Development Geology Reference Manual edited by Diana Morton-Thompson Arnold M. Woods AAPG Methods in Exploration Series, No. 10 Published by The American Association of Petroleum Geologists Tulsa, Oklahoma, U.S.A. 74101Functions of a Petroleum Landman James C. Tinkler Univesity of Houston-Downtoron Houston, Texas, US.A GENERAL FACTS ‘The United States and the individual states have followed a legal system based on Roman law, which allows private ‘ownership of oil and gas interests. Nevertheless, the federal and state governments control the leasing of about one-third of the oil and gas interests underlying the onshore landmass of the United States (estimated at 22 billion acres). They also control 100% (97% federal and 3% state) of the offshore areas of the United States (estimated at 885.6 million acres). In additional, 54 million acres of Indian lands are subject to US, government leasing control, and leasing rights to 44 million acres in Alaska are controlled by Alaskan natives (Mineral ‘Management Service, 1989; Petroleum Independent, 1991) FUNCTIONS OF A TYPICAL PETROLEUM LANDMAN, ‘The functions of a petroleum landman, who should be a highly skilled negotiator, vary from company to company. In the case of an independent landman, the functions vary depending upon his or her area of specialization. Generally, these functions can be divided into three (sometimes overlapping) phases (Burke, 1983; Kimball, 1982; American Assocation of Petroleum Landmen, 1984): + Acquisition ‘+ Maintenance ‘+ Disposition Acquisition Phase Tre acquisition phase involves the following functions: 1. The andman must obtain the rights to explore and produce oil and gas interests underlying lands doomed prospective fo exploratory or developmental purposes (including producing properties). These rights may be obtained by purchasing ol and gas leases, permits, options, contracts (fam-outs), leas trades, well trades, joint venture agreements, creation of partnerships, and /or acquisition of entities. Preliminary o obtaining such rights, the andman must determine the availability ofthe desired acreage by (a) examining the public records, (0) reviewing notices of Jease sales (c) making local inquiries, and (@) observing the activity Fany) of competitors. Also, costs must be determined along with the terms and willingness ofthe ‘owners to either lease or trae their interests Upon supporting the recommendations to acquire interests, obtaining the funding, and setting the terms of the trade(s), the next functions in the acquisition phase include the following: (I) select personnel; (2) make detailed ‘ownership checks; (3) negotiate with the interest owners on costs and terms; (4) cause or prepare the necessary documents; (5) pay the seller either by cash, check, or customer's draft, or by contract to perform the drilling or services promised; (6) obtain execution and recording of the affected documents; (7) process the documents, financial records, and data necessary to maintain the interests acquired; and finally, (8) perform the necessary “due diligence” or ttle curative. ‘Maintenance Phase ‘The maintenance phase during the ownership period involves lease administration related to the following, functions 1. Processing payments of delay rentals, royalties, and shut-in royalties, as well as landowner relation activities 2. Title curative work involving ownership changes affecting various payments; obtaining pooling and untization agreements; confirming good or defensible title prior to drilling by obtaining documents for ttle ‘examination; and preparing and getting execution of ‘curative documents to satisfy the “requirements” made by title examiners (attorneys) in ther ttle opinions, 3. Promotional and /or contract negotiation and preparation with outsiders or investors on deals such as farm-outs,farmvins, bottom hole contributions, seismic ‘options, easements, joint operating agreements, bidding. agreements, unitization, and other contracts 4. Keeping track of lease and contract obligations (receivable and payable), and maintaining land statistical records Disposition Phase The disposition phase involves the following functions: 1. Release or surrender of interests in leases or contracts as they expire 2. Farm-out sale, o disposal of oil and gas interests 3. Keeping land records for federal and state tax purposesLand Description and Maps James C. Tinkler University of Houston-Downtown Houston, Texts, U.S.A INTRODUCTION “Any person involved in the exploration, development, and production of oil and gas is usually exposed on a daily basis to property descriptions and oil and gas maps. Fundamental to property descriptions and maps is the principle that every tract of land or point on the earth is unique and distinguishable from any other tract or point— that i, if they are described in a legally sufficient manner. ‘The maps discussed in this part of the Manual are limited to those that are typically called “land” maps in the oil and {gas industry. Gererally, land maps are planimetrc, that i, they reflect a flat or horizontal surface that show the shape, dimensions, and extent of a given area or tract of land. In contrast to this, altametric (commonly called topographic) ‘maps, additionally reflect the variations in ground surfaces with respect to sea level. ‘Any point on earth can be identified in terms of latitude (east-west lines parallel to one another, with a base line located on the Equator), longitude (north-south circular lines all intersecting at the true north and south poles), altitude, and time. Several commercial map companies have revolutionized ‘map making and map sources for use in the oil and gas, industry by using modern computer and satellite positioning, devices and technology, all tied to base points that are defined, identified, and delineated by the US. Coast and Geodetic Survey. LAND MAPS ‘The land ownership map is one of the most valuable tools the landman uses because it synthesizes a majority of the information from the official records and files. The land map should serve as an overview of the activities in the area or region, along with the current lease status. ‘The following excerpts from a paper by Horace E. Rowald (1984, p. 1-13, chap. ID provide a summary of pertinent information related to land descriptions and maps used in the onshore United States Gee also Stamper, 1973) {quoted material begins herel [There is certain basic information contained. ., such as 1. Property identification by township, range, section, survey, or block Names of lessees and/or operators Status of leases—expiration date or held by production Surface land ownership Mineral ownership Well data (1e., producing wells, dry holes, total depths drilled, operator's name, and occasionally, unit outlines. and topographic information) 7, Names of roads 8. Names of streams 9, Names of lakes Information by allegend. Another commonly used map is the individual tract or unit survey plat. This is prepared by ... {al civil engineer from an “on the ground” survey of a particular tract in connection with a drilling or development program. ‘Common procedure is to establish on the ground boundary lines, as called for in the property description of the lease or deed, through a survey to determine the lines of use and ‘occupancy (established by fences or other definite features). ‘Variances between the property description and the lines of ‘use and occupancy are reflected by the written report. ‘Asset of symbols and abbreviations developed through the US. Geological Survey . . . are used to identify specifically defined features. as symbols and abbreviations is explained PROPERTY DESCRIPTIONS ‘An accurate property description is one of the most important aspects ofthe conveyance. A defective description is one of the most frequent instances of ttle failure. In order for ile to pass, the property description ... must describe the parce! of land so it can be identified and located on the ground. The Rectangular System of Surveys, adopted by the US. Government, generally covers all lands west of the Mississippi except Texas, all states north of the Ohio River, and Alabama, Florida, and Mississippi [Editor's note: ‘The systems used in the excepted states to describe land include sectionalized descriptions developed by each individual state, metes and bounds descriptions, or the use of lot, block, and subdivision descriptions] For example, 17 states, including the original 13 colonies, used a sectionalized basis to describe their land, in which... townships six miles square were laid out, but grants within the township varied in size and shape, and do not conform with the US. Governments system. Land grants were made by France, Spain, and Mexico in southwestern states such as Texas, Louisiana, and New Mexico prior to these lands becoming a part of the United States. ‘These descriptions generally cover large blocks of land and are described by metes and bounds. Over 30,000,000 acres of public domain in Texas were granted by the state to railroad companies... The basic unit of area used in laying out, locating, and surveying these lands was the section, which, for the most part, was a square mile. These sections frequently were assembled into blocks, with a ‘number assigned to each section within the block and a ‘number assigned tothe block.