One of the most common questions I get from mineral owners is, "have you heard of XYZ Oil Company?" I get calls from California to New Jersey to Florida. They're people who had no idea they owned minerals because they inherited them, so it sounds too good to be true. In this modern world, too good to be true is usually just that. Surprisingly, I haven't run across a scam where someone represents themselves as an oil and gas company to mineral owners. However, if it's not happening now it will happen in the future, so some due diligence research is in order. Here's how I would go about figuring out if I'm dealing with a reputable company.
Get the Oil & Gas Leasing Company's Name
It won't be hard to find out company you're dealing with. When the landman contacts you for the first time, one of the first things he'll tell you is who he represents. (If he won't tell you who he works for, tell him to get lost.) The company's name will be all over the paperwork, too.
Sometimes the landman will be working for a lease broker. Lease brokers deal in title issues and leasing, and turn their work over to developers. It's OK. It's common. In fact, when I was a landman I only worked for lease brokers, and worked on projects for several different companies. Just make sure you know who the lease broker is working for.
Also, find out where the company is headquartered. Many of the large companies are based in Oklahoma, Texas, and other states. If the landman doesn't know this, he or she can find out for you. They'll be glad to have an excuse to call you back.
Research the Company
With name (or names) in hand, head to the internet. Of course, you're going to want to check the forums here on MRF to start with. Here's a quick search tip: in Google, type "site:www.mineralrightsforum.com XYZ". Replace XYZ with the name of the company you're researching, and don't include the quote marks. Google will bring up only hits from MRF, and you'll be able to see quickly what people are saying about that company.
If you're dealing with a large national or large local company, a quick Google search will turn up the company website with a phone number and address. If it's a smaller local company there sometimes won't be a website, but you should at least be able to find them in the phone book.
Don't call them quite yet. The next step is to go to the West Virginia Secretary of State's Business Organization Search page. If a company is organized or licensed in West Virginia, the information will be there. You can find out where they're based and how long they've been around.
For those companies based in other states, look up the Secretary of State's web site and call the main office. You'll probably get bounced around a bit, but the time will be well spent. Ask how long that particular company has been in business.
Research the Landman
Now that you know the company is real, you should check up on the landman. One phone call to the company will tell you whether he or she works for them.
At this point you can stop, knowing that you're dealing with a real company and one of their actual representatives. But if you want to push it a little farther you can try to figure out what their reputations are like.
Additional Oil & Gas Leasing Research
Check out the landman. While there are a couple forums out there that try to rate landmen, there are so few landmen listed (as of April 2013) that they're just not helpful. A Google search is still worth a try just in case your landman is listed and has a really bad reputation. And if you get involved on the forums I'll help you find below, you might find people who have had dealings with your landman.
Check out the company. Unfortunately, there isn't a centralized database for complaints and compliments. You're going to have to rely on what can sometimes be pretty unreliable sources of information - internet forums.
Do a Google search for "West Virginia oil and gas" to get you started. I've also found that a Google search of the company name and the county where your mineral property is located ("Antero Harrison") will usually bring up a local forum or two where you can contact West Virginians who have real world experience with the company. That's how I found mineralrightsforum.com.
If that doesn't give you any good results, try replacing the company name with that of another company (Chesapeake, Range Resources, EQT, Dominion, etc.) and you should get some results that will lead you to a forum. Once there, you'll have to get involved on the forum by asking questions about your particular company. It may take a while to get an answer. Mineral owners seem to be pretty friendly and helpful with each other, but they don't always seem to be extremely involved in the internet.
A word of warning about forums. Anybody can post anything, so take everything you read on a forum with a grain or ten of salt. What you're looking for is not a perfect reputation, but a general sense that they're in the business and actively working to do their job.
You can also get in touch with the Office of Oil and Gas in Charleston. They only have complaints about environmental issues, but it's something. A long line of complaints from a diverse set of people is a big red flag.
You would think you could go check with the Better Business Bureau, but lots of real oil and gas companies are not accredited with them, e.g. Chesapeake Appalachia, Antero Resources, and Mountain V. Those are some pretty well-known and established companies.
Best of luck in the oil patch!
Kyle Nuttall is a former landman and practicing lawyer in the State of West Virginia. You can view his web site at www.nuttalllegal.com.