Introduction

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Introduction

         The oil and gas leasing process for private land owners normally begins when a Petroleum Landman contacts a mineral owner and offers to buy an oil and gas lease.  Exceptions to that normal practice of negotiating for the lease can occur when owners of extremely large interests seek bids for lease packages.

 The Landman could be a Company Landman, who is employed by an oil and gas exploration company, or an Independent Field Landman, who is working under contract for an oil company.  Sometimes, the Landman may be buying leases on interests as part of a speculative effort to sell a prospect to an oil company for drilling.  The Landman will have already done preliminary title research on the mineral interest held by the land owner.  The Landman will generally know why the landowner’s interest is being leased.

 Getting the best deal from an oil and gas land man requires research and an understanding of when and where to find flexibility in the parameters of the deal.  Understanding the flex-points will help you to get the best lease terms from the Landman.  The flex-points are where oil companies will accept changes to their standard language and initially offered terms.  Timing, location, and the size of the leasehold tract will determine whether or not you can negotiate the oil company away from its standard oil royalty language.  If you do not have a large tract that is strategic to the oil company and if timing and location are not favorable, you cannot expect to negotiate any concessions on the oil royalty language.

Copyright 2011 by Edward G, Hawkins. All rights reserved.