In the beginning of this great Utica play on GMS archives, landowners can read in real time the evolution of the play up to the minute today, this is phenomenal and most likely unprecedented. The lack of knowledge and experience in a play most likely damaged landowners and yet created immediate wealth for many.
This writer who ran a sleepy land mangement company in Ohio, constantly provided insight, knowledge and understanding on GMS in order for all landowners to grasp the industry that required for their survival the minerals owned by each and every landowner in ther Utica shale.
In the beginning, another phenomenon which sprang up immediately was the massive landgroups and this vehicle for many seemed to be the organization to protect, organize and lead the landowners. Rather than revisit the enromous amount of information relative to landgroups, I leave it to the reader to gain this knowledge on GMS.
What needs to be said and what has been needed from the beginning is Land Management and following is why many landowners have made serious mistakes which many times unfortunately are permanent:
1. Land management is a team of qualified professionals with experience individuals working strictly in behalf of the landowner.
2. Landowners require assistance from the beginning of a play and for the life of the industry in a play.
3. Pooling resources (legal,engineering, monitoring, accounting, research) is economical and affordable allowing a landowner to continue their normal lives.
4. Basically a land management group is identical to property management in real estate however specialized. Sadly, land management is rare in this play.
This is an opener and is meant to further the debate and education of us landowners as we continue down this journey. And, I strongly believe this is needed more than ever today.
Sorry for the delay in answering your questions; God bless this play, it is giving us all alot of work lately. First of all it is a relief to read what you write since you are truly a veteran of the old oil and gas industry locally. Some here on GMS really do not fathom how rewarded we are to have you and other professionals giving good advise here.
As far as large acreage being the first to be leased, farms really were managed correctly by the owner farmer, so to lease he only needed a good lawyer. Where we found ourselves in the beginning of the play was managing smaller suburban and urban properties. Since we have been into property for many years, the pace was never like it is now with the energy companies as new tenants. We also found ourselves wondering how we fit into this new demand, but after the awe, we fell right back into looking out for the best interest of our landowners and ourselves. Yes, we probably were the first to successfully negotiate with majority of the energy companies at our doorsteps, Shell (PA), Hilcorp,CHK, and BP.
When CHK first opened up Mahoning county for leasing, our in house real estate lawyer immediately contacted an oil certified lawyer from Texas for consultation. In addition, as the engineer in the group I retained an engineer from Texas locally who was in Russia five years ago doing well logging on the largest horizontal rig operated by Exxon, he taught us about well logging. What we first concluded was that landowners would need property management for the duration of the well and that ROW, royalty accounting, surveys and every normal thing relative to property was still going to be needed albeit more intense.
One important thing we realized from the beginning is that property managemnt is really landowner driven, there is not a fast sale approach, "sign this lease or you will be left out" approach. Property managemnt is still the same as far as demand, if you want and need your property to be managed, call us up, it is a genuine relationship. The landowner wants someone experienced and established to look after their property period. For instance today, having lunch with an associate in downtown Youngstown, a very wealthy businessman came in an waived at me, so I walked over shook his hand and chatted a bit about the upcoming outdoor movies and we started talking about energy. He surprised me that he owns 500 acres here and another 200 acres there and that he hasn't leased yet. Most likely because he is pretty much isolated from solicitation by his staff and he does not need the money. He asked me to give him an email shout and we would sit down and talk about management. Now this one is a large landowner but it is the same as most of our landowners, community, big or small.
Finally one of our key new additions to our team, because we had no experience in oil and gas realtive to land, is an "older" exlandman. I know, I know, not all landmen are evil. What impressed us about this landman the most, was we met him as one of the landman of a major energy company trying to lease our lands. He was man enough even though he severed his employment , to forward us to the company he left. He was at odds because of.......morals, he felt many of the approaches required by the large energy companies were just not feeling right with him. In any event, he is a great God send to our small management team.
anyhoot, enough about us, once again this is not a plea for clients. More likely, this is a response to the outrage of unprofessionals tarnishing the service of land management and a counter to landowners being taken advantage of by a new industry we are unfamiliar with.
I predict more lawsuits will be filed against self proclaimed "experts" who led landowners into negotiations with multi billion dollar companies denying the property owner professional representation. Thus resulting in the inability of the mineral owner to secure the fairest value and terms.
It was very enlightening for me to read the posts back and forth. All of the comments, from both sides, support my long held views that landowners groups do not work. Why not? Because there is an inherent, built in bent towards a conflict of interest. While landowners' groups are touted as "unions" by some attorneys' groups, they are not because of a union's concept of "one for all and all for one." By its very nature, that cannot happen in a landowners' group because no operator will ever be obligated to take every lease of every member in a group. And when attorneys purport to represent all of the group members, what becomes of the landowners left out? What about the attorney's ethical obligation to that landowner?
Story time. There was a Texas-style landowner group in Butler County. The leaders of this group, with the aid of a certain attorney, split from the group, signed their own lease and left the rest hanging. To this day, they remain unleased. The simple, honest act that could have been accomplished to avoid this conflict of interest would have been to tell the landowners that it would be up to the operator to choose which leases it wanted and that a possibility existed that they would not all be leased. This was never done because the leaders wanted to keep this group together for some reason, most likely for their own potential pecuniary interests.
The only purpose I see for gathering groups of folks and pooling acreage is to assure that the folks are ALL treated fairly and equally. I submit that this can be done without making promises and guarantees to them that cannot be enforced.
My two cents.
I beleive past landgroups will be investigated on how they represented landowners.
FFF, Do you have any HBP lease samples available that you could send me? Thanks, Harry