I have been participating in this forum for a while now and I wanted to offer some thoughts on negotiations. Some background: I started as a landman in 1981, developed a mineral consulting practice as well as a revenue enhancement consulting practice, started developing my mineral portfolio in 1982, and have been a party to multiple property purchases/sales. I have solely focused on managing my mineral portfolio for the last 28 years.
I have witnessed a consistent theme that people seem to think that oil companies, their related employees and contractors are unhelpful and borderline untrustworthy. My experience with the vast majority is quite the opposite. Try to appreciate their workload when communicating with them. You will get a much better response.
When in negotiations, their job is to do their best for their employer. When they do not tell you everything in a negotiation, that does not make them a liar. Your job is to do the research to best represent your interest. If they make you an offer that you believe is unfair, that does not mean they are trying to steal the property or OGL. In their mind they may have made a fair offer. Learn to negotiate and be patient.
Are their disreputable people in this business, of course; however, name me one where large dollars are involved where that is not the case. Consider yourself a professional mineral owner and conduct yourself as a professional. Do your research if you want to attain a fair value.
I have enjoyed this forum, the sharing of ideas, the professionals that try to help others, and the interesting topics. Thank you and best of luck.
And take it easy on the poor guys/girls that work in accounting/division orders that constanly get chastised by “know it all mineral owners that have no idea what they really own” for not knowing how do their job when they call in griping about 1.9 vs 2.0 net mineral acres. They are only going off what the title opinion/system says and doing their best to keep their job and keep a roof over their head.
How often will an oil company agree to something like an unmodified Producer’s 88 it readily uses to lease minerals when leasing its own minerals to another oil company? I may be in la la land, but, for me, there would be ethical concerns about employing a “caveat lessor” approach which incentivizes treating unsophisticated or otherwise challenged mineral owners far differently–to their detriments–than more sophisticated and empowered ones.
Dealing with lease brokers is not always a pleasurable experience. A lot of mineral owners do not own enough minerals to justify hiring an oil and gas attorney. A lot of local attorneys don’t know much more than the mineral owner. If you can deal with the “In House” company landman usually it is better. Eliminate the middle man that is trying to make himself look good to the company.
Caveat Lessor would be lessor beware, which is excellent advice. There are consumer statutes that apply when a professional is dealing with a consumer/non-professional. Unfortunately, some people fail to adhere to these limitations. Additionally, many mineral owners do not know what language to listen for or the questions to ask in order to focus the negotiations.
When consumers/non-professionals fail to perform the research, develop the education and obtain the professional support, then it is difficult to make decisions for the best outcome. This may sound as if I am not pro-mineral owner, but it is just the opposite. I want people to make full use of the tools and resources that are available. This forum is one as well as NARO, TIPRO and other similar organizations. Please employ the mantra “Invest in what is required for good decisions”.
There are a lot of people and mineral owners without much experience that have jobs and work too. Their minerals and assets, their families are important to them also. They might need the money as fast as they can get it! It’s their right!
The are both good organizations. TIPRO will be more focused on the producer, but will provide helpful information. NARO is a mineral owner group, so it will offer more in the area of successful mineral management protocols. If you can only choose one, then I would suggest NARO.
I believe it is safe to assume that the vast majority of mineral owners have jobs. If the assets and the funds are important, then they deserve the requisite attention prior to a decision. Generally, fast as you can is what leads to poorer results. But we can disagree.
If its that important to them, then they should know what they own/inherited so that they dont run into the problems of getting paid, its not the job of Accounting, Division Orders, Landmen nor Title Attorneys to do that. Using this board as an example, people often think they own much more than they do bc it states they got 1/2, 1/4, 1/8th etc on the deed, probabte, etc but they dont take into account the 80 years of previous title and what they actually own. So, then they call into the division order/accounting offices causing a ruckus about their interests and how much they think they own and the money they should be getting while having no idea what they are talking about 7 times out of 10. Yes, its their right to call in and complain, I was simply saying, being polite about it goes a long ways and imagine someone calling you everyday about a possible mistake in the job that youre doing when its not your fault.
I will echo what Bob77 said. There are posts on here, where knowledgeable people give solid advice, but then others think it is just better to send a mean threatening letter by certified mail. Worse, then people love that or press the heart button.
Sometimes, when there is a mistake, you have to show the analyst where the mistake is, not just yell (in a letter format) that they’re wrong and not tell them where the company went astray.
A company can spend 20 million dollars on drilling and completing a well and not have all the mineral owners leased prior to including them in a unit! Or have incorrect title. There are a lot more mineral owners than oil and gas companies. People simply want their money! Would you buy a tract of land and build a house and not have a “clean correct title”?
Kind of disagree here. Sending a request or communication via certified mail is important, especially if the differences lead to litigation. Nothing about it has to be mean or rude, it is meant to ensure your requests for communication regarding whatever matter you have are not ignored, and that they cannot claim ignorance of the mistakes later. At the end of the day, this is a business, and we all need to protect ourselves.
The oil companies hire the best title attorneys around to figure out who owns what. Do they make mistakes? Sure, but youre acting like its common practice for title opinions to be wrong, which I simply disagree with. The majority of the issues Ive seen on this board are people being deeded/probated a 1/16th interest under the NE4, so then they think thats what they own and no matter how its explained by the board, attorneys or the operators accounting/division orders, they wont take no for an answer. But they dont factor in prior title, so that 1/16th is often the 1/16th of a 1/4 interest owned 60 years ago and of course it ticks people off when they start thinking of the money they are about to make. As far as buying a house, youre comparing apples to oranges, its 1,000,000 easier to determine the ownership of surface vs minerals.
The example you give is for new wells. 90% of the people on here who are having issues involve wells that have been producing for years, or they are the third or fourth generation removed from the lessor.
I will also suggest many of these problems are because the prior generations didn’t provide the company with probate orders or deeds. So, it is not the company trying to keep the mineral owner’s money, it is lack of information available to the company because prior generations dropped the ball.
It is the job of the landmen, lease brokers and title attorneys to complete their jobs in a timely manner and not take months and months stalling to keep from paying. They ought to be called out on it!
Companies do not take a certified letter as rude. It is considered just as any other communication. Sure there can be statutory reasons you may want to use a certified vs email, but today it just takes longer to get in the Q. By all means you should protect your interest
understand and you have a valid point. I should have phrased my response better.
My main point is if somebody isn’t getting paid, just sending certified mail, jumping up and down and demanding payment doesn’t serve any purpose. The first step is to determine if the company has the person in title, are there requirements or is there anything the company doesn’t have to make sure the owner gets put in pay status.
Suppose a company has an overworked analyst. She gets requests or inquiries all day long. At opposite ends of the spectrum, she gets an inquiry with a probate that may have been overlooked, not provided, or it was analyzed incorrectly. The inquirer provides the information with the owner’s name, owner number and well. The analyst may also get an inquiry that asks why the owner isn’t getting paid correctly or my mother owned some interest somewhere without any additional information. One can probably guess which inquiry gets handled first.
Exactly. Without prompting from the mineral owner, the oil companies suffer no inconvenience by keeping funds in suspense. And there are many more issues that arise outide of just title opinions. Chastising a mineral owner for speaking up and wanting a timely resolution is a bit much, calling such resolution “threatening” or some form of yelling is incongruous with the purpose of this board at the bare minimum. Forums like this, and organizations like NARO exist only because so many people have been taken advantage of
Not sure what you mean by clean correct title. It is poor practice that 100% of all owners be leased prior to drilling, but it is not required. The fallout from such a practice can lead to diminished returns for the oil company for many reasons. With that said, there can be business/economic reasons to proceed in this manner. My experience when someone drills on one of our properties without leasing (or force pooling where applicable) us first generally leads to much better economic options for us.
There are delays in the case of title defects. If there is an OGL, then it is a common obligation of the Lessor and Lessee to cure the defect in order to get on pay. If the interest is not subject to an OGL or there has been a change in title, then it is the sole obligation of the mineral owner to cure the defect. Most purchasers will be able to provide some information to get this process started, but it is not their obligation to do so.
I want all forum members to consider that it is their duty to stay well informed on activity around their property. Waiting for notification by someone else will typically reduce your economic options.