America’s conversation place for mineral & royalty owners
How do you know your landman is doing his best for you?
A couple of months ago we signed a lease with Blanca Peak Energy. The lease was to be for 3 years with a 3 year option. We have had several leases in the past which were done properly and so we had come to trust what we were told. With that said, the lease contained not one, but all four of our properties. Still not being suspicious because we are new to this, we didn't notice he had (Andy Marlette, Blanca Peak) changed the draft to 120 days instead of 90 as agreed on.
Now, that got my attention, after the fact and too late to change it. In the meantime I told my youngest brother, who is executor, that I didn't trust Andy. He told me he trusted him a lot, and he (Andy) was helping us by researching some leases from our past.
Since then my brother gave him another piece of property to lease. He agreed to 60 day draft, 3 + 3. I told my brother at the time I was not dealing with Blanca Peak again. That was 30 days ago yesterday, and no lease yet. I asked my brother about it and he called Andy, who said (again, again, again) that they are covered up and he'll get it out as soon as possible. Well, with a 60 day draft, 30 days since he said he would fill out the lease and however many days we will wait from today before we get the lease, effectively we could have our minerals tied up for 120 days with no money on the table. All this is just one story. I'm sure others have had worse things happen. I can only pray that at the end of the 120 day draft we are paid. From what I've been told often times landmen simply back down after 120 days and our minerals will have been tied up, cost free to Blanca for 6 months. We're learning. Hope the education doesn't take ALL my retirement from me.
I'd welcome anyone else's comments, lease horror stories, etc. These discussions are wonderful for letting beginners know what not to do. I believe I will have a manager from here on out.
Wes Luke
Replies to This Discussion
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Permalink Reply by Wes Luke on -
Andrew,
You are absolutely right. If you send an OGL signed and notarized, you won't hear from them for at least 90 days no matter what they promised you. If liars go to hell, then I don't know of one person with CHK that stands a chance at Heaven. : )
Yours,
Wes Luke
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Permalink Reply by Roy Pender on
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There are some options should you not get paid you might take. Send the company which of course is leasing for chesapeake a cease and desist letter. Then file a copy of it at the court house as a public notice. As for the excuse land men should never take more than they can run title on at any given time. However with the case of this company I suspect its a premeditated scheme to keep it tied up. Then if and when chesapeake decides if they want it after all. From the looks of their stock prices today it does not look good.
Always refuse anything beyond a 30 day draft! And even add a addendum stating 30 day pay or its null & void.
Roy
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Permalink Reply by Cliff Williams on -
I like Mr. Kennedy's responses and I agree. A couple things I would add:
- These site drafts are legal and unless the landman signs the draft as an "agent" for the oil and gas company you can hold him personally liable for the payment of the draft. Since most of these landmen are contractors they do not have an LLC and they are at substantial risk personally.
- As Mr. Kennedy says the landman is not working for you nor for your benefit. In many cases the landman receives his day rate plus he can receive a portion of your bonus and royalty depending on his contract so it pays him to keep your numbers low. You may want to consider an oil and gas attorney reviewing your lease and negotiating your bonus and royalty.
- The landman is generally pretty disconnected from the oil and gas company especially if they are only a contractor. They rarely go to the office and usually only speak by phone to their in-house guy. Information is spotty and not likely to be more than speculation.
Having someone on your side is a great benefit.
Sincerely,
Cliff Williams
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Permalink Reply by Buddy Cotten on
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Of course, I agree with Mr. Williams. If a lawyer represents himself, he has a fool for a client. Same can be said of many landowners.
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Permalink Reply by F. Andrew grooms on
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After having been a Landman in all capacities for over 30 years now (ie. first as a courthouse record checker, then as a broker, then 17 years as an Operating Company Landman and now simply managing what we own) I have definite opinions on how the BONUS payment matter needs to be handled. The field brokers working in the courthouses and motel rooms etc. are guys out there trying to make a living. We have a lot of youngins out there now who simply do not have the experience that some of the older pros do. I get calls every week as I manage substantial mineral interests in 8 producing states. Some of the younger Landmen have not had the time they need to learn to live by strict ethics due to the booming pace of the industry at this time.
MOST LEASE BROKERAGE COMPANIES ARE WORKING UNDER THE DIRECT ORDERS OF THE COMPANY CLIENTS THEY HAVE. NONETHELESS, THE BROKERS NEED TO DEMAND THAT THEIR CLIENTS BEHAVE ABOVE BOARD AND ADHERE TO LONG ESTABLISHED PRINCIPALS THAT MOST LANDMEN HAVE LIVED BY FOR YEARS AND YEARS.
IT IS REALLY IMPORTANT TO KNOW THAT OUR DOMESTIC OIL AND GAS INDUSTRY CANNOT SURVIVE WITHOUT THE SERVICES OF THESE FIELD BROKERS, THEY ARE IMPORTANT PLAYERS IN THE FABRIC OF THE DOMESTIC E&P INDUSTRY. THE BY WORD IS THIS.....THE AVERAGE MINERAL OWNER NEEDS TO TRULY LEARN AND UNDERSTAND HIS OR HER ASSET. KNOWLEDGE IS POWER.....KNOWLEDGE IS KEY TO SUCCESS IN ANY NEGOTIATION.
My process is that when I negotiate a lease with a broker who calls, that once the terms are agreed upon, we will execute the lease form as negotiated, I will send the broker a COPY ONLY of the executed lease and will send them our W-9 form, I tell them in writing, I will give them 15 days maximum to send a CHECK for the amount due......at that time, I will then (and only then) mail them or Fed Ex them the original fully executed lease. I explain in WRITING, that if we are not paid in the said 15 day time frame, THAT THE TRADE IS DEAD AND NULL AND VOID. I make exceptions to this rule if I have extensive experience with the buying broker or the company he or she is buying for. Sometimes I will give 20 days....but no more....PERIOD. I will not sign a brokers draft no matter who it is from.....and when they tell me that it is "subject to approval of title", I tell them........."go do the title exam first, then call me back and if the lease is still available, then we will talk but don't call me until you have your homework done first".
The subject of "Cold Drafting" is deplorable and un acceptable.....no Landman who gives a damn about his or her reputation would ever work for anyone who would even condone such a thing. THE CURRENT PROBLEM WITH THIS ISSUE HAS BEEN MASSIVELY PROPAGATED BY AN OKLAHOMA CITY OIL COMPANY WE ALL KNOW ABOUT AND I HOPE THEY GET THEIR ASSES SUED BECAUSE OF THE MUD THEY HAVE CAUSED TO BE THROWN ON ALL US WHO CONDUCT OUR BUSINESS ABOVE BOARD AT ALL TIMES. I personally plan on writing the President of the American Association of Professional Landmen about taking a stance on this matter immediately.
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Permalink Reply by Wes Luke on
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Mr. Grooms,
I and I'm sure many others on this board appreciate your comment. If you are as honest as you say you are, you make the third honest person I've "met" in over a year. Of course, I'm talking ND rather than Texas. I never had a problem in Texas with dishonesty. The other two men I found to have integrity and are honest as the day is long are: Tim Greenheck in Minot with Copperhead Corp., and Buddy Cotten of Cotten Oil Properties. If not for the previous two I would have given up on finding any. Nothing leaves a worse taste in a person''s mouth than to find they have been blatantly lied to, taking advantage of the trust put in them. Again, thanks for your response to an ongoing problem.
Yours,
Wes Luke
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Permalink Reply by Roy Pender on
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Wes
Have you seen the latest story on Chesapeake? Seems they are having to sell off assets in order to fund themselves. I think Enron took the same actions prior to their decline.
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Permalink Reply by Wes Luke on
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Hi Roy,
I heard what I thought was a rumor to that affect. I do know they had been overextended for a while now, but Donald Trump filed bankruptcy just before he came back strong. Amazing, isn't it? I have zero sympathy for CHK. I can't even feel bad about the employees if they lose their jobs. They went along with all the conniving and lying. I suppose that's a cold way to feel, but I've had my share of CHK lies. It will come back to haunt them. I just hope none of their clients get hurt by it. Thanks for the heads up.
Yours,
Wes
Roy Pender said:Wes
Have you seen the latest story on Chesapeake? Seems they are having to sell off assets in order to fund themselves. I think Enron took the same actions prior to their decline.
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