OIL & GAS LANDMAN. Employment

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2 OIL & GAS LANDMAN TRAINING MANUAL The oil and gas industry is going through a major transformation with prices rising daily it seems. With price decline being the trend for the last 20 years, no one has believed the oil and gas industry to be a high paying job where you can make a good living. So, the amount of individuals entering the oil and gas business has been in a steady decline along with the prices. Now, with the rise in prices, companies are scrambling to hire experienced people. The problem is there is no one to hire and demand for experienced oil and gas workers is skyrocketing. Becoming a landman has become a profession where you can earn income of over one hundred thousand dollars per year with no previous experience. I can t think of any other business where you can earn this type of money without having worked in the industry ever. But, now that the prices are rising daily, there is nobody to do the work and companies are paying landmen whatever it takes. You can take advantage of this lack of skilled landmen and start earning $500+ per day along with all expenses paid. I don t know of any other business where you can earn this type of money from the start. And, this book will show you all you need to know to give yourself a head start to earning the income you deserve. The hardest part about becoming an oil and gas landman is learning the processes involved in the job. That is our reason for writing this book, to help you learn all you need to know about becoming an oil and gas landman. Finding work with the rising prices will be easy once you know the ins and outs of the business. Don t think you will know all there is to know just from reading our book. You will have a good idea of the process involved, but there are questions that will always come up that you will have to consult other landmen or an attorney to answer. Employment When you have made up your mind to become an oil and gas landman, your first order after reading this book will be finding a job. There are so many avenues to finding work as a landman, that we could write an additional book on this subject. But, we will focus on the few that have been successful for other landmen first starting. Your first source of any job search, and becoming a landman is no different, is the internet. All the job boards are full of jobs for all types of oil and gas jobs, especially landmen. Just go to Monster, Career Builder or your local papers web postings and you will see numerous ads for landmen. 2

3 Another great source of landmen jobs are geologists. They always have an inside track on who is doing the drilling and also who is growing and looking for landmen. You can just open the phone book and start calling geologists and you will be pointed in the right direction. You can also contact small operators and even visit the courthouse to talk to other landmen. Other individuals who work in the courthouse will also be able to lead you in the right direction. The way the industry is working right now, getting out and talking to people will help you find a job. It is definitely an easy sell and one that can start your rewarding career in the oil and gas business. After you have secured your job through the various sources we have discussed, it is now time to start earning your pay. The way the majority of landman projects start is that a geologist finds an area that they believe will be a good spot to drill an oil well. The company does several studies on this land and if they believe oil and gas will be found, they will go ahead and start securing leases on the land. They will then tell you the specific sections within a township and range they want you to lease and you will begin working. We have included a sample section map in the back of this book to help you know what you are looking for. Now you are ready to start leasing. The Leasing Process Before we get started explaining the process, we want to give you a brief overview of the entire process. The list below goes in exact order of the way the process of leasing will work: 1. Obtain map from company 2. Determine land ownership of the map 3. Determine if the land owner is the same as the mineral owner 4. Contact the mineral owner about the lease 5. Negotiate with the mineral owner over the lease terms 6. Get the lease signed by the mineral owner 7. Record the lease at the county or parish courthouse where the land is located 8. Do a purchase report detailing all aspects of the lease and terms 9. Repeat this process until you finish leasing the entire area 10. Do a Division Order detailing ownership of the well Now, the list above is a brief overview and there is much more involved in the process. We will explain the entire process, but questions will arise in every situation. Don t hesitate to ask questions of others with more experience. We have been in the business for over 30 years and there are still things we don t understand. Land The first step to learning the oil and gas business is to know the land you will be leasing. Land is divided into sections, townships and ranges. A section includes 640 acres and a township and range is 36 sections. If you view the section map, it is broken down into 16 quarters. For example, the SE/4 of the NW/4 is 40 acres. And the NW/4 of a section 3

4 equals 160 acres or four 40 acre tracts. When you first view the section map, you need to keep in mind there are sixteen 40 acre tracts in each section. Each part of the section map is broken down into quarters and that is where you get the NE, SE, NW, etc. detailed descriptions. This is derived from the quarters on the section map. This section description will be your basis for figuring the ownership in the property. A township and range is made up of 36 sections or six square miles. When your company identifies a township and range, they will usually pick two to five sections for you to research for their prospective well. This will give you a basis for your leasing when you come into the county or parish to begin your endeavor. A sample map of a whole township and range is included in the back of this book. Determining the descriptions for the land is an important part of your job and one that you need to study in detail to ensure no mistakes when reading sections, township and ranges along with the descriptions of each. Some land is described in metes and bounds and in these areas you won t be using sections, townships and ranges. The metes and bounds methods describes certain landmarks or coordinates and you will determine the amount of acreage from this. Once you start using the metes and bounds method, you will get used to the terminology. Poles will be the main word used on metes and bounds descriptions. A pole is equal to 16 ½ feet and 320 poles is equal to one mile. Most of the descriptions will be something like: Thence north 38 poles to a barn This means that the description of the land at this point goes north by a distance of approximately 627 feet. As long as you understand poles, then you can understand the metes and bounds method. It is just a different way to describe land and is used in some counties around the country. This book is written for sections, townships and ranges though, but we wanted to give you an explanation on the metes and bounds process. When you begin working on a certain section, you will receive a map of that section or the section number so you can go to the courthouse and obtain a copy of the map. The map will contain all the owners in the section and will be your first stop in determining ownership of the section. Now, these owners are land owners and you are trying to determine mineral owners, but this will still be your starting point. Each tract isn t going to be perfect meaning that you won t have 5 owners in a section who own 40 acres and 2 that own 220 acres bringing your total to 640 acres. If this was the case, you would have an easy time leasing, but I doubt there would be much of a demand for your services. Most of the time, you will have different land owners in a section and the tracts will range drastically in size. The amount of acreage will be included on the map you receive some of the time, but if it isn t included, you can get the exact acreage off the deeds that you will be researching at the courthouse. We now want to go back to the map descriptions because this will be very important in determining the number of acres and also where the land is located on the map. We know this sounds like common sense, but you need to make sure you know where North, South, East and West are on a map. 4

5 Surprisingly, there are a lot of people who don t know this and if you can t figure out this part, you are going to have a hard time in this job. Many times when you are researching deeds, you will see under the description something similar to this: The E/2 of the NW/4 and the SE/4 of the NE/4 located in Section 21, Township 18 North, Range 2 West minus 3 acres sold to Raymond Fisher It will be up to you to figure out how many acres are in the above description. We will break it down just so you understand how to read these descriptions. In all cases when you see a description like the above, you will want to separate them. This means that first you will determine the number of acres in the E/2 of the NW/4 and then you will determine the number of acres in the SE/4 of the NE/4. E/2 of the NW/4 In every case when you see a description like this, you will need to start with the second part. I hope this makes sense, but the land in the first part of the description is included in the second part of the description so you will need to figure out how big the second part is. We know from the description at the top of this section that the section map is 640 acres and is broken down into quarters. So, the NW/4 is 160 acres. Now, each of these 160 acre quarters can be broken down into quarters that are each 40 acres. But, in the description above, we are trying to get the E/2 of the entire quarter. So, the total of the acreage is 80 acres. SE/4 of the NE/4 We will start working on this the same as the description above. The second part is asking for the NE/4 which we know to be 160 acres. We also know that the 160 acres will be broken down into quarters so this acreage will equal 40 acres. If we add the 80 acres to the 40 acres, we get 120 acres and then we take out the 3 acres sold to Raymond Fisher and we have a total acreage of 117 acres for this description. We want to give you a few others to practice on and we are putting the answers at the bottom of the list to make sure you understand. This sounds simple, but is really confusing and you need to practice on these descriptions so they become second nature. All of the descriptions below are based on an entire section of 640 acres. 1. NW/4 2. S/2 of the NE/4 minus 4.5 acres sold to James Berry 3. NW/4 and 3 acres in the NE/4 4. S/ acres in the NW/4 of the NE/4 6. The NE/4 of the SE/4 and 17 acres in the NE/4 Answers acres 5

6 acres acres acres 5. 2 acres acres Now these won t be the only kind of land descriptions you will find. In some cases, you will get a description that references different items such as a tree, stake, piece of property, etc. These types of descriptions could also reference different points found by a compass. In many cases these land descriptions will be greek to you and will have no bearing on your job. The reason they won t have any bearing on your work is they will almost always give a detailed amount of the acreage at the end of the description. So, after you see one of these descriptions you will usually see the words containing 2.93 acres or something like that and you can determine the exact acreage from this. If you are doing your leasing in an area that includes a lot of houses, then in many cases, you will just be given a lot and unit in the description. Every subdivision is broken down into different units and lots which will make your description look something like this: Lot 2, Unit 3, Plantation Estates Subdivision Of course, you can t determine ownership from this because you don t know how big each lot is. But, every subdivision is required to file a plat of the subdivision at the courthouse, so you will be able to refer to this to determine the exact amount of acreage included in the plat. The descriptions above will cover the three main ways that land will be listed. Now, there will be exceptions, but you really don t care as much about the description, all you care about is the amount of acreage. By using the courthouse and the courthouse records, you will be able to determine the amount of acreage described. Courthouse Work The Tax Assessors Office in the county or parish you are working will be the first place you will visit. Along with having section, township and range maps in their office, they also have a record of all surface ownership in the county or parish. You will need to find the name of the current owner of a particular piece of property by looking at the tax rolls. In some cases, the assessors office can provide you a print out of the different land owners which will include book and page numbers to use for reference. There will be book and page references to the records in the county or parish clerk of courts office. We have also included an example of this form to show you what you will be looking for. This ownership form will become your trusted source over the next few months you are working this section. When the tax assessor records are not complete or available for the title to each tract, your other source of title history would be an abstract office usually located near the courthouse. 6

7 The main thing you are trying to get from the assessor s office is the book and page numbers where you can research the mineral ownership of the land. Different areas have it listed in different ways but all you need is a way to check different title transfers on this certain tract of land so you can determine the mineral owner. Obtaining the mineral owner is the whole point of your courthouse work because this will be who you are actually leasing from. If you were just leasing from the land owner, this would be a very easy job, but your job is to determine each mineral owner on the map you are working. We now want to side track a little and explain mineral ownership to you. In a perfect world, the mineral owner and the land owner would be the same person. But, as we all know this isn t a perfect world. Sometimes the mineral owner and the land owner are the same person, but this doesn t happen all the time as somewhere along the way someone reserved the minerals on the land. If a mineral reservation has occurred, then it will stay in effect forever. The only exception to this law is Louisiana where a mineral reservation stays in effect for only ten years and then transfers back the land owner. So, when you are researching deeds and other pertinent instruments for the land, you will need to check each instrument to see if a mineral reservation has occurred. The language will be different in most cases, but they will be easy to spot. It will read something like Seller reserves unto himself/herself all the minerals on and below the described land. Just remember, a mineral ownership stays in effect forever so it is best to start with the older records when you are checking title. If you see a full mineral ownership of the property then the ownership can t be lost but it can be sold so you will need to make sure no sale of the mineral ownership has occurred. Just check the records carefully to trace land ownership along with mineral ownership. Your next stop will be the county or parish Clerk of Courts Office. You will use your ownership form to look up the book and page deed references to track ownership. Before you start this process, it is best to make sure the property isn t held by a current lease. It is best to take a few of the large land owners in the area and run their names on the computer system or the Direct Index Of Conveyances. The Direct Index Of Conveyances will be available in the clerks office and will allow you to search under a certain name to see if they have leased their land. You will want to check back for the last five years and can do this by running the persons name in the index and see if an oil and gas lease is recorded under their name. The reason why you select several land owners to review in this process is because you aren t sure they own the minerals, but if you look at several large tracts, in most cases one of these people will own the minerals. This will save you time having to determine a mineral owner when you are doing this step. Now, leasing for the last five years isn t the only thing you will need to check prior to starting your leasing on the area. You will also need to check for active wells in the area. This can be done by contacting the Department of Natural Resources in your state and inquiring about a well in a certain section or tract. Many times, each state will have a computer directory where you can obtain this information. The Department of Natural Resources can point you in the right direction though. If you live in Texas, you will need to contact The Railroad Commission in Kilgore for well activity. Once you have 7

8 determined that there is no current production in your area then you are fine to lease the land. If it is determined that production is occurring then you won t be able to lease the acreage where the production is occurring or land that is held by this production. This will eliminate your ability to lease this section. Most companies won t even want to go into a situation where production is currently occurring, but there are exceptions where individuals have put clauses in their lease that will cause their land to not be held by this production. To determine the exact acreage held by a well will require much more work and will probably require attorneys to get involved, but this is an option if you find this scenario. In all cases, your company will perform a lease check that will check if the land is leased or if production is occurring. You might even be doing the lease check yourself. But, it is still a good idea to perform the lease check prior to starting your leasing. We now want to return back to our discussion of the clerks office. This is where you will start your research of the land and will start viewing the books that determine the mineral ownership. From the book and pages listed on your ownership report, you will get a brief ownership history for at least the last twenty years of the property, hopefully longer. You will need to run the title book back to before 1900 to make sure there are not any flaws in the title. To do this you will then need to run the last owner of the property backwards in the indirect indexes book included in the Clerk of Courts Office to see who they purchased the property from. After you find the previous owner and the deed reference, you will also run this person indirect in the same manner. You will repeat this process over and over until you have traced ownership back to before Remember, the indirect index will give you book and page numbers associated with each purchase and sale. You then go to the book and page numbers included in the indirect index to see if mineral ownership was held by a previous owner. Run the name backwards in the indirect (vendee) deed records to see who they purchased the property from and then run that owner backwards and so on until you have checked back to before The easiest way we have found to do title runs is to use a yellow legal pad and list out the current land owner and then all the associated book and page numbers under the land owners name. This way, you can trace ownership back and record any mineral reservations that occur. You won t believe how confusing all the books and pages get and by tracing ownership back, you will ensure that no mistakes are made, because you will see ownership going from one individual to another. Also, you will need to record all mineral reservations that were done on a certain piece of property. There will be some cases where you will see more than one mineral reservation. This is usually just a mistake on the latest person doing the reserving, because the first mineral reservation will be the one that will stay in effect. You will also have to deal with partial mineral reservations, but these are easy to trace. To give you an example of what we are talking about, we have included a sample run sheet. 8

9 Land Owner Bill Friedman 8 acres Bales to Friedman Walk to Bales Jones to Walk Sale to Jones ¼ mineral ownership retained Pierce to Sale ½ mineral ownership retained The above sample is really short and easy to follow. Most of yours won t be this easy to follow and there will be more transfers of ownerships in deeds, successions, judgement of possessions and tax sales. The mineral ownership for the above 8 acres would be: Friedman 2 acres Sale 2 acres Pierce 4 acres To help you understand this, when Pierce sold to Sale in Book 109, Page 903, he/she retained a half mineral ownership or 4 acres. Then, when Sale sold to Jones, he/she retained a quarter mineral ownership or 2 acres. Those are the only two mineral reservations and with no prior production on the land, Friedman will have the last 2 acres of ownership. Someone can own the surface of the property but retain no mineral ownership because of prior mineral reservations in the deed records. Examine all the records carefully back to before 1900 and look for language anywhere in the deeds that state that the seller of the property reserves all or part of the oil and gas minerals under the property. After you have completed this chain of title, you should know the mineral and surface ownership of the property. We have included a sample deed with mineral reservations for your information. The language in this reservation won t always be the same, but it will be very similar. Once you have run all the current landowners and determined the exact mineral ownership, it is now time to start the leasing process. Determining the mineral ownership will be the most important and most time consuming part of the job. Just make sure you take good notes and understand clearly how title is transferred on each tract and how a reservation will affect ownership. The names will start getting confusing and remember that for oil and gas leasing, the ownership of the minerals is your main concern because this is who you will contact in order to obtain oil, gas and mineral leases on their mineral ownership. After you have completed this process, the company you will be working for will give you certain parameters of contacting these individual owners. There will be an offer for a certain dollar amount per mineral acre (example $100 per acre), a certain royalty amount on the property (example 1/6 th royalty) and a certain term for the oil and gas lease 9

10 (example 3 years). These examples are just basis for this book and actual terms of the leases could vary substantially depending on many factors such as demand and amount of drilling success in the area. It is now time to move on to the leasing process. Leasing Your next step is to contact the owner or owners of the minerals and make them an offer based on the terms you were given by the company. In some cases, it is a challenge to hunt down the contact information for the different mineral owners. If the mineral owner is the same as the land owner, then you should be able to get an address off your ownership report or the tax rolls. Where you run into a problem is when you have a mineral owner from many years ago and you need to get in contact with this person. This can take some work, but you need to first start in the county or parish you are living and run their name in the computers or in the direct and indirect indexes to see if you can find any current land ownership or land sales for this person and obtain an address from this tract. If this doesn t work, then you will need to run that individual back for several years in the direct indexes to see if they died and there is a succession on file determining ownership. This process can become very complicated especially if you have someone who died over fifty years ago and now that mineral ownership is in the hands of twenty heirs. But, your main job at this point is getting in touch with the mineral owner and if you are able to locate a succession, then you will be able to contact someone about leasing. If you don t have any luck finding information about the mineral owner, you might want to start contacting people in that area with the same last name to see if they can be of any help. At this point in the process, you will become a detective and will have to use every resource available to get in contact with the individual. You can also look in different phone books in the surrounding area and use Yahoo.com People Search to help you with this task. The Internet has made this part of the job much easier and a good place to start your search if you are stumped is: They offer a good way to find people that you are having a hard time finding and the prices are fairly reasonable. In most cases, if you search long enough and research enough records, you can figure out how to get in touch with the mineral owner. Just use all the steps we outlined above and use every available resource to complete this part of the process. Once you have located the mineral owner, you will make an offer based on the terms given to you by your company. If your offer is accepted, no further negotiations are needed and you are ready to prepare the oil and gas lease for signature. If the offer isn t accepted, you will need to go back to your company and see if they want to up the terms of their offer. Some negotiations can last for months and sometimes you will not even be able to come to an agreement. This happens rarely because the mineral owner isn t losing any piece of his land by leasing, but some individuals will hold out thinking they 10

11 can get more money. Just remember, a well can still be drilled even if you aren t able to lease every part of the section(s). Once you have agreed to the terms of the mineral lease, you will need to get started preparing the oil and gas lease. Most states have pre-printed lease forms that can be used. There are also software programs available so that you can do all the typing work on your computer. You can find these programs available on the internet or by talking to other landmen in your area. There are a few blanks on each form that needs to be filled out such as name, address, lease terms, company doing the leasing and royalty amount. You will also want to have an exact description of the land you are leasing on the lease. This can be found from a deed where the land is transferred. In many cases, you won t have enough room in the area provided on the lease to list all the terms so you will use an Exhibit A that lists additional terms of the lease. If you are using an Exhibit A, then in the area where it asks for a property description, you will put: SEE EXHIBIT A ATTACHED HERETO FOR DESCRIPTION AND SPECIAL PROVISIONS You will also have to include every person that owns the minerals on the lease. There could be an unlimited amount of owners and most leases only hold 4 names and signature lines. In this case, you will have to use different leases and have them all signed by the people listed on the leases. The people that are leasing to your company will also have to sign the lease and enter their social security number and they will also need two witnesses and need to have the lease notarized by a Notary Public. We now want to discuss the Exhibit A. In many cases, an Exhibit A will be attached to an Oil and Gas Lease. There just isn t enough room to list all the additions to the lease so the exhibit accomplishes this task. The lease is just a standard lease that is issued by the states and has a lot of wording and most of it doesn t mean anything to you. On most leases, the royalty will be listed as 1/8 or a similar amount and this royalty is an amount that used to be used, but today people are paying 1/5 th or 1/4 th or in some cases more than that. So, this will be listed on the exhibit along with any additional clauses that the mineral owner will want to include. These clauses are usually standard clauses such as no drilling on their property or depth clauses about the drilling. The depth clauses will state that all land or depth that isn t held by the well can be released back to the mineral owner. This keeps people from drilling a well that is barely producing and then tying up the land with a lease for an infinite amount of time. We now want to go over several different clauses for the Exhibit A included in the back of the book. This list will give a detailed description of the clauses. For each clause, please refer to the Exhibit A at the end of the book. We are going to go through each number and give you a detailed explanation of what each clause in the exhibit means. 11

12 1. This is the amount of royalty the mineral owner will be receiving. All Oil and Gas Leases will have a standard royalty listed, usually 1/8th. The Exhibit A royalty will override the royalty on the lease. 2. Requires the oil and gas company to get written consent from the landowner before anything is done to or on the land. 3. Leaves other minerals besides oil and gas in the hands of landowner unless something other than these minerals is found on the land. 4. This clause is known as a pugh clause and is very important. When a lease is taken on a certain amount of acres, all the acreage is held as long as one well is active and drilling. This way the oil and gas company could hold all the land owners land from one well and they would have no way of leasing the land again until this well is removed or stops producing. The pugh clause protects the mineral owners interests and makes sure that all acreage not included in the well area is released back to the mineral owner so that you can lease the land again. 5. This clause deals with the depth the well is drilled. The landowner will get back the land 100 feet below the deepest depth drilled by the oil and gas company. For example, if the oil and gas company drills to 10,000 feet, the landowner will retain the depth greater than 10,100 feet and have the ability to lease the land again at the greater depths. 6. This clause means that the oil and gas company producing the well can not maintain the lease by paying the mineral owner shut in royalties for more than two consecutive years. Shut in royalties refers to the well not producing and the company holding your lease with a shut in payment instead of production. 7. Makes sure the oil and gas company has all legal responsibilities for operations on the landowner s land. Because the landowner owns the land, they have a legal responsibility for people or equipment that is on their land. This clause makes sure they have no liability and that all the liability is placed on the oil and gas company. 8. The clauses in the Exhibit A are the correct clauses and supersede any similar clauses in the oil and gas lease. 9. The oil and gas company has 120 days to clean up all the affected land from their operations. They also will remove all equipment and trash and leave the land in the same condition as when they arrived. They also will maintain any roads built for the terms of the lease. The oil and gas company also has to properly plug all wells that aren t active. And, should any equipment be left over then it will become the property of the landowner. 10. Landowner is not responsible if the oil and gas company didn t research the title work correctly. The landowner gets to keep the bonus paid even if they own less acreage then they were paid for initially. Upon written request of landowner, oil and gas company must deliver title opinions and abstracts to the landowner. 11. The oil and gas company can t remove any timber, soil, iron ore or other materials from landowners land. 12. There will be no hunting or fishing on the land. And, employees of the oil and gas company are forbidden from carrying firearms. 12

13 13. If the landowner becomes obligated to clean up, remove or expend funds because of the oil and gas company activities, the oil and gas company will investigate, clean up and remedy at its sole cost and risk. There are plenty of other clauses that can be included, but these are the main ones you will see. There is also a clause called most favored nations clause that we didn t include. It is a clause to protect the mineral owner and means that if anyone in the area is given more favorable terms than the mineral owner by the leasing company, then the mineral owner will get the same terms that are included in that lease. There are other clauses that we haven t included so make sure you read each of them carefully because this could cause a big problem if you don t read and understand each clause that the mineral owner has included. After preparing the lease, you will then need to prepare a draft for the dollar amount due the mineral owner. This draft will be paid by the company you work for through the mineral owner s bank within fifteen days. You can mail the lease or draft or personally visit the mineral owner if they live close enough to your location. It is always better to see the owners in person if possible because of any additional questions or concerns they may have. Some individuals will request a check and this is fine as long as your company approves it prior too. One last piece of business and the main reason for issuing a draft is that this gives you time to go back and run the title again before payment to make sure a sale or lease of the land hasn t taken place since you checked title prior. Since some areas will take you over a year to lease, this is an important step, because you don t want to pay an individual who you shouldn t pay and believe me, the mineral owner isn t going to tell you when you have made a mistake. Once the lease has been properly executed and witnessed, you will prepare reports to be turned in along with the original lease to your company and a copy of the prepared draft. In most cases the company you are working for will require a purchase report along with an executed and recorded copy of the lease. The purchase report gives you a detail of the lease and lists several items such as: 1. Lessor s name 2. Lessor s address 3. Time of lease 4. Lease date 5. Royalty 6. Bonus paid 7. Leasing companies name 8. Leasing companies address 9. Special clauses included There will be other items included, but these are the main items you will need to make sure are included on the purchase report. If you are using a leasing program, most of the reports can be done by the program. This will make your job easier and if you are interested in getting a leasing program, talk to other Landmen in your area. 13

14 We now want to go over the last step in the process. This step is preparing a Division Order which won t be done by the Landman in all cases. The Division Order occurs after all the land in a certain section has been leased and it is time to drill the well and determine ownership of the well. For the purposes of this book, we are going to say that the section we leased was exactly 640 acres. It doesn t always round to that amount, but we are going to say it does to help you understand a Division Order. Ownership in the Division Order is determined by taking the amount of acres owned by an individual divided by 640 acres multiplied by the royalty amount. This will give the mineral owners interest in the well. For example, lets say a mineral owner has 320 acres in this section and they leased their land for a 1/5 th royalty. There ownership would be as follows: 320/640 *.2 =.10 or 10 percent Also, if you had a mineral owner who only owned 4 acres in a section with a 1/4 th royalty, then their ownership would be: 4/640 *.25 =.0016 or.16 percent The Division Order can be done easily in Microsoft Excel and you will be able to do all the calculations without a calculator which will save you time. There are many other details other than the steps outlined in this book, but this should give you an overall view and the knowledge to prepare you for training or being trained by a company. This book gives you a good idea as to what is involved in becoming an oil and gas landman in the petroleum industry which can be a very lucrative and rewarding career. We thank you for reading our book and we hope that you obtain the position and profits you desire. JPM Investments is the owner of this book and this book can not be printed or sold without express written consent of JPM Investments. JPM Investments also acknowledges that this is a training manual and further study is necessary to becoming an oil and gas landman. We also believe the information contained in this book to be true and correct, but make no guarantees as to the information contained herein or the outcome obtained if you use this book. 14

15 Forms Included In This Ebook: 1. Deed # Deed # Plat Village Of Lucky 4. Township And Range Map 5. Assessor Ownership Plat Section 4 6. Assessor Ownership Plat Section Oil And Gas Lease Blank 8. Oil And Gas Lease F Exhibit A 15

16 Below is a summary of the forms included in this book: Deed A deed is found in the Clerk of Court records in a Parish or County Courthouse. The deed will show the seller or grantor or donor which is the individual conveying the land and buyer or grantee or donee which is the individual buying or receiving the land. The deed will also show a description of the land conveyed. The basic information you need to look for in a deed is who is selling to whom and also what the legal description of the land is. This will ensure that you get the right owner and also the right land. In the first deed, Exhibit A shows the exact land being conveyed. It is described by sections and there are 640 acres in a section. If you look at the 2 nd deed included in the package, you will see the same basic information as the 1 st deed with a big difference. In the last paragraph on the 1 st page the seller vendor is reserving the mineral rights. This is exactly the type of language you will need to look for when you are doing oil and gas leasing. You will need to scan each deed to look for paragraphs such as the language included on this deed. Plat A plat shows section layout within a township and range. The plat can be found in the Tax Assessors office. The plat will give you a brief ownership overview of each section. The numbers on the map represent the middle of each section. The plat shouldn t be used to obtain ownership; it should only be used as a reference point. As you can see in the plat included, the left side of the plat showing part of section 19 and 20 is broken up and has many different owners while section 21 is owned mostly by International Paper and other large owners. This would be an easy lease to negotiate when ownership is confined to a few individuals. But, most of the time, you will find ownership broken into many different pieces with many different owners. Assessor Ownership Plat This will be your bible for the work you are going to perform over the next few months. This form shows a section by section breakdown of each owner and also has the book and page numbers you need to look in to prove the ownership. Although the two assessor ownership plats that we have included look entirely different, they are exactly the same as far as information included. The first assessor ownership plat we have included shows the owner and book and page included in each box of the form. The second assessor ownership plat is the more common and it breaks down each section with numbers by the individual owner and it will have numbers to the right of the section showing the owners name and the book and page reference number. Make sure you keep this form with you all the time, because you will be referring to it often. Oil And Gas Lease This form will be the actual form you will use to lease the land from the owner. You can find these forms free of charge at local print shops. The first Oil and Gas Lease that we have included shows you what a blank form will look like. They are very similar from state to state and the information that needs to be provided is self explanatory. The second Oil and Gas Lease that we included is an executed lease between Hunter Energy Corporation and an individual. It will show you all the necessary information that needs to be filled in. The signatures of all individuals go on page two and the form also needs to be notarized and filed at the courthouse in the county or parish 16

17 where the land is located. There is an Exhibit A attached to this lease which is pretty standard with leases. It lists a legal description of the land and also shows the royalty terms and any clauses that the owner or your company want to have added. If you don t need an Exhibit A, you can type the legal description of the land in the part on the 1 st page where it reads See Exhibit A. Township And Range Map A township and range map contains 36 sections. The sample map we have included is for 18N 2W. You can on the map that there are 36 sections. This map will be used as a reference and should be sent to you by the company you are working for when you are ready to start your leasing. Sample Exhibit A With Clauses This references the Exhibit A clauses we have included in the book. This is just to show you the different clauses that owners can use and how to read each one. 17

18 Glossary of Terms For The Oil And Gas Business Geologist Individual who studies faults and structures in order to find oil and gas locations. Seismic Shootings that are done on the surface to map images under ground to aid in oil and gas exploration. Operator Individual companies who operate the wells on a day to day basis in order to insure continuous oil and gas production. Landman Individual who secures correct title to property to be drilled and secures leases in order to drill each prospected location. Bonus The amount paid per acre for an oil and gas lease. Term The number of years the oil and gas lease is executed for. Lessor The person or company who owns the land and leases his property. Lessee The company or individual who secures the lease and pays the lease bonus. Grantor The person or company who owns the land and sells to another individual or grantee. Grantee The person or company who buys the land from the owner or grantor. Dry hole When a well is drilled and no production is secured or found. Producer A well that successfully finds production and produces oil and gas. Mineral Ownership under the surface of the ground which can be separate from the surface ownership if minerals were reserved when the land was sold, severing the minerals from the surface. Royalty Ownership of the production of oil and gas wells or the right to receive the mineral owner s income if they transfer or sell their royalty to another individual. Mineral owners still retain the right to lease. This also means the amount of percentage you may receive as a mineral owner when you execute a lease. Mineral Reservation When the owner sells their land but reserve the mineral rights to the land. Deed The legal document that transfers ownership of an exact tract of land. 18

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