How do you know your landman is doing his best for you?

Landman Discussion
#1

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

#2

We will not accept any drafts. Heard wayyyyy too many stories like yours. These guys may need a few days to search your records. If they are ready to lease your land, you might give them a 7 day exclusive if the terms of the lease are satisfactory, then tell to come back with a lease and a check or don’t come back.

#3

Morgan,

You can do that? Being new to this I saw what everyone else was doing and did it that way. Never would have dreamed of doing it any other way. Thanks so much for the heads up. We sure don't need any more problems like the one we have now. Life is just too short. : )

#4

Your the land owner, they want what you got and you are in the driver’s seat. You can ask for the moon if you want, of course they can always say no, but if your in a good area, there will definitely be another land man looking. Getting a check vs a draft though is not asking for the moon.

#5

Morgan,

I believe you're right. Took it a while to sink in, but I understand. Here's hoping you have a great day, and thanks again. : )

Wes Luke

#6

Hello, Wes. I think the answer is, they are not your landman. They are the lease agents landman. The oil co's landman. They could be an independent landman, with 120 working day drafts ( I agree with Buddy that it amounts to a free option ). I think the only landman that is yours would be one that you hire/pay, and even then, you need to ask questions. There are landmen and lawyers out there that I am sure do less than quality work. I believe I never communicated with a competent landman before I came to this site and forums. Had the landmen I had dealt with previously done a good job, I'd have never had reason to look for this forum. I'd have been solidly leased, paid, paying my taxes and spending my royalty. I think the less able landman counts on getting a commitment from you, to tie up your minerals, then they can fix it later with you as captive audience. To restate Wes, if you didn't seek them out and pay them yourself, they are not your landman.

#7

Robert,

I hear you. I know you're right and agree on every point. Thanks for your input. I value your opinion because I know what you've been through. I appreciate you taking the time to help me.

Wes

#8

Thanks Joel,

From what I've been told you are right, although I haven't heard the term "affidavit of nonpayment". I think lawyer time is an almost last resort. Lawyers are expensive and in ND they are where the landmen are, the same town in a lot of cases. I don't know if there would be an issue of trust since I haven't yet been in a position to use one up in ND. I wonder how many people have heard of a mineral manager? If you have several mineral rights a manager might be the way to go, especially if you are not too familiar with the oil business like me.

Wes Luke

#9

ND is pretty liberal about recording documents. Whether you record an affidavit of non payment or a declaration of lease forfeiture for non payment they should record it either way. A simple phone call to the county recorders office you are going to record it in would probably provide the document title they would prefer. I think they are non judgemental as long as you leave them enough space in the margin for their barcode and enough space for the seal. Of course you need the legal mineral descriptions so they can index it properly.

#10

Thanks Robert,

It's surprising they're that easy to deal with considering how busy they must be. Isn't it a shame so many companies are doing things wrong to people who for the most part can't afford to take a loss or pay an attorney to take care of these things?

Wes

#11

I think the state will do nothing. As mineral owners, all we can do is demand certified funds, and or not let the executed lease out of your hands without cash payment. Other than that all we can do is try to get the word out on these collection instruments, drafts, orders for payment, by whatever name, that are unenforceable, glorified IOU's.

#12

Robert,

I totally agree. In Texas not once have I had a problem of any kind. So, when I started dealing with landmen in ND it was a completely different game. Kinda like protecting your credit cards from thieves. Since all previous transactions had gone so well dealing with honest folks, I never suspected what all a lease can do to your share of the profits. I was taken to the cleaners by Blanca Peak because I trusted them. Since dealing with them, I only know of one landman I trust, other than my manager. That man is Tim Greenheck with Copperhead in Minot. In fact I need to introduce my manager to Tim. They are both honest and forthright in their dealings and possibly can help each other. Have a great day, Robert.

Wes

#13

Good morning folks,

Well, as I suspected, since no lease from Blanca Peak has arrived as of yesterday, they seem to be making the time we wait equal the days of the draft. The 13th of last month was 30 days since agreeing to a 60 day draft. So, we have waited thus far for 55 days and counting. Is there a limit to the amount of time they can take to send a lease/draft after they agree on the terms? This is essentially a 115 day draft at the time of this writing. 60 days agreed on and 55 days without sending it. If there were no money involved it would be humorous. Has anyone else had this happen to them? My brother called them and they gave him their favorite song and dance about being busy and they would get it to us as soon as possible. Whew! Now they're BUSY!!!

Wes Luke

#14

Wes, I don’t think anyone is that busy. I have had the paper lease offer in my hands 16 hours after the phone call where I agree to consider the offer. I think you are losing valuable opportunities by waiting. You haven’t signed anything, because they haven’t even sent you the offer yet. ND is a race to record state, because the state wants to protect you from companies wasting your time. It’s one of the few protections the state offers. I would take advantage of it. If the lease you executed and submitted previous to this one has not been recorded and the bonus paid, I would be shopping it right now. The 3+3 deal you signed is usually a bad idea for the mineral owner, I hope it at least states that you are to be paid for the 3 years kicker, some people have signed leases where the wording does not include payment for the extra 3 years. It should not take 120 days to run title. Mineral owning is business, and we have been giving away the store. It’s time to put our foot down and tell the oil industry that there are no more freebies. Oil co’s want us to commit while they keep their options open, the option to accept the lease, the option to pay. No one is going to stick up for us, you have to do it for yourself. Just keep telling yourself, nothing free anymore. I think we need to stop being passive. Good luck, Wes

#15

Thanks Robert, a little encouragement goes a long way. Have a great day,

Wes

#16


Good morning Robert,

Well, fast approaching 90 days since Blanca Peak agreed to lease with us and no lease as of now. The 13th will mark 90 days. Of course, we both know they don't intend to send a lease or they would have done so. I put the minerals with my mineral manager last month. No guilt feelings whatsoever. I hope you're doing well with your interests.

Wes

#17

Wes, I am glad you are proactive again. It’s a shame they could not get back to you in that timeframe with a yes or no simply for courtesy’s sake. I think the true measure of Blanca Peake will be on your first lease that they have not paid you for yet. I know you have good title. Will Blanca Peake honor the draft and record the lease or did they just trap you into a free option with a 120 day draft? Time will tell.

Wes Luke said:


Good morning Robert,

Well, fast approaching 90 days since Blanca Peak agreed to lease with us and no lease as of now. The 13th will mark 90 days. Of course, we both know they don't intend to send a lease or they would have done so. I put the minerals with my mineral manager last month. No guilt feelings whatsoever. I hope you're doing well with your interests.

Wes

#18

Is it a bad idea to give a landman as much information as you can find on your mineral rights? I feel like he's not doing his job....just waiting for someone to do it for him. I've never had a lease offer where they were willing to lease everything, but they didn't have any idea how many acres were involved. Sounds a little strange to me, but I am also a novice. Our mineral rights are in Daniels County, MT. He stated they are a very small company. They don't have a website.....Would love your input.

Thank you, Holly S.

#19

Wes

This is in fact a common practice for Cheaspeake as always overspending. Sullivan Land is one other of many names for CHK. All in which tie up properties for long period of time and then walk away. I have a copy of a contract where Chesapeake agreed to purchase 25,200 acres and failed to close on 2 set dates by them. Yet they paid 7.8 million and gave a broker another 5 million. They approved title and never closed and have lost 12.8 million dollars of investor funds.

I have worked for brokers and CHK title so I know alot. Chesapeake has around 11.8 billion in debt and their market cap is 111 million. So they are at the top of the scale of spending. They are much like Enron.

They are currently being sued in Federal County of Texas, also by Harold Hamm in Oklahoma. They will lie to get what they want and dont care the hardships they cause along the way. They were also sued for underpayments of royalties due owners.

Unlike Samson Resources that have always paid owners like clockwork. As well as other legitimate companies that are not out to spew arrogance and attempt to impress others like CHK.

Most all companies will pay by check if they are in fact interested in a lease. And CHK seems to find a fictional title problem to relieve them from payment when they do NOT have the money to make payments.

Should anyone want to view the proof I have on anything feel free to contact me.

Best wishes

Neil Pender

#20

This has been an eye-opening discussion. I have my suspicions about the landman who has contacted my family. I responded with the terms I would like to see on my contract and got a response of "we offered the same to all the lessor's..."I hope you understand." Now that sounds to me like he is trying to say there is no room for negotiation. I am aware they don't work for me, but was surprised about that kind of response. I look forward to seeing how things work out for you, Wes. Good luck!