Landman Training Manual

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OIL & GAS LANDMAN

TRAINING MANUAL

The oil and gas industry is going through a major transformation with prices rising dailyit seems. With price decline being the trend for the last 20 years, no one has believed theoil and gas industry to be a high paying job where you can make a good living. So, theamount of individuals entering the oil and gas business has been in a steady decline alongwith the prices. Now, with the rise in prices, companies are scrambling to hireexperienced people. The problem is there is no one to hire and demand for experiencedoil and gas workers is skyrocketing.

Becoming a landman has become a profession where you can earn income of over onehundred thousand dollars per year with no previous experience. I cant think of any otherbusiness where you can earn this type of money without having worked in the industryever. But, now that the prices are rising daily, there is nobody to do the work andcompanies are paying landmen whatever it takes. You can take advantage of this lack ofskilled landmen and start earning $500+ per day along with all expenses paid. I dontknow of any other business where you can earn this type of money from the start. And,this book will show you all you need to know to give yourself a head start to earning theincome you deserve.

The hardest part about becoming an oil and gas landman is learning the processes

involved in the job. That is our reason for writing this book, to help you learn all youneed to know about becoming an oil and gas landman. Finding work with the risingprices will be easy once you know the ins and outs of the business. Dont think you willknow all there is to know just from reading our book. You will have a good idea of theprocess involved, but there are questions that will always come up that you will have toconsult other landmen or an attorney to answer.

Employment

When you have made up your mind to become an oil and gas landman, your first orderafter reading this book will be finding a job. There are so many avenues to finding work

as a landman, that we could write an additional book on this subject. But, we will focuson the few that have been successful for other landmen first starting. Your first source ofany job search, and becoming a landman is no different, is the internet. All the jobboards are full of jobs for all types of oil and gas jobs, especially landmen. Just go toMonster, Career Builder or your local papers web postings and you will see numerousads for landmen.


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Another great source of landmen jobs are geologists. They always have an inside trackon who is doing the drilling and also who is growing and looking for landmen. You canjust open the phone book and start calling geologists and you will be pointed in the rightdirection. You can also contact small operators and even visit the courthouse to talk toother landmen. Other individuals who work in the courthouse will also be able to lead

you in the right direction. The way the industry is working right now, getting out andtalking to people will help you find a job. It is definitely an easy sell and one that canstart your rewarding career in the oil and gas business.

After you have secured your job through the various sources we have discussed, it is nowtime to start earning your pay. The way the majority of landman projects start is that ageologist finds an area that they believe will be a good spot to drill an oil well. Thecompany does several studies on this land and if they believe oil and gas will be found,they will go ahead and start securing leases on the land. They will then tell you thespecific sections within a township and range they want you to lease and you will beginworking. We have included a sample section map in the back of this book to help you

know what you are looking for. Now you are ready to start leasing.

The Leasing Process

Before we get started explaining the process, we want to give you a brief overview of theentire process. The list below goes in exact order of the way the process of leasing willwork:

1. Obtain map from company2. Determine land ownership of the map3. Determine if the land owner is the same as the mineral owner4. Contact the mineral owner about the lease5.

Negotiate with the mineral owner over the lease terms6. Get the lease signed by the mineral owner7. Record the lease at the county or parish courthouse where the land is located8. Do a purchase report detailing all aspects of the lease and terms9. Repeat this process until you finish leasing the entire area10.Do a Division Order detailing ownership of the well

Now, the list above is a brief overview and there is much more involved in the process.We will explain the entire process, but questions will arise in every situation. Donthesitate to ask questions of others with more experience. We have been in the businessfor over 30 years and there are still things we dont understand.

Land

The first step to learning the oil and gas business is to know the land you will be leasing.Land is divided into sections, townships and ranges. A section includes 640 acres and atownship and range is 36 sections. If you view the section map, it is broken down into 16quarters. For example, the SE/4 of the NW/4 is 40 acres. And the NW/4 of a section


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equals 160 acres or four 40 acre tracts. When you first view the section map, you need tokeep in mind there are sixteen 40 acre tracts in each section. Each part of the section mapis broken down into quarters and that is where you get the NE, SE, NW, etc. detaileddescriptions. This is derived from the quarters on the section map. This sectiondescription will be your basis for figuring the ownership in the property.

A township and range is made up of 36 sections or six square miles. When yourcompany identifies a township and range, they will usually pick two to five sections foryou to research for their prospective well. This will give you a basis for your leasingwhen you come into the county or parish to begin your endeavor. A sample map of awhole township and range is included in the back of this book. Determining thedescriptions for the land is an important part of your job and one that you need to study indetail to ensure no mistakes when reading sections, township and ranges along with thedescriptions of each.

Some land is described in metes and bounds and in these areas you won t be using

sections, townships and ranges. The metes and bounds methods describes certainlandmarks or coordinates and you will determine the amount of acreage from this. Onceyou start using the metes and bounds method, you will get used to the terminology. Poleswill be the main word used on metes and bounds descriptions. A pole is equal to 16 feet and 320 poles is equal to one mile. Most of the descriptions will be something like:

Thence north 38 poles to a barn

This means that the description of the land at this point goes north by a distance ofapproximately 627 feet. As long as you understand poles, then you can understand themetes and bounds method. It is just a different way to describe land and is used in somecounties around the country. This book is written for sections, townships and rangesthough, but we wanted to give you an explanation on the metes and bounds process.

When you begin working on a certain section, you will receive a map of that section orthe section number so you can go to the courthouse and obtain a copy of the map. Themap will contain all the owners in the section and will be your first stop in determiningownership of the section. Now, these owners are land owners and you are trying todetermine mineral owners, but this will still be your starting point. Each tract isnt goingto be perfect meaning that you wont have 5 owners in a section who own 40 acres and 2that own 220 acres bringing your total to 640 acres. If this was the case, you would havean easy time leasing, but I doubt there would be much of a demand for your services.

Most of the time, you will have 20-40 different land owners in a section and the tractswill range drastically in size. The amount of acreage will be included on the map youreceive some of the time, but if it isnt included, you can get the exact acreage off thedeeds that you will be researching at the courthouse. We now want to go back to the mapdescriptions because this will be very important in determining the number of acres andalso where the land is located on the map. We know this sounds like common sense, butyou need to make sure you know where North, South, East and West are on a map.


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Surprisingly, there are a lot of people who dont know this and if you cant figure out thispart, you are going to have a hard time in this job.

Many times when you are researching deeds, you will see under the descriptionsomething similar to this:

The E/2 of the NW/4 and the SE/4 of the NE/4 located in Section 21, Township 18 North,Range 2 West minus 3 acres sold to Raymond Fisher

It will be up to you to figure out how many acres are in the above description. We willbreak it down just so you understand how to read these descriptions. In all cases whenyou see a description like the above, you will want to separate them. This means thatfirst you will determine the number of acres in the E/2 of the NW/4 and then you willdetermine the number of acres in the SE/4 of the NE/4.

E/2 of the NW/4 In every case when you see a description like this, you will need to

start with the second part. I hope this makes sense, but the land in the first part of thedescription is included in the second part of the description so you will need to figure outhow big the second part is. We know from the description at the top of this section thatthe section map is 640 acres and is broken down into quarters. So, the NW/4 is 160acres. Now, each of these 160 acre quarters can be broken down into quarters that areeach 40 acres. But, in the description above, we are trying to get the E/2 of the entirequarter. So, the total of the acreage is 80 acres.

SE/4 of the NE/4We will start working on this the same as the description above. Thesecond part is asking for the NE/4 which we know to be 160 acres. We also know thatthe 160 acres will be broken down into quarters so this acreage will equal 40 acres.

If we add the 80 acres to the 40 acres, we get 120 acres and then we take out the 3 acressold to Raymond Fisher and we have a total acreage of 117 acres for this description.

We want to give you a few others to practice on and we are putting the answers at thebottom of the list to make sure you understand. This sounds simple, but is reallyconfusing and you need to practice on these descriptions so they become second nature.All of the descriptions below are based on an entire section of 640 acres.

1.NW/42.S/2 of the NE/4 minus 4.5 acres sold to James Berry3.NW/4 and 3 acres in the NE/44.

S/25.2 acres in the NW/4 of the NE/46.The NE/4 of the SE/4 and 17 acres in the NE/4

Answers

1. 160 acres


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2. 75.5 acres3. 163 acres4. 320 acres5. 2 acres6. 57 acres

Now these wont be the only kind of land descriptions you will find. In some cases, youwill get a description that references different items such as a tree, stake, piece ofproperty, etc. These types of descriptions could also reference different points found by acompass. In many cases these land descriptions will be greek to you and will have nobearing on your job. The reason they wont have any bearing on your work is they willalmost always give a detailed amount of the acreage at the end of the description. So,after you see one of these descriptions you will usually see the words containing 2.93acres or something like that and you can determine the exact acreage from this.

If you are doing your leasing in an area that includes a lot of houses, then in many cases,

you will just be given a lot and unit in the description. Every subdivision is broken downinto different units and lots which will make your description look something like this:

Lot 2, Unit 3, Plantation Estates Subdivision

Of course, you cant determine ownership from this because you dont know how bigeach lot is. But, every subdivision is required to file a plat of the subdivision at thecourthouse, so you will be able to refer to this to determine the exact amount of acreageincluded in the plat.

The descriptions above will cover the three main ways that land will be listed. Now,there will be exceptions, but you really dont care as much about the description, all youcare about is the amount of acreage. By using the courthouse and the courthouse records,you will be able to determine the amount of acreage described.

Courthouse Work

The Tax Assessors Office in the county or parish you are working will be the first placeyou will visit. Along with having section, township and range maps in their office, theyalso have a record of all surface ownership in the county or parish. You will need to findthe name of the current owner of a particular piece of property by looking at the tax rolls.In some cases, the assessors office can provide you a print out of the different landowners which will include book and page numbers to use for reference. There will bebook and page references to the records in the county or parish clerk of courts office. Wehave also included an example of this form to show you what you will be looking for.This ownership form will become your trusted source over the next few months you areworking this section. When the tax assessor records are not complete or available for thetitle to each tract, your other source of title history would be an abstract office usuallylocated near the courthouse.


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The main thing you are trying to get from the assessors office is the book and pagenumbers where you can research the mineral ownership of the land. Different areas haveit listed in different ways but all you need is a way to check different title transfers on thiscertain tract of land so you can determine the mineral owner. Obtaining the mineralowner is the whole point of your courthouse work because this will be who you are

actually leasing from. If you were just leasing from the land owner, this would be a veryeasy job, but your job is to determine each mineral owner on the map you are working.

We now want to side track a little and explain mineral ownership to you. In a perfectworld, the mineral owner and the land owner would be the same person. But, as we allknow this isnt a perfect world. Sometimes the mineral owner and the land owner are thesame person, but this doesnt happen all the time as somewhere along the way someonereserved the minerals on the land. If a mineral reservation has occurred, then it will stayin effect forever. The only exception to this law is Louisiana where a mineral reservationstays in effect for only ten years and then transfers back the land owner.

So, when you are researching deeds and other pertinent instruments for the land, you willneed to check each instrument to see if a mineral reservation has occurred. The languagewill be different in most cases, but they will be easy to spot. It will read something likeSeller reserves unto himself/herself all the minerals on and below the described land.Just remember, a mineral ownership stays in effect forever so it is best to start with theolder records when you are checking title. If you see a full mineral ownership of theproperty then the ownership cant be lost but it can be sold so you will need to make sureno sale of the mineral ownership has occurred. Just check the records carefully to traceland ownership along with mineral ownership.

Your next stop will be the county or parish Clerk of Courts Office. You will use yourownership form to look up the book and page deed references to track ownership. Beforeyou start this process, it is best to make sure the property isnt held by a current lease. Itis best to take a few of the large land owners in the area and run their names on thecomputer system or the Direct Index Of Conveyances. The Direct Index Of Conveyanceswill be available in the clerks office and will allow you to search under a certain name tosee if they have leased their land. You will want to check back for the last five years andcan do this by running the persons name in the index and see if an oil and gas lease isrecorded under their name. The reason why you select several land owners to review inthis process is because you arent sure they own the minerals, but if you look at severallarge tracts, in most cases one of these people will own the minerals. This will save youtime having to determine a mineral owner when you are doing this step.

Now, leasing for the last five years isnt the only thing you will need to check prior tostarting your leasing on the area. You will also need to check for active wells in the area.This can be done by contacting the Department of Natural Resources in your state andinquiring about a well in a certain section or tract. Many times, each state will have acomputer directory where you can obtain this information. The Department of NaturalResources can point you in the right direction though. If you live in Texas, you will needto contact The Railroad Commission in Kilgore for well activity. Once you have


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determined that there is no current production in your area then you are fine to lease theland.

If it is determined that production is occurring then you wont be able to lease the acreagewhere the production is occurring or land that is held by this production. This will

eliminate your ability to lease this section. Most companies wont even want to go into asituation where production is currently occurring, but there are exceptions whereindividuals have put clauses in their lease that will cause their land to not be held by thisproduction. To determine the exact acreage held by a well will require much more workand will probably require attorneys to get involved, but this is an option if you find thisscenario. In all cases, your company will perform a lease check that will check if theland is leased or if production is occurring. You might even be doing the lease checkyourself. But, it is still a good idea to perform the lease check prior to starting yourleasing.

We now want to return back to our discussion of the clerks office. This is where you will

start your research of the land and will start viewing the books that determine the mineralownership. From the book and pages listed on your ownership report, you will get a briefownership history for at least the last twenty years of the property, hopefully longer. Youwill need to run the title book back to before 1900 to make sure there are not any flaws inthe title. To do this you will then need to run the last owner of the property backwards inthe indirect indexes book included in the Clerk of Courts Office to see who theypurchased the property from. After you find the previous owner and the deed reference,you will also run this person indirect in the same manner. You will repeat this processover and over until you have traced ownership back to before 1900. Remember, theindirect index will give you book and page numbers associated with each purchase andsale. You then go to the book and page numbers included in the indirect index to see ifmineral ownership was held by a previous owner. Run the name backwards in theindirect (vendee) deed records to see who they purchased the property from and then runthat owner backwards and so on until you have checked back to before 1900.

The easiest way we have found to do title runsis to use a yellow legal pad and list outthe current land owner and then all the associated book and page numbers under the landowners name. This way, you can trace ownership back and record any mineralreservations that occur. You wont believe how confusing all the books and pages getand by tracing ownership back, you will ensure that no mistakes are made, because youwill see ownership going from one individual to another. Also, you will need to recordall mineral reservations that were done on a certain piece of property. There will be somecases where you will see more than one mineral reservation. This is usually just amistake on the latest person doing the reserving, because the first mineral reservation willbe the one that will stay in effect. You will also have to deal with partial mineralreservations, but these are easy to trace. To give you an example of what we are talkingabout, we have included a sample run sheet.


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Land Owner

Bill Friedman8 acres

1119-143Bales to Friedman

1087-554Walk to Bales907-442Jones to Walk615-27Sale to Jonesmineral ownership retained109-903Pierce to Salemineral ownership retained

The above sample is really short and easy to follow. Most of yours wont be this easy tofollow and there will be more transfers of ownerships in deeds, successions, judgement ofpossessions and tax sales. The mineral ownership for the above 8 acres would be:

Friedman2 acresSale2 acres

Pierce4 acres

To help you understand this, when Pierce sold to Sale in Book 109, Page 903, he/sheretained a half mineral ownership or 4 acres. Then, when Sale sold to Jones, he/sheretained a quarter mineral ownership or 2 acres. Those are the only two mineralreservations and with no prior production on the land, Friedman will have the last 2 acresof ownership.

Someone can own the surface of the property but retain no mineral ownership because ofprior mineral reservations in the deed records. Examine all the records carefully back tobefore 1900 and look for language anywhere in the deeds that state that the seller of theproperty reserves all or part of the oil and gas minerals under the property. After youhave completed this chain of title, you should know the mineral and surface ownership ofthe property. We have included a sample deed with mineral reservations for yourinformation. The language in this reservation wont always be the same, but it will bevery similar.

Once you have run all the current landowners and determined the exact mineralownership, it is now time to start the leasing process. Determining the mineral ownershipwill be the most important and most time consuming part of the job. Just make sure youtake good notes and understand clearly how title is transferred on each tract and how areservation will affect ownership. The names will start getting confusing and rememberthat for oil and gas leasing, the ownership of the minerals is your main concern becausethis is who you will contact in order to obtain oil, gas and mineral leases on their mineralownership.

After you have completed this process, the company you will be working for will giveyou certain parameters of contacting these individual owners. There will be an offer for acertain dollar amount per mineral acre (example $100 per acre), a certain royalty amounton the property (example 1/6th royalty) and a certain term for the oil and gas lease


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(example 3 years). These examples are just basis for this book and actual terms of theleases could vary substantially depending on many factors such as demand and amount ofdrilling success in the area. It is now time to move on to the leasing process.

Leasing

Your next step is to contact the owner or owners of the minerals and make them an offerbased on the terms you were given by the company. In some cases, it is a challenge tohunt down the contact information for the different mineral owners. If the mineral owneris the same as the land owner, then you should be able to get an address off yourownership report or the tax rolls. Where you run into a problem is when you have amineral owner from many years ago and you need to get in contact with this person. Thiscan take some work, but you need to first start in the county or parish you are living andrun their name in the computers or in the direct and indirect indexes to see if you can findany current land ownership or land sales for this person and obtain an address from thistract. If this doesnt work, then you will need to run that individual back for several years

in the direct indexes to see if they died and there is a succession on file determiningownership.

This process can become very complicated especially if you have someone who died overfifty years ago and now that mineral ownership is in the hands of twenty heirs. But, yourmain job at this point is getting in touch with the mineral owner and if you are able tolocate a succession, then you will be able to contact someone about leasing. If you donthave any luck finding information about the mineral owner, you might want to startcontacting people in that area with the same last name to see if they can be of any help.At this point in the process, you will become a detective and will have to use everyresource available to get in contact with the individual. You can also look in differentphone books in the surrounding area and use Yahoo.com People Search to help you withthis task. The Internet has made this part of the job much easier and a good place to startyour search if you are stumped is:

www.Intellius.com

They offer a good way to find people that you are having a hard time finding and theprices are fairly reasonable. In most cases, if you search long enough and researchenough records, you can figure out how to get in touch with the mineral owner. Just useall the steps we outlined above and use every available resource to complete this part ofthe process.

Once you have located the mineral owner, you will make an offer based on the termsgiven to you by your company. If your offer is accepted, no further negotiations areneeded and you are ready to prepare the oil and gas lease for signature. If the offer isntaccepted, you will need to go back to your company and see if they want to up the termsof their offer. Some negotiations can last for months and sometimes you will not even beable to come to an agreement. This happens rarely because the mineral owner isntlosing any piece of his land by leasing, but some individuals will hold out thinking they


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can get more money. Just remember, a well can still be drilled even if you arent able tolease every part of the section(s).

Once you have agreed to the terms of the mineral lease, you will need to get startedpreparing the oil and gas lease. Most states have pre-printed lease forms that can be used.

There are also software programs available so that you can do all the typing work on yourcomputer. You can find these programs available on the internet or by talking to otherlandmen in your area. There are a few blanks on each form that needs to be filled outsuch as name, address, lease terms, company doing the leasing and royalty amount. Youwill also want to have an exact description of the land you are leasing on the lease. Thiscan be found from a deed where the land is transferred. In many cases, you wont haveenough room in the area provided on the lease to list all the terms so you will use anExhibit Athat lists additional terms of the lease.

If you are using an Exhibit A, then in the area where it asks for a property description,you will put:

SEE EXHIBIT A ATTACHED HERETO FOR DESCRIPTION AND SPECIALPROVISIONS

You will also have to include every person that owns the minerals on the lease. Therecould be an unlimited amount of owners and most leases only hold 4 names and signaturelines. In this case, you will have to use different leases and have them all signed by thepeople listed on the leases. The people that are leasing to your company will also have tosign the lease and enter their social security number and they will also need twowitnesses and need to have the lease notarized by a Notary Public.

We now want to discuss the Exhibit A. In many cases, an Exhibit Awill be attachedto an Oil and Gas Lease. There just isnt enough room to list all the additions to thelease so the exhibit accomplishes this task. The lease is just a standard lease that is issuedby the states and has a lot of wording and most of it doesnt mean anything to you. Onmost leases, the royalty will be listed as 1/8 or a similar amount and this royalty is anamount that used to be used, but today people are paying 1/5 thor 1/4thor in some casesmore than that. So, this will be listed on the exhibit along with any additional clausesthat the mineral owner will want to include. These clauses are usually standard clausessuch as no drilling on their property or depth clauses about the drilling. The depthclauses will state that all land or depth that isn t held by the well can be released back tothe mineral owner. This keeps people from drilling a well that is barely producing andthen tying up the land with a lease for an infinite amount of time.

We now want to go over several different clauses for the Exhibit A included in theback of the book. This list will give a detailed description of the clauses. For eachclause, please refer to the Exhibit Aat the end of the book.

We are going to go through each number and give you a detailed explanation of whateach clause in the exhibit means.


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1. This is the amount of royalty the mineral owner will be receiving. All Oil andGas Leases will have a standard royalty listed, usually 1/8th. The Exhibit Aroyalty will override the royalty on the lease.

2. Requires the oil and gas company to get written consent from the landowner

before anything is done to or on the land.3. Leaves other minerals besides oil and gas in the hands of landowner unlesssomething other than these minerals is found on the land.

4. This clause is known as a pugh clause and is very important. When a lease istaken on a certain amount of acres, all the acreage is held as long as one well isactive and drilling. This way the oil and gas company could hold all the landowners land from one well and they would have no way of leasing the land againuntil this well is removed or stops producing. The pugh clause protects themineral ownersinterests and makes sure that all acreage not included in the wellarea is released back to the mineral owner so that you can lease the land again.

5. This clause deals with the depth the well is drilled. The landowner will get back

the land 100 feet below the deepest depth drilled by the oil and gas company. Forexample, if the oil and gas company drills to 10,000 feet, the landowner willretain the depth greater than 10,100 feet and have the ability to lease the landagain at the greater depths.

6. This clause means that the oil and gas company producing the well can notmaintain the lease by paying the mineral owner shut in royalties for more thantwo consecutive years. Shut in royalties refers to the well not producing and thecompany holding your lease with a shut in payment instead of production.

7. Makes sure the oil and gas company has all legal responsibilities for operations onthe landowners land. Because the landowner owns the land, they have a legalresponsibility for people or equipment that is on their land. This clause makessure they have no liability and that all the liability is placed on the oil and gascompany.

8. The clauses in the Exhibit A are the correct clauses and supersede any similarclauses in the oil and gas lease.

9. The oil and gas company has 120 days to clean up all the affected land from theiroperations. They also will remove all equipment and trash and leave the land inthe same condition as when they arrived. They also will maintain any roads builtfor the terms of the lease. The oil and gas company also has to properly plug allwells that arent active. And, should any equipment be left over then it willbecome the property of the landowner.

10.Landowner is not responsible if the oil and gas company didnt research the titlework correctly. The landowner gets to keep the bonus paid even if they own lessacreage then they were paid for initially. Upon written request of landowner, oiland gas company must deliver title opinions and abstracts to the landowner.

11.The oil and gas company cant remove any timber, soil, iron ore or other materialsfrom landowners land.

12.

There will be no hunting or fishing on the land. And, employees of the oil andgas company are forbidden from carrying firearms.


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13.If the landowner becomes obligated to clean up, remove or expend funds becauseof the oil and gas company activities, the oil and gas company will investigate,clean up and remedy at its sole cost and risk.

There are plenty of other clauses that can be included, but these are the main ones you

will see. There is also a clause called most favored nations clause that we didnt include.It is a clause to protect the mineral owner and means that if anyone in the area is givenmore favorable terms than the mineral owner by the leasing company, then the mineralowner will get the same terms that are included in that lease. There are other clauses thatwe havent included so make sure you read each of them carefully because this couldcause a big problem if you dont read and understand each clause that the mineral ownerhas included.

After preparing the lease, you will then need to prepare a draft for the dollar amount duethe mineral owner. This draft will be paid by the company you work for through themineral ownersbank within fifteen days. You can mail the lease or draft or personally

visit the mineral owner if they live close enough to your location. It is always better tosee the owners in person if possible because of any additional questions or concerns theymay have. Some individuals will request a check and this is fine as long as yourcompany approves it prior too. One last piece of business and the main reason for issuinga draft is that this gives you time to go back and run the title again before payment tomake sure a sale or lease of the land hasnt taken place since you checked title prior.Since some areas will take you over a year to lease, this is an important step, because youdont want to pay an individual who you shouldnt pay and believe me, the mineralowner isnt going to tell you when you have made a mistake.

Once the lease has been properly executed and witnessed, you will prepare reports to beturned in along with the original lease to your company and a copy of the prepared draft.In most cases the company you are working for will require a purchase report along withan executed and recorded copy of the lease. The purchase report gives you a detail of thelease and lists several items such as:

1. Lessors name2. Lessors address3. Time of lease4. Lease date5. Royalty6. Bonus paid7. Leasing companies name8.

Leasing companies address9. Special clauses included

There will be other items included, but these are the main items you will need to makesure are included on the purchase report. If you are using a leasing program, most of thereports can be done by the program. This will make your job easier and if you areinterested in getting a leasing program, talk to other Landmen in your area.


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We now want to go over the last step in the process. This step is preparing a DivisionOrder which wont be done by the Landman in all cases. The Division Order occurs afterall the land in a certain section has been leased and it is time to drill the well anddetermine ownership of the well. For the purposes of this book, we are going to say that

the section we leased was exactly 640 acres. It doesnt always round to that amount, butwe are going to say it does to help you understand a Division Order. Ownership in theDivision Order is determined by taking the amount of acres owned by an individualdivided by 640 acres multiplied by the royalty amount. This will give the mineral ownersinterest in the well. For example, lets say a mineral owner has 320 acres in this sectionand they leased their land for a 1/5

throyalty. There ownership would be as follows:

320/640 * .2 = .10 or 10 percent

Also, if you had a mineral owner who only owned 4 acres in a section with a 1/4th

royalty, then their ownership would be:

4/640 * .25 = .0016 or .16 percent

The Division Order can be done easily in Microsoft Excel and you will be able to do allthe calculations without a calculator which will save you time.

There are many other details other than the steps outlined in this book, but this shouldgive you an overall view and the knowledge to prepare you for training or being trainedby a company. This book gives you a good idea as to what is involved in becoming anoil and gas landman in the petroleum industry which can be a very lucrative andrewarding career.

We thank you for reading our book and we hope that you obtain the position and profitsyou desire. JPM Investments is the owner of this book and this book can not be printedor sold without express written consent of JPM Investments. JPM Investments alsoacknowledges that this is a training manual and further study is necessary to becoming anoil and gas landman. We also believe the information contained in this book to be trueand correct, but make no guarantees as to the information contained herein or theoutcome obtained if you use this book.


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Forms Included In This Ebook:

1. Deed #356627

2. Deed #04579

3. PlatVillage Of Lucky

4. Township And Range Map

5. Assessor Ownership PlatSection 4

6. Assessor Ownership PlatSection 18

7. Oil And Gas Lease Blank

8.

Oil And Gas LeaseF44575

9. Exhibit A


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Below is a summary of the forms included in this book:

DeedA deed is found in the Clerk of Court records in a Parish or County Courthouse.The deed will show the seller or grantor or donor which is the individual conveying theland and buyer or grantee or donee which is the individual buying or receiving the land.

The deed will also show a description of the land conveyed. The basic information youneed to look for in a deed is who is selling to whom and also what the legal description ofthe land is. This will ensure that you get the right owner and also the right land. In thefirst deed, Exhibit A shows the exact land being conveyed. It is described by sectionsand there are 640 acres in a section. If you look at the 2nddeed included in the package,you will see the same basic information as the 1

stdeed with a big difference. In the last

paragraph on the 1stpage the seller vendor is reserving the mineral rights. This isexactly the type of language you will need to look for when you are doing oil and gasleasing. You will need to scan each deed to look for paragraphs such as the languageincluded on this deed.

PlatA plat shows section layout within a township and range. The plat can be found inthe Tax Assessors office. The plat will give you a brief ownership overview of eachsection. The numbers on the map represent the middle of each section. The platshouldnt be used to obtain ownership; it should only be used as a reference point. Asyou can see in the plat included, the left side of the plat showing part of section 19 and 20is broken up and has many different owners while section 21 is owned mostly byInternational Paper and other large owners. This would be an easy lease to negotiatewhen ownership is confined to a few individuals. But, most of the time, you will findownership broken into many different pieces with many different owners.

Assessor Ownership PlatThis will be your bible for the work you are going to performover the next few months. This form shows a section by section breakdown of eachowner and also has the book and page numbers you need to look in to prove theownership. Although the two assessor ownership plats that we have included lookentirely different, they are exactly the same as far as information included. The firstassessor ownership plat we have included shows the owner and book and page includedin each box of the form. The second assessor ownership plat is the more common and itbreaks down each section with numbers by the individual owner and it will have numbersto the right of the section showing the owners name and the book and page referencenumber. Make sure you keep this form with you all the time, because you will bereferring to it often.

Oil And Gas LeaseThis form will be the actual form you will use to lease the land fromthe owner. You can find these forms free of charge at local print shops. The first Oil andGas Lease that we have included shows you what a blank form will look like. They arevery similar from state to state and the information that needs to be provided is selfexplanatory. The second Oil and Gas Lease that we included is an executed leasebetween Hunter Energy Corporation and an individual. It will show you all the necessaryinformation that needs to be filled in. The signatures of all individuals go on page twoand the form also needs to be notarized and filed at the courthouse in the county or parish


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where the land is located. There is an Exhibit A attached to this lease which is prettystandard with leases. It lists a legal description of the land and also shows the royaltyterms and any clauses that the owner or your company want to have added. If you dontneed an Exhibit A, you can type the legal description of the land in the part on the 1stpage where it reads See Exhibit A.

Township And Range MapA township and range map contains 36 sections. Thesample map we have included is for 18N2W. You can on the map that there are 36sections. This map will be used as a reference and should be sent to you by the companyyou are working for when you are ready to start your leasing.

Sample Exhibit AWith ClausesThis references the Exhibit Aclauses we haveincluded in the book. This is just to show you the different clauses that owners can useand how to read each one.


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Glossary of Terms For The Oil And Gas Business

GeologistIndividual who studies faults and structures in order to find oil and gaslocations.

SeismicShootings that are done on the surface to map images under ground to aid in oiland gas exploration.

OperatorIndividual companies who operate the wells on a day to day basis in order toinsure continuous oil and gas production.

LandmanIndividual who secures correct title to property to be drilled and securesleases in order to drill each prospected location.

BonusThe amount paid per acre for an oil and gas lease.

TermThe number of years the oil and gas lease is executed for.

LessorThe person or company who owns the land and leases his property.

LesseeThe company or individual who secures the lease and pays the lease bonus.

GrantorThe person or company who owns the land and sells to another individual orgrantee.

GranteeThe person or company who buys the land from the owner or grantor.

Dry holeWhen a well is drilled and no production is secured or found.

ProducerA well that successfully finds production and produces oil and gas.

MineralOwnership under the surface of the ground which can be separate from thesurface ownership if minerals were reserved when the land was sold, severing theminerals from the surface.

RoyaltyOwnership of the production of oil and gas wells or the right to receive themineral ownersincome if they transfer or sell their royalty to another individual.

Mineral owners still retain the right to lease. This also means the amount of percentageyou may receive as a mineral owner when you execute a lease.

Mineral ReservationWhen the owner sells their land but reserve the mineral rights tothe land.

DeedThe legal document that transfers ownership of an exact tract of land.


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Documents

Landman Training Manual