By Andy Tiwari
When an oil company, or a “land man” representing an oil company or an interested promoter, approaches a landowner seeking a lease to explore and produce oil, gas & other minerals from a tract of land, there are several factors property and rights owners need to investigate and consider.
We’ve talked about the need to clarify who owns the mineral rights and whether those rights have been severed from the surface rights (read previous post). Sometimes the records aren’t clear or there appears to be multiple parties with potentially valid claims. In that case, it’s particularly important that the land man does a good job of gathering information from the land records on file in the county records and allow all parties to review that data that’s been gathered from various public records to identify errors and to try to get the record “straight.”
You will likely want to exchange copies of any family records that reflect title transfers or clouds on titles such as inheritances, deaths, gifts, probates, partitions, guardianships, encumbrances, deeds of trust, maps or surveys, wills or trusts, previous leases, conveyances, and easements – the list is long.
Consequently obtaining and discerning the true picture can get very complex and require a detailed and extensive knowledge of land law in Texas and so a good attorney is very valuable in this process. Many times defects are found that must be corrected or “filled in” and knowing what steps might succeed in achieving a repair to the chain of title is very important and essential. Again, a good oil & gas lawyer (or “land” lawyer) earns his fee in these situations. A good land man knows many “cures,” too.
Getting the records straight are in the landowners and land man’s best interests since it affects many details that should be resolved prior to the signing of any lease – including who should get any bonus payment for the mere act of signing, how royalty payments should be divided among rights owners, and who will be compensated for any surface damages to crops or pastures, livestock, fences, waterways and buildings as well as payments of compensation for erosion or pollution. The producer doesn’t want to pay the wrong people for any of the compensatory elements of a lease or production.
While a land man may be a welcome sign at your doorstep, there are many elements that go into getting the contract right and making sure you are not the one holding the short end of the stick. Don’t rush into things, just because you’re excited that riches are finally at your door – spend a little money and time getting experienced advice that is on your side! If there are good prospects for oil & gas production from your land, the deal won’t go away, and may only get better if you play a bit hard to get.
If you need legal advice, schedule a meeting with Tiwari + Bell PLLC through our website or by calling (210) 417-4167.