Is this a Scam? It sounds like the landman is working from home

We (my family) were recently approached by an individual who claimed to be representing EOG. She provided documents showing we inherited the mineral rights to some land in Fowlerton, TX. and offered us a lease; 3yr/$1000 an acre plus 25% royalties.

We noticed her e-mail was a g-mail account and the phone number, which does work, is a personal cell. It's almost as if she's working from home.

Does this sound kosher? Could she actually be an independent agent working on EOG's behalf?

There was no mention of any processing fees or other red flag items like that, but I guess I would expect an office phone number and a corporate e-mail account.

Seann,

Be careful and do not give anyone your signed lease without payment in hand.

With that said, everything you described sounds perfectly normal (except the telephone # not working). Virtually all oil companies use independent landmen (male & female), several of them do "work out of their home" since their real work is typically done in county courthouses and via the phone & mail. So I would not be alarmed, but be cautious and re-read the first sentence of my reply. Good luck.

Most likely, the agent working for EOG is an independent contractor. EOG has an office in Cotulla. They're right down the street from our office actually. Most likely, her number is a cell phone, since we all use the same number and move around quite a bit. Another thing, gmail has one of the best email clients available for those that use their system online (webmail).

Give her a shout and schedule an appointment.

Thank you both for your responses. I feel better now. So far this is a total “too good to be true” experience and I’m trying to be as careful as possible. I’ll definitely heed the ‘no lease without payment’ warning.

If I had any doubts about the land agent I would call EOG’s land department in Houston and verify if the land agent is authorized by EOG to negotiate mineral leases. Also on the Mineral Lease Form itself it should specify the name of the Operator, in this case EOG, as the entity primarily responsible for drilling operations. I would not be concerned about a land agent utilizing a cell phone or a non Company e-mail address. This is more often the rule instead of the exception in my past experiences.

I am an independent landman and for 15 yrs, I occasionally make calls and negotiate leases from my home office or from a motel on the road on my cell phone and using my personal email on behalf or as an agent of my client (EOG in this case). Independent contracting Landmen or women are contracting for a larger production company and are not provided company or client email accounts and cell phones, those are only for company or in house landmen which most companies do not use to work on large leasing projects 85% of all landmen are independent contractors. The is a very normal way to buy leases. If you want to meet someone in person, simply tell her that. I drive all over the country meeting in folks homes.

Good luck

Seann:

You have been provided some good information regarding your situation. The main thing is to cover all bases and make sure everything is on the up and up. From what you've said, this person is probably legit but be careful about how the bonus is being is paid and what documents you are providing without money in hand.

Seann, I am an independent Landman myself. I can tell you that the person that contacted you is most likely an independent, working for a broker who's client is EOG. The saying goes "If it sounds too good to be true, it probably is" I can tell you pretty much for a fact that NO oil company is going to pay you 25% royalty. That is a total farce. Most often, it is a 1/8 royalty. That is pretty much standard. I don't know why I'm even replying, seeing that this post was in June, and it is now January. I'm sure you have already taken care of business. I am mainly posting for those out there who read these posts, and hope this may help.

Mr lane, 1/8th royalty, really ? I don't know anyone who would lease for that. I think they'd rather leave it in the ground, I know I would. Texas, where the OP's minerals are, is not Oklahoma. The lowest offer I ever received in ND was 1/6 royalty and the only offer I ever received in Tx started at 20%. I know it's easy to think that the situation in your area is common, it has bit me in the rear before, as I think it just did you. You might check out a few groups in other states just to broaden your knowledge. Welcome to the forum.

David Lane said:

Seann, I am an independent Landman myself. I can tell you that the person that contacted you is most likely an independent, working for a broker who's client is EOG. The saying goes "If it sounds too good to be true, it probably is" I can tell you pretty much for a fact that NO oil company is going to pay you 25% royalty. That is a total farce. Most often, it is a 1/8 royalty. That is pretty much standard. I don't know why I'm even replying, seeing that this post was in June, and it is now January. I'm sure you have already taken care of business. I am mainly posting for those out there who read these posts, and hope this may help.

We have several leases in Reeves and Ward County in Texas. All of our leases are 23.5 per cent (no cost) or higher....


David Lane said:

Seann, I am an independent Landman myself. I can tell you that the person that contacted you is most likely an independent, working for a broker who's client is EOG. The saying goes "If it sounds too good to be true, it probably is" I can tell you pretty much for a fact that NO oil company is going to pay you 25% royalty. That is a total farce. Most often, it is a 1/8 royalty. That is pretty much standard. I don't know why I'm even replying, seeing that this post was in June, and it is now January. I'm sure you have already taken care of business. I am mainly posting for those out there who read these posts, and hope this may help.

Jerry, I may have been wrong, but that is over 1/4% royalty. That's not typical at all. I guess the next question would be; Are there any new wells on those leases? I would be willing to say probably not. No oil company wants to give any mineral owner 25% of the oil. The cost involved in drilling, paying for the work that was done, including the Landmen, the cost of the leases purchased, lawyers, the cost of production, and many other factors really dictate how much an oil company is willing to pay, not to mention the profits needed for further exploration. If they offered that much, it was most likely to get a leasehold in the area where your minerals are located and have no expectation of drilling there. That's just to keep the competition out, and to keep from breaking a block (an large acreage of leases owned by one company) It is possible, but not likely.

Sorry, I don't know what I was thinking. 1/8 is what I have seen. That is still not 25%.

My parents last signed a 1/8 royalty lease in the mid-seventies, with an increase to 1/6 after so many months of production. I don't know of anyone these days in Texas who would even consider a 1/8 royalty. I have had two offers in the past 18 months and they were 23 and 24% (initial offer).

David Lane said:

Sorry, I don't know what I was thinking. 1/8 is what I have seen. That is still not 25%.

6GT,

Now you know the problem with field landmen. They are the most under-represented segment of the oil and gas industry when it comes to training, personal and professional development.

I had a landman come to me recently and wanted to take my aptitude test. She made a zero. She had 18 months of experience and her trainer had 2 years experience. The poor landman was told bad information by her "trainer" and took it as gospel. Now she has 18 months of confused experience. Maybe one real month of experience. Shame.

So many times, I skip the field landman altogether and go straight to the decision maker (the company landman).


6th Generation Texan said:

My parents last signed a 1/8 royalty lease in the mid-seventies, with an increase to 1/6 after so many months of production. I don't know of anyone these days in Texas who would even consider a 1/8 royalty. I have had two offers in the past 18 months and they were 23 and 24% (initial offer).

David Lane said:

Sorry, I don't know what I was thinking. 1/8 is what I have seen. That is still not 25%.

If you are working in most oil producing states in the mid continent or gulf coast, look at the addendum for the royalty change.


David Lane said:

Sorry, I don't know what I was thinking. 1/8 is what I have seen. That is still not 25%.

i have been an independent contractor for various companies for 15 yrs, I have a gmail account and I use my own cell phone. That is how it works. Only inhouse or company landmen have corp email and cell phone accounts.

The agent in question turned out to be legit. My lawyer, and family friend, browsed everything (mineral rights lawyer from TX) and made a few changes mainly regarding personal protection and getting rid of costs incurred in making the oil/gas sellable.

The lease reads "....1/4 part of the net amount received by lessee for the sale of oil at the time it is run from the storage tanks or into the pipelines, so-on and so-forth."

I don't see anywhere in the lease where that amount is halved by an addendum, and no mention was made by my friend. Maybe they are in fact simply securing the land with no plans on drilling, but it was stated in several correspondences that plans were in place to erect drills, so I'm keeping my fingers crossed on this one.

I will say this, if I ever see a dime out of this beyond the bonus I'll be mildly surprised.

For what it is worth, I received an offer in Kingfisher county OK of 3/16 royalty (=0.1875 vs your 1/4 =0.25) and will wait til I get better than $400/Acre

You can NOT just take the word of an in-house landman. They do not all have degrees, and even if they do have a degree, it does not mean they know more than the field landman, or independent landman. The inhouse landmen sometimes have no field experience, and have no idea why things are done in the field the way they are. It's like comparing an M.D. to a D.O. They are both doctors, but were trained differently. It does not make either one of them a bad doctor. A landman with a PLM has more knowledge of the background, but you put an inhouse landman out in the field to run title, and he doesn't even know where to begin. A field landman can figure out who owns the minerals, but can't give you any background information. They are both vital, and necessary to getting leases. As a field landman, I am constantly trying to increase my knowledge and background. I don't believe this is true for all field landmen. As for going directly to the Decision Maker, the decision maker will only be able to tell you why you are or aren't going to receive 1/4, and not how he knows you have the minerals in the first place. He's going to tell you, "Well, that's what our field guys are for, and we depend on them."