective, truth as I see it, not as a "landman" perspective, and just because one goes "country curmudgeon" doesn't necessarily mean that one might be doing anything other than trying to keep others from noticing the fresh mash of cowpie stuck to the bottom of their boot.  I come here both to share and gain insight and perspective from its many members; try to respect mine.

Permalink Reply by DrWAVeSport Cd1 on June 27, 2012 at 8:40

DW,

Respectfully speaking...

These "black eyes" are still on the O&G Industry...

Landowners, royalty owners didn't start any of the "land grabs."

Landowners, royalty owners didn't make the "rules and regulations."

Landowners, royalty owners didn't hunt down every Tom, Dick and Harry in every Shale section of U.S. for their Shale "signatures."

Landowners, royalty owners aren't the ones being sued...

The SEC, IRS, and DOJ aren't gathering e-mail correspondence and documents and depositions from Landowners and royalty owners...

And, landowners, royalty owners aren't hiring high-priced attorneys because they need them...

So where does the onus lie?

Respectfully speaking...

 

DrWAVeSport Cd1 6/27/2012

 

 

 

  

Permalink Reply by DrWAVeSport Cd1 on June 27, 2012 at 8:45

and,

Landowner, royalty owners didn't write "drafts" and then refuse to honor them... and the leases that were attached...

Permalink Reply by Dion Warr, CPL on June 27, 2012 at 10:52

Doc:

Respectfully speaking:

How many mineral interest owners and working interest owners, once they realized that they were part of the "land grabs", were more than happy to wait as long as possible (in some cases, too long) to play along and wait for the largest offer possible, even once it became clear that the value of some of the offers were no longer justified (ie, natural gas prices had retreated 50, 60, 75%), and only soured after the offers were revised or pulled entirely?

How many mineral and royalty owners have sought legal advice to break existing contracts under which they had received bonuses, rentals, and royalties, sometimes after receiving proceeds for years if not decades, once they realized that by being under contract that they would not be eligible to receive thousands of dollars per acre in bonuses and higher royalties compared to their unleased neighbors, who had received virtually nothing during the same timeframe, and continue to justify it under the terms of being "fair", or for that matter, seek to undermine regulations and orders that have been in place for years once they realized that instead of having the right to receive the proceeds of multiple wells at once anywhere in a large area, now seek to break said contracts after they realize that more than likely they will have to share with more people for one well, with their contract being held by same?

You are correct, landowners and royalty owners did not seek and hunt down every available owner for their signature. Landmen did that. It's their job to sign up everyone they can, near and far. It is not landmen's job to cure every piece of clouded title and straighten out generations of neglect on the part of royalty owners and their ancestors in title so that companies know who to pay and how much, but in many cases they make their best efforts in doing so. They do get blamed however, when they have not checked with every last Tom, Dick and Harry that might know anything about a family member that disappears from the record in 1934, have not bothered to put their hands on every baptismal record and family bible between here and California looking for "lost heirs" and sued when they happen to obtain a sworn affidavit from the wrong family member who leaves certain heirs out of their statement.

Respectfully, landowners and royalty owners are generally not sued because there is not enough money to sue over, and individuals generally do not have the deepest pockets, which generally constitute the parties that are sued most often. However, landowners and royalty owners have been sued and will be sued by parties for electing to spend their royalty dollars to the extent of neglecting to pay their bills and notes, some of which may be backed by the very property and mineral rights from which they have received royalties and revenues in the first place. Landownes and royalty owners also get sued for return of bonus and royalty monies to which they are not entitled provided that Lessees have the right to demand the return of same, particularly in the cases of owners selling or leasing property that they knowingly had no right to lease or sell.

In general, the purview of the SEC and DOJ does not extend to the individuals acting upon their own individual interest. However, try to evade paying proper taxes upon your revenue or royalty proceeds, and the IRS will slap a lien on all real property and assets that you may own, and move to garnish any income that they can collect against, to the fullest extent of the law.

It is true, oil and gas companies in particular, and corporations in general, do hire high-priced attorneys because they need to. Whenever there is an aggregation of wealth, many parties great and small will justly or unjustly seek to extract or recover its perceived due based upon the companies' mere existence or it's conduct, in good faith or in bad. The attorneys defend them from all as well as seek to make and perfect its own claims against others. And when landowners and royalty owners aggregate enough wealth and assets to make themselves a ripe target for lawsuits and claims and counterclaims, they will hire attorneys to look after their interests, too.

When we try to deal with each other in a sense of anything other than fair play, good faith and fair dealing, that is where the seeds of mistrust are first sown. Once we become motivated or driven in our dealings with others by sense of envy and avarice, we (either as individuals, employees or agents of corporations, mineral owners, lessors or lessees) bear our share of that onus.

P.S. As to drafts not honored: if a lessor had marketable title, timely executed and submitted their draft for payment, IMHO, such a draft should be honored. This is the primary reason that I would not deliver a draft until such time as I am holding an executed lease, if I can at all help it. If a lessor only moved to consummate their agreement and submit their draft once they became aware that their prior offer was to be withdrawn, caveat emptor.

Permalink Reply by GoshDarn on June 27, 2012 at 20:15

Dion:

Overall, per all of these years on GHS, I have -- more or less -- found your posts and comments to be quite professional, fairly straightforward, a good bit direct, and seemingly with strong intent to share your truth as best you know it from your POV.

Note:  From your POV.

That's key.

Also, as you remember, I've even complimented you when I've read your going-the-extra-effort attempts so as to explain complex issues with complex insight.  (Ahem.)

Plus, years back, I think I might have even posted something to the effect of your laudable integrity per your heated debates with KB, yet you were always exceptionally civil and never degrading, nor were you ever known to take a cheap shot or use fake outs to juice your argument (more or less).  In other words, you have always been civil and professional.

This is my general recollection.  (Yet, I could be possibly wrong about a few minor inconsequential details since a number of years have transpired.)

Also, as you well know, anyone can find fault with any wording and look for the negative and also assume a negative (even if certain wording wasn't written as such with whatever negative intent).

To repeat, as you know, the Net is notorious for misreadings and false red hearings of flawed assumptions and erroneous labels, etc., etc.

Oh, my quid pro quo was meant as a legal reference to the illegal compensation of a benefit between two or more colluders who have/had intent on price fixing, not as you referenced (either facetiously or as possibly not having the required/specific legal training; or maybe I'm wrong about what I think I remember about such laws).

Also, just because you assume you think you know what someone posts per whatever wording, doesn't mean you know the true reason or the true intent.  There are many levels upon level of history on GHS, and many posters have years of backstory and possible issues (with various other posters) which some infrequent and/or new readers quite possibly are totally clueless as to.

So, like they say:  "Be careful what you assume and/or what you think you know or what you want to label whomever."  Life is quite complicated these days.

Oh, most landowners (such as myself) have no problem whatsoever with straightforward and honest landmen.  Your attempt to box me in and categorize my words over a precise legal situation per a huge national scandal in which you attempted to seemingly try to offer excuses for certain bad actors has really nothing to do with most landmen at all (as you well know).

My reference was simply to your perspective (again, your POV) and why you were taking the tack you were taking.  It certainly wasn't personal, nor was it meant to cast all landmen in a negative light.

If anyone reads my GHS page (ahem) -- they see quite clearly my favorable thoughts about the reputable/honorable landmen who have truly helped me personally, helped my family, and helped my friends with their kindheartedness and honest intent.  Nevertheless, I've also had dealings with lying crooked landmen, too.

So, just as in many areas of life -- there is "the good, the bad, and the ugly" in most professions (?).

Plus, I call "friend" one of the best landmen in La., IMHO.  And he rightly earned that friendship, too.

So, no.  Don't take the discussion about a specific illegal scandal and attempt to read more into than that's there.  You're better than that, DW.

Lastly, the real issue here is the emotional investment that landowners have in desiring a fair and honest deal.  That's basically all we ask.  No more; no less.  The feds call it a:  "A fair and reasonable offer."

That's all we ask.

Now, from the other side of the fence (from your POV), it's a job.  Certain folks in the O&G are paid to do a job.  And we get it.  No problem.

But the other side of the fence (your POV) has to know that viewing a lease negotiation/transition as just another biz deal in a long series of biz deals (your POV) . . . which is done year in and year out by an O&G insider, who can possibly keep the personal emotion at arms length and try to stay kinda objective in the whirlwind of money offers --

Yet for a relatively small landowner/farmer who doesn't have to get involved with such monetized intrigued that often (if rarely ever); and when the lease/transaction involves the blood, sweat, and tears of possibly decades of work (or even much longer with generations of families who might have seen exceptional hardship over the years) --

Then if there is the appearance of lying and cheating and lawbreaking, on the emotional level, it might seem to some (i.e., the honest landowner and that POV) . . . it might seem somewhat like a burglar breaking into a family's home (i.e., breaking into their land) to commit a crime and harm the family.

Get it?  It's not just business.  It's way beyond going to the store to buy groceries or going to the farmer's market to sell produce.

Of course, for the O&G pro (from your POV), it's just business, and there might not be anywhere near the emotional response the landowner is having (or even possibly that certain landmen can even comprehend).

So, thinking about in that way, Dion -- maybe we can only hope you see our side of it.  Put yourself in the shoes of the hardworking farmers who were repeatedly lied to and taken advantage of on land that means a good bit to them per all of their toil over long periods of time (by CHK).

It's not just about business.  And my family went through that cheat, too.  I know the facts.  We know probably more than you do since you clearly have posted you have no conflict of interest per not having worked for CHK.

Yet we know what happened, DW.  We lived it.  Get it?

So, it's way beyond a simple business transaction, as the good Doc on this site probably will attest to.

Indeed, sometimes things come along in life, and the circumstances spin off into some serious issues with falsehoods, lies, and interesting sums of money, i.e., truly spinning into the principle of disrespecting folks.

Bad mojo.

Bad, bad mojo.

People need to understand when you cross that fence line and come onto private property (per lease terms), there runs deep emotion by the landowner, just as there is deep emotion by the homeowner when someone attempts to wrongly invade a person's home.

Plus, as you also might know, when it comes to certain sums of money, stuff can get strange quite fast, too.

Families have been pulled apart.  People have committed crimes. 

So, it ain't pretty.

Gotta respect folks and simply be fair and reasonable.

Yep, there it is.

Take care, Dion.  Keep sharing.  Your insight is always worth the effort to read (usually). 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2012 at 2:45

IMO, the concept of "fair" is too subjective to be of use in negotiating any business transaction including leasing minerals.  Lacking a written definition agreed to by both parties, the concept is worthless.  Those who do not understand how to negotiate a business deal should seek professional assistance.  Those with an inflated opinion of their abilities who choose to go it on their own should have the decency to remain silent when they make poor decisions and get a less than stellar outcome.  Or at least refrain from giving poor advise to others out of spite.  Of course when someone blows their own horn incessantly it makes it quite difficult to admit to shortcomings and much easier to claim foul concerning the actions of others.

Permalink Reply by Dion Warr, CPL on June 28, 2012 at 3:58

GD:

You are all too kind in your recollections. I do try to be thoughtful and considerate and respectful of others in my posts and my replies when I feel like I'm being respected. When I feel like I'm being talked down to ("Indeed, the laws are very specific on price fixing and colluding... You may want to review them, if you haven't done so in a bit."), or have my POV trivialized as "landman perspective" (a la "you're not a landowner, you're just a landman, y'all just don't understand"), or get uncomfortably called to the carpet to explain the actions of a fellow landman, or otherwise be called to be "on the record and name names", I can and have gotten bristly.

My personal feelings are that the series of Reuters stories are not Woodward and Bernstein caliber. AKM and CHK have been who they have been for years. The fact that a key man in a publicly traded company is so intertwined in its survival and success is not news, and neither are the lists of ego boosters and high-profile toys and collections. The fact that he is so leveraged and in to the same people as CHK is what makes it uncomfortable from a corporate perspective. Then again, when you're an owner and investor and you want to cash flow your oil and gas assets in a hard environment, there are only so many players that will finance such a transaction. Swell the portfolio into the billions, and the list of possible financiers gets real short. Does it make sense to do business with people that are already all too aware of your interests and presence, yes, in that there's a lot less due diligence left to do. To the extent that you're on the same set of hooks with the same people as your company is... Not so much, and not in the current environment.

But these stories and their tone generally come on when the world turns sour. Nobody does shareholder investigations and exposés when the bulls are running, and perceived values are positive and increasing. In good times, the largesse of the CEO reflect the heady times that everyone wants and sees ahead. When stocks start taking a beating, that largesse becomes a liability, and the same CEO becomes Exhibit No. 1. All the alleged wrongdoing comes out at that time.

The point of my hypotheticals were to illustrate plausible explanations as to why one is seeing what one sees. Competitive leasing situations in a relatively new play and time can begin to play out like a high-stakes hold 'em game with very seasoned players. The most savvy players seem to almost preternaturally determine the value of their hand and everyone else's before the flop even occurs. The fact that they can push so much money around, raise or fold before a card is even turned can seem baffling to the uninitiated. But the time comes when each player's mettle must be tested, and a time when it is not enough to front one's hand and just continue to push money into the pot, and the hands must stand as they are dealt. In macrocosm, both in this play and with this company and its CEO, that's what is playing out.

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