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No Lease, No Grease

No Lease, No Grease. Henry Hood Sr. Vice President of Land & Legal. What is Land?. “Land is the source of all wealth” Henry George, American philosopher (1879). Why Landmen? The U.S. is the only oil and gas producing country that has widespread private ownership of minerals.

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No Lease, No Grease

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  1. No Lease, No Grease Henry HoodSr. Vice President of Land & Legal

  2. What is Land? “Land is the source of all wealth” Henry George, American philosopher (1879)

  3. Why Landmen? • The U.S. is the only oil and gas producing country that has widespread private ownership of minerals

  4. U.S. is ALSO THE only country that has local rule of oil and gas   • State regulation  • Multi-state compacts (SRBC) • County/township ordinances • Municipal ordinances • Plat restrictions

  5. Role of a Landman • Determines mineral ownership of well site or prospect outline • Buys leases • Negotiates surface rights for well sites • Negotiates deals with industry partners to trade leases or joint venture wells • Pools and unitizes tracts and owners • Calculates well ownership • Estimates future well ownerships (PUDS) • Works with acquisitions & divestitures to buy and sell properties

  6. Top oil and gas plays in the US • Haynesville Shale – Louisiana • Fayetteville Shale –Arkansas   • Barnett Shale – Fort Worth area • Eagle Ford Shale – South Texas • Marcellus Shale – PA and West Virginia • Utica Shale – Ohio • Bakken Shale –North Dakota and Wyoming • Various in Oklahoma

  7. ALL PLAYS ARE UNIQUE WITH THEIR OWN LAND CHALLENGESLET’S EXPLORE The Good, the bad and the ugly . . .

  8. Haynesville Shale - Louisiana   Good: • Producer friendly environment • Single appointed expertcommissioner • Forced Unitization   • 10 year prescription rule  

  9. Haynesville Shale - Louisiana   Bad: • Prescription interruption rule  • No risk fee from unleased mineral owners  (100% back-in) • Accounting to unleased owners

  10. Haynesville Shale - Louisiana   Ugly: • Legacy clean up liability   • Gatti litigation – one well units

  11. Haynesville ShaleDevelopment Plan

  12. Fayetteville Shale - Arkansas  Good: • Limited competition • Compulsory Integration • Standard JOA • Cross-unit authority • Cooperative political climate

  13. Fayetteville Shale - Arkansas  Bad: • 9 member politically appointed OAG Commission • Limited hearing opportunities • Standard JOA • High Road use fees  

  14. Fayetteville Shale - Arkansas  Ugly: • Lawsuits (Earthquakes, Nuisance)

  15. Barnett Shale-Fort Worth area Good: • Lots of gas • Modern digital county land records • TRRC exclusive  (mostly) jurisdiction of drilling and pipelines • Eminent domain

  16. Barnett Shale-Fort Worth area Bad: • Highly fractured (and factioned) mineral title • Surface access restrictions (drill sites, water sources and disposal) • Urban drilling infrastructure challenges • Surface access restrictions • Undeveloped well density/conservation regulation – minimum set backs from uncontrolled tracts  

  17. Barnett Shale-Fort Worth area Ugly: • Politics, politics, politics • Local rule battles with municipalities • Hyper-active Media     • Anti-Drilling Wackos • Opportunism /greed

  18. Eagle Ford Shale –South Texas Good: • Large sophisticated landowners • Few split estates • Flat, dry barren undeveloped surface

  19. Eagle Ford Shale –South Texas Bad: • Burdensome lease /surface lease forms • Hunting season restrictions • Remote location /limited infrastructure

  20. Eagle Ford Shale –South Texas Ugly: • Mexico

  21. MARCELLUS SHALE Good: • Simple lease forms    • No offset rules (Pa) • No lease flippers • Exclusive rule / Uniform Municipal Ordinance  

  22. MARCELLUS SHALE Bad: • No pooling / no unitization • Well Impact Fee • Coal relations   • Primitive county land records/register of deeds • Dense land ownership – poor title  • Challenging surface access issues Legacy leases/marginal production • Carpet bagging perception

  23. MARCELLUS SHALE Ugly: • Gasland • Opportunistic lease cancellation lawsuits     • West Virginia anti-business legal climate • New York

  24. UTICA SHALE Good: • Landowner coalitions (ease in leasing blocks)   • Limited competition • Cooperative government • Compulsory unitization

  25. UTICA SHALE Bad: • Old leases • Legacy HBP   • 500 ft. set backs from any unleased owner/working interest • Undeveloped oil and gas law • Uncertainty of Dormant Mineral Act • Railroads

  26. UTICA SHALE Ugly: • Severance taxes looming

  27. Utica shale

  28. BAKKEN SHALE Good: • Large tracts

  29. BAKKEN SHALE Bad: • Federal lands • Endangered species • Split estates  

  30. Oklahoma Good: • Force Pooling (especially forced leasing) • Tract Indices • Cross unit wells / multi-section units • Pro- development regulatory environment

  31. Oklahoma Bad: • Complex title (horizontal and vertical)    • Dense competition • Hyper-active legislature

  32. Oklahoma Ugly: • None No Place Like Home!

  33. Demographics - Gender

  34. Demographics - AGE 70% under 35 18% over 45 65% under 35 21% over 45

  35. Demographics for supervisor and above 70% under 35 18% over 45 65% under 35 21% over 45

  36. Demographics – AGEsupervisor and above 68% > 45 36% > 55 42% > 45

  37. Columbiana County Record Room

  38. Columbiana County downstairs and upstairs hallway

  39. Digitization and Indexingof County Records

  40. QUESTIONS?

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