Dealing with Fear
BY FRED A. DAVIS II, CPL, PETROLEUM LANDMAN
I have a deal for you. I want to come on your property don't worry I'll clean up my mess. I want to spend hundreds of thousands of dollars, maybe even millions, to look for Oil and Gas. I want to give you a substantial percentage of the hydrocarbons I find free of any fees. Just to prove I'm a good guy, here is some money - $XXX.XX per acre as a Bonus. Sounds like a sweet deal; so why the heck do people balk at the prospect of leasing their land?
The answer is simple. GREED and FEAR. In this edition we will explore the aspects of relieving the landowner/mineralowner of fear, which in my experience is generally tied to the land.
Getting past the fears that most often plague the prospective Lessor as smoothly as possible is the first step in taking an Oil, Gas and Mineral Lease that protects the interests of both the Lessors and Lessees. Actually, in most instances it is fairly simple to take a lease. Landowners know from talking to their neighbors across the fence what current Bonus and Royalties are, and they go with the flow. Call them on the telephone and set up a time to drop by and see them. It is just a process of them getting comfortable with you and the company you represent. That is the secret, making people comfortable enough to allow you on the property for exploration. Something I have found helpful when first contacting a prospective Lessor is making an appointment to "visit" with them over coffee. People want to do business with their friends, and there is nothing more neighborly than visiting with someone over coffee. This usually brings everyone together at the kitchen table and makes for a very comfortable situation. The prospective Lessors are invariably at ease with this arrangement. The two most important things that any Landman can bring to the table when seeing a landowner, besides cash, are to be liked and credible. In my experience, people do not lease to buttheads, nor do they lease to people they are uncomfortable with. When going to see a landowner, it is very important to look like somebody they trust. Look around the town you are in and see how most of the small business owners dress. For me this is a good starting point. In most parts of Texas it usually includes boots, clean bluejeans and a nice shirt. This is the start of taking away fear. It can be very hard getting someone to sign a legal document at their kitchen table when you look like their version of the carpetbagger who conned Granddad out of the North Forty. When sitting at the kitchen table, don't just jump into the terms of the lease. Talk to the people first. Say something nice about their home or their property. Show them that you are interested in them, and not only in what they and their land can do for you. Ask about any concerns they have about their land being used for Oil and Gas exploration. For example, if they have a parcel that they don't want disturbed, suggest an amendment to the lease that only includes their property for pooling purposes if it is not needed for a drillsite. It is always preferable to work out any differences in the beginning. Be sure to discuss all of the landowner's concerns so that appropriate amendments can be added to the body of the lease. Take notes. It is professional and beats the heck out of trying to remember all of the particulars of a lengthy discussion. Be sure to know the lease form. When the inevitable questions involving the exact obligations of both parties come up, the Landman MUST be able to point to the part of the lease that addresses their questions. No matter how well you have done your job making the "folks" feel at ease, it can be undone in a heartbeat if they feel they are dealing with a total incompetent. Being professional and competent instills confidence in everyone, you and the people you are visiting with. A well-prepared lease will have the basics for protecting the landowner in it when the first visit takes place. During the second get together, when going over the actual amendments addressing the specific concerns of the Lessor, be sure to explain each new addition thoroughly. Have the draft ready there must be an instant quid pro quo for their time and trouble. After asking if all of their questions have been answered, it is time to ask for the signature. DON'T ASK FOR A SIGNATURE. Ask them to O.K. the paperwork, or give their approval. Friends don't ask friends to sign legal documents. NEVER LIE. Leasing is a process, not an event, and you can bet the fence talk will come back to haunt you or help you before too long. A liar doesn't stand a chance in a long-term play. Fear will come to the forefront with everyone you approach. Without credibility you might as well learn to sell shoes. The greatest thing a Landman can have is a good reputation, and the trust that goes with it. There are times when only one visit to a landowner is necessary. If they are comfortable and can see that their concerns are taken into consideration, then having a lease and draft ready can mean an easy and pleasant time. It is especially nice if the party in question is the bell cow for the clan. There is usually a lead family member that the others will follow when it comes to leasing. Many times, however, it is necessary to have a meeting with their attorney, this is not a visit.