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Permalink Reply by ELLIS HUGH on October 13, 2009 at 4:07

I have never heard of a landman being paid a commission or bonus for getting leases signed.

Independent Landmen are usually paid a 'day rate' + expenses.

If anyone has information to the contrary, please e-mail me the name of the broker paying a commission. I would consider a job change.

--EH, Independent Petroleum Landman

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Permalink Reply by Two Dogs, Pirate on October 13, 2009 at 13:02

Ellis after the news broke and the prices started to jump I was sent to Converse to buy 6000 acres for shallow drilling. The first person I went to see was a good friend that happens to be one of the largest landowners in the area. As soon as I walked into his place of buisness he said "You are about 60 days too late". I told him that two checks were better than one and that all I wanted was the first 5000 feet. His phone was ringing off the hook with people wanting advice on what to do. He started telling the folks that there was a shallow player looking to take leases along with the shalers. He told me about one person that was fixing to make a deal and that I may be able to buy his shallow rights. I went to this mans house and he told me that a timber guy was working as a Landman and that he told him that he had $3000 per acre for a lease bonus but that he was going to get 10% for taking the lease. His responce was "no your not". I was wondering what the hell a timber guy was doing out buying O&G leases. I asked around about this and was told that Chesepeake had sent someone into the DeSoto courthouse that announced that "Any Landman with experience we will pay you $200 a day more if you come to work for us". I would think that some brokers lost a lot of their landmen, if this were true. Some hired timber guys that knew the area but evidently didn't know crap about buying a mineral lease. At this point in time, I was told that there were wanted dead or alive posters on me placed in Zwolle. I had just come off of a play to the West of Zwolle where we were buying all depts for about $150 per acre, just a litte more than the shalers were paying. At that point I had no clue as to what the shalers were doing other than some sort of a concept play.

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Permalink Reply by ELLIS HUGH on October 13, 2009 at 13:31

Two dogs,

I was also working in the Haynesville Shale before I knew there was such a thing. I was working in northern Red River Parish on the 'Woodardville south extension.' No death threats, but some nasty phone calls. I had no clue another play existed outside the cotten valley/hosston in that area. I was simply buying on my authority.

I know first hand of Chesapeake going into DeSoto looking for brokers. I have a friend who went to work for them, most were laid off not long after.

I also know a timber guy and a CPA that was charging a percentage of bonus money and royalty to mineral owners to help get the highest possible bonus. They did not negotiate terms, only top dollar bonus. They would tell me, just give a large bonus offer and modest royalty............. Then they wanted to charge me for bringing the lessors to the table. They also called themselves landmen.

I know more locals that deceived their 'friends' and neighbors to make a dollar than letters in my name.

E L L I S H U G H

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Permalink Reply by Two Dogs, Pirate on October 13, 2009 at 14:20

I could have become a multi millionare in the first few months after Easter of 2008. That wouldn't have helped me on my trail to meet the Great Sprit. I watched the snakes crawl from their holes into the light of day, snakes with expensive clothes and flashie talk. I saw their misdeeds recorded in the Sabine Parish Courthouse. The shalers came in on me in the spring of 2005. All I knew was they were out of Lafayette and paying more money than me, and buying it all. They would give the same for 5000 down as they would if they got it all. This was fair competition, the stuff that happened after Easter of 08 was a cat fight that I didn't want to be into.

What I heard about the timber guys was that a large company had gave them the gig of buying at $3000 and getting 10%. I can't understand someone that would try to make a deal with someone that pretty much cut his teeth on a drilling rig and was in his early 70's and still working, when he wanted to. Got 3 grand but im gonna get 3 hundred, what a way to blow a deal. I think I wouda thought things out a litta bit meaux in the long run. Lets just see how the numbers crunch 108.50 acres X $3000 = $325500.00/10= $32550.00 to the landman.

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Permalink Reply by Wildcat on October 13, 2009 at 4:19

Landmen are not paid anything extra to get leases signed. They are paid a day rate + exepenses. The only benefit they get for signing a lease is not getting fired.

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Permalink Reply by P.G. on October 13, 2009 at 4:46

So what motivates landmen to go above and beyond the call to duty to get a mineral owner the worst deal they possibly could get if there's no extra compensation?
Landman of the Month Award???

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Permalink Reply by Randy on October 13, 2009 at 5:03

P.G., Simply, we are not paid to look out for your best interests. Our client pays us, (typically very decently), to make the best deal possible for them. It's simple ethics, you don't bite the hand that feeds you. They pay us to look out for them, and that's what we do.

In addition I'd like to point out, that all over this site there are landmen that recommend seeking professional legal help. If you ask me when I'm asking you to sign something, "Do I need to talk to a lawyer?" My answer will be "It's a binding legal document, that will be with you for a long time, it involves money. If you don't understand everything you're signing, you should get help from someone who does."

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Permalink Reply by ELLIS HUGH on October 13, 2009 at 7:28

In most cases,

A landman simply makes the offer that they were provided with by his client/broker. They do not care how much money they pay or what royalty they provide. They have no decision in the matter.

As far as motivation goes, a landman job is like any other job. You do well, you get rewarded. You do poorly, you get fired.

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Permalink Reply by P.G. on October 13, 2009 at 8:16

So then a mineral owner should take pride in doing his/her best getting the landman fired, right? jj

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Permalink Reply by Spring Branch,mineral owner on October 13, 2009 at 8:20

How does a landman's never buying a lease help the mineral owner?

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Permalink Reply by Jon Williamson on October 13, 2009 at 9:54

On smaller dealers, a broker will work for an override in lieu of a day rate. That scenario might allow the broker to pocket anything which was leased for less than say 25% or pick a number. If I lease your 10 acres for 20% royalty, I then get the additional 5% royalty as an override for compensation.

Lots of ways to skin a cat, although I doubt this is being done much in the HA.

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Permalink Reply by Skip Peel - Mineral Consultant on October 13, 2009 at 10:58

Jon, unfortunately you would loose that bet. I review leases daily and it is disappointing but not uncommon to see leases containing royalties of three sixteenths and a fifth that were signed in 2009. There are quite a few. I am relatively sure that none of the lessors in question are, or were, members of GHS.

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