I Thought You Were a Professional?

Oklahoma Minerals Owners,

Berlin was having coffee at the sale barn this week where she ran across an ol' boy named Keith. Keith asked Berlin what she did when she wasn't raising stockers and she mentioned she's a landman. Keith looked a bit perplexed when he said "a landman? I thought you were a professional, like an accountant or doctor or some sh*t."

Sorry to disappoint Keith, both you and daddy wished Berlin was a doctor or some shi*t too. But even landmen can continue to learn. Below are some items that Berlin thought might be of interest to the readers of The Oil Scout. 

Everything from these pipe fences to producing oil and gas from Oklahoma mineral property is going to become more expensive thanks to the new tariffs.

Saturday Assorted Links

Learning How to Learn: A new course from Coursera created by UC San Diego

Never Split the Difference: Negotiations book (recommended, but you can't use what you learn when negotiating the sale of your Oklahoma oil and gas royalty interests to Berlin)

The Tariff Folly: This tax increase on imported aluminum and steel will punish American workers, invite retaliation that will harm U.S. exports, and make everything that is made out of aluminum and steel more expensive (so...,almost everything). Berlin predicts this will negatively affect the Oklahoma oil and gas industry more than the proposed increase in the gross production tax that the OIPA enjoys complaining about.

More to follow,

Berlin

Four Key Pieces of Correspondence for the Oklahoma Mineral Owner

(This post originally appeared on www.oklahomaminerals.com on November 8,2016)

All,

Landmen are no busier than most professionals during the work day, but it is often stated that company landmen never return the calls of mineral owners. While this might be true of the bottom 10% of the profession, most landmen know that by placing a single call to a mineral owner, he could spend 30 minutes explaining knowledge that could easily be obtained throughsimple internet research. An informed mineral owner, who asks a poignant question, is much more likely to receive the answer he needs than the owner who calls to ask the difference between a spacing application and a well proposal.

Admittedly, if one owns a single tract of minerals or maybe just inherited the minerals, then the inaugural process of leasing and receiving the regulatory paperwork while the company is assembling the drilling and spacing unit would surely baffle most.

In general, there are four key pieces of correspondence that an Oklahoma mineral owner will receive from the landman. These occasions are detailed in brief below.

The Offer to Lease

Often, the first time an Oklahoma mineral owner will be contacted by a landman is when the landman’s company is assembling a prospect. The mineral owner will be contacted by phone and/or mail with an offer to lease their mineral interest. Most landmen will offer at least two options which will differ in the amount of cash bonus per net mineral acre and the royalty.

The Well Proposal

After the landman has made a bona fide effort to reach an agreement with all owners who own the right to drill a well in the proposed unit, he will send a well proposal to the parties with whom he has not yet reached an agreement. The well proposal will offer final terms in lieu of participation in the well and details of the well to be drilled such as location, proposed depth, target formation, estimated depth and cost of the well in the event the party would like to participate. It is important to note that in Oklahoma, an election to participate in the well is not binding until the party elects under the pooling order.

Oklahoma Corporation Commission Applications

Initially one of the most confusing aspects of being an Oklahoma mineral owner is the receipt of Oklahoma Corporation Commission (“OCC”) applications and orders. Some owners ask why they are being sued and others ask to be removed from the mailing list. Owners receive the applications and orders because Operators and applicants are required by law to provide notice of their activities to the owners who their activity affects. These applications are orders are mailed from an attorney who represents the applicant in OCC matters. The three most common applications that an owner will receive are the spacing application, location exception application, and pooling application. These applications will be discussed in detail at a later date, but the pooling application will be the application that will have the largest effect on the mineral owner’s rights and pocketbook. The OCC publishes a handbook for mineral owners that can be found http://www.occeweb.com/og/PubAsst/WebRoyaltyOwnersHandbook3-2015.pdf

The Division Order

If an operator successfully drills and completes a well, the next correspondence the mineral owner will receive from the company is the division order. A division order is an instrument which sets forth the proportional ownership in the produced hydrocarbons. The proportional ownership is communicated to the owner on the instrument in a decimal form. After the division order is signed and curative title issues are completed, the mineral owner should receive their first check within six months from the date of first production from the well.

In conclusion, the four key pieces of correspondence that an Oklahoma mineral owner will receive from the landman and the company, are the offer to lease, the well proposal, Oklahoma Corporation Commission applications and orders and finally, the division order. All four of these topics will be expanded upon in future articles. If there are any other topics you would like to discuss, please mention your ideas in the comment section.

More to follow,

Berlin

80% of Success is Showing Up

Woody Allen said that. He's not my favorite playwright, but he has a point. How many big company landmen are willing to meet an Oklahoma mineral owner at zero dark thirty to get an oil and gas lease signed in Minco before the day starts? Think the former OU Energy Management major would disrupt his morning routine for that? He'd have to get in his Tahoe and drive down from Edmond before the sun rises. That's the opportunity. There is always a lease to buy and a unit to bust. If they know your name in Davis, you'll get the call. It won't be the Landman II at Apache.

More to follow,

Berlin