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WHAT IS AN OIL AND GAS LANDMAN?

08/08/13 at 09:59 AM

An oil and gas landman is a member of the oil and gas industry that deals primarily with the acquisition, divestiture, maintenance and negotiations of public and private mineral rights of the properties used in the development of energy resources in the United States.

The American Association of Professional Landmen defines a landman as a land professional who has been primarily engaged in negotiating for the acquisition or divestiture of mineral rights and/or negotiating business agreements for exploring for and/or development of minerals.

Some consider a landman as being on par with the engineer or geologist in the development process. A high quality landman can have as much effect on the profitability of the oil and gas venture as either a geologist or engineer. Any mistake by the landman can expose the oil and gas producer to various lawsuits or reduce the profitability of the property due to poor negotiation tactics.

Most oil and gas landmen spend a tremendous amount of time in county courthouses searching through the real property records to determine the mineral ownership in various properties. This process can be very tedious and requires a firm understanding of state real property law. Tens of thousands of dollars may be spent in leasing based on the landman's final report of the mineral ownership of the properties.

Once the title ownership is determined into the oil and gas properties, it is the landman's responsibility to contact the various mineral owners to execute oil and gas leases. The landman has to have a solid understanding of oil and gas law at this point because more often than not the negotiations are with the mineral owner's attorneys. Virtually every oil and gas lease tends to be a custom document tailored to the individual concerns of the mineral owner. This is a critical phase of the process because the bonus consideration for executing the lease and the royalties paid on production are negotiated at this point.

During and after the title search process the landman may be required to cure title defects by drafting and executing various agreements including affidavits, ratifications and use and possession. The primary role of the landman at this stage is to help reduce the title risk associated with the ownership of the respective producer into the leases taken on the property.

Landman are involved at virtually every other level of the development process of oil and gas ventures. They may be called upon to unitize or pool various mineral interests into a production unit, divestiture negotiations, leasehold due diligence and general management and maintenance activities.

Most new landmen are challenge by the fact that they have to be an analyst, manager, salesman and negotiator all at the same time. It takes a very self motivated individual to wear of all these hats one time. Although the job involves a high amount of stress, the rewards of successfully handling the deal from start to finish more than make up for the sleepless nights.

 

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