Ethics in the Oil and Gas Industry

Most leasing contracts are deceiving, pretending to be Gross when in Fact they are Net contracts due to the Market Enhancement Clause.

Open ended where they claim you're held by production and you get little or no profit.

Shut in terms that make it impossible to get paid even the very meager sums they offer

Though I'm informed enough to avoid bad contracts, when I come across a contract like this it makes me totally mistrustful of the company and reluctant to so much as lease with them.

So far the companies I'm familiar with generally attempt to deceive landowners and cheat them if possible.

Does anyone know of any companies that actually have Ethics?

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Permalink Reply by Billy Park Whyde on August 25, 2013 at 1:29pm

  O&G companies hire attorneys with that being said the CEO could be the Pope but your still going to be shafted if possible

Permalink Reply by Joseph-Ohio on August 25, 2013 at 5:00pm

All that follows is written only IMHO (In My Humble Opinion).

As it appears to me, the only corporate 'ethic' that exists out there in these business / economic endeavors these days is how badly the large corporate interests can rip off the landowner that they are doing business with.  The greater the rip off the better (from their 'ethical' perspective)

In other words as it appears to me, there are no corporate 'fair play' ethics that exist today.

The market place appears to me to be a hostile environment.

All we can do is hope and work for standards, laws, rules and regulations that protect the rights of private ownership.

Elect to power those who embrace that philosophy and un-elect those who do not.

We do not live in Utopia.

As a landowner, protect yourself (as best you're able) at all times.

In addition I find no 'fairness' / 'ethics' in the revising of laws, ordinances, rules and / or regulations that diminish the landowner's rights after said landowner has purchased land on the basis of enjoying the land and the associated landowner rights included at the time of the purchase.

Landowner Beware (the snow job) !

Good luck to the landowners - we need it.

Permalink Reply by randall gottus on August 26, 2013 at 5:13pm

I 'm not sure who to respond to ...but when I was approached by a landman a few years ago, he stated that his company (Shell) was interested in leasing my property, and then proceeded to give me a lease agreement with an amount writtened on it. He then gave me his phone number and asked that I call him back. I responded by saying that I need to meet with an attorney first, and therefore, it may be a few weeks before I can call him back. His response was "no problem", and then he left. After a few weeks, and a few visits to the attorney's office, and many phone calls, we got it done...with almost double the amount, and with many changes to the agreement, and tons of addendums added. The landman was very supportive and responsive to any concerns I had, and did not mind working with my attorney. I then spoke with other landowners back then who also had a positive experience with Shell. So..I guess we landowners do have some control over this process.

Permalink Reply by Joseph-Ohio on August 26, 2013 at 8:21pm
Good for you.

Hope when it's our turn we can relay the same or similar good experience.

Right now however (based on what we read) you seem to be the exception rather than the rule. Wouldn't you agree ?
Permalink Reply by randall gottus on August 26, 2013 at 8:59pm

I guess, maybe.. I don't know. I can only say that the landman from Shell that I worked with a few years ago in N. Butler County was very supportive, and remained professional during the entire process. Some of the other landowners that I spoke with back then also felt the same way.

Permalink Reply by FairMktValue on August 26, 2013 at 9:15pm

So..I guess we landowners do have some control over this process.

 Nuff said!! 

Wake up landowners!  You are allowed to say NO!

Permalink Reply by Joseph-Ohio on August 26, 2013 at 9:34pm
Yeah.
BTW - we're ready to say no if we have to - but, we're also ready to say yes if we can.
Hope we don't have to say no (should we get a chance to bargain) and can say yes with confidence and the knowledge that we've negotiated a square deal.
Permalink Reply by randall gottus on August 26, 2013 at 10:15pm

FairMktValue...WHO said that you are NOT allowed to say NO?    ...are you having some difficulty processing what I said?  If I did not want a lease ...or if the landman would not have agreed to the many changes/addendums my attorney and I wanted, I would not have signed.  Let me know what part you are having difficulty with, and maybe I can help.

Permalink Reply by Lisa McKenzie on August 27, 2013 at 10:50am

Agreeing with Randall.  If there are terms you don't like, then say no.  I have yet to sign a lease, but will say that I'm shocked the companies' process is just to mail a lease with a prepaid return envelope, as if we'd just see the payment order and sign. 

My sister and I have one property where the same land man has been calling for over 2 years.  The lease has terms we don't like (deductions from royalties, only 1/8th royalty, they want a 5-year extension after the primary term, no Pugh clause, gives them a right of first refusal any time we want to enter into a new lease with someone else, has no time limit to the Shut In Well clause and only pays $1/acre for that per year, general warranties of title, and no calculation of our net acreage - their geneologist turned up an extra sibling that we don't have, so the math is off too).  He keeps calling and asking what it will take for us to sign.  Our objections to the lease agreement remain unchanged.

I will say on the "ethics" issue that I found correspondence of Mom's from the mid-1960's where Pennzoil sent her a letter about 3 properties they wanted to lease, but which all had back taxes into the 1880's owed as they had never been put on the tax rolls.  It gave Mom instructions to send them the checks and they would redeem the properties for her, in her name, which they did.  These days, the companies skip the owner and go straight to the courthouse to have the property sold for taxes, so they can get it cheap.  BTDT on hundreds of acres.  We had properties in Wetzel sold when the taxes owed were under $3 and had been paid the previous year, and Mom had lived in the same house for 20 years.  That said, the companies' job is to get the most they can get for the least cost.  We have to look out for ourselves as in all things.

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on August 27, 2013 at 5:46pm

It is tough. It's quite simple, too.... THEY (G&O Co.'s) are 'your friends' until you 'sign on their dotted line' - then YOU are THEIRS (or rather, what's yours is theirs...til death do you part...).

Had this thought the other day...YOU are the 'king' of your castle/house/land...but, like in Russia years ago when the Czar was forcefully abdicated his thrown...in a way 'we' can potentially be forced to 'abdicate' our OWN 'thrown' (our HOME/PROPERTY 'thrown')...ethics? Only when it comes down to the 'brass tacks' - the pot o' blak gold at the end of d' GAS/OIL-BOW...

Interesting how a company can strategically 'monopolize' a 'set area' - Twsp., Co., +...and OTHER DRILLERS basically 'stay away'. WHY? - because they all 'buy & trade' OUR 'cattle-fodder' land to whoever 'rules the roost' (at the time...)...remember how HalCON 'did (WRONG!)' that Mercer Co., Pa. group? Interesting....

As one light lights another, nor grows less - so nobleness enkindles nobleness. IF you 'think like a king', then a king thou shalt be...(but FIRST, one must BELIEVE...). King of YOUR castle?...or just a 'renter' in disguise (basically 'paying RENT to the bank who LENT to you the do-ray-me) - with the OPTION to 'own' (ONLY AFTER you 'pay the place off'?...). *NOT UNTIL you 'pay the OWNER off in full are YOU at the true helm of your ship' - Capiche? Rules are rules...and he who has the gold MAKES 'the rules'...therefore doth thou live, breathe, & die....

Permalink Reply by Deb Reynolds on October 8, 2013 at 11:55am

Our original lease was with East. They were conspicuously absent for information. 

Shell took over, and they have been very open, I've seen and heard with my own eyes how they are bending over backward to be good neighbors, to work things out, to answer questions. 

Their safety record is astounding, they're extremely careful. 

I was recently involved in a discussion with an elderly person whose grandfather left a property to his descendants--we're talking 5 generations down, approx. 2 dozen people splitting the lease monies, and Shell has been very good about searching out the line of descent, making sure documentation was present--it's quite a mess and may take years, since some of the family have not had contact in generations. 

They're not going to give away wads of money for nothing. But they are a good company to work with. Individuals, however, can be a giant PITA.

On another note, I know of 3 individuals who worked for Shell or a subsidiary who had sudden, severe health needs (incurable cancer, and 2 car accidents) and the company has gone far above and beyond for their people. 

Just my experience. 

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