Texas Landman Market Report | Q3 2017

Land administration personnel are in demand again now that deals are happening.

This edition of the Texas Landman field update covers activity in Railroad Districts 1-6. Even though drilling activity has remained flat since my last report, oil prices have edged up close to $60/bbl and held firm above $55/bbl. The increase in  oil prices may be due in part to the Saudi’s keeping their promise to cut production until later next year to speed up the rebalancing of the oil markets. Of course, they may just be trying to boost the price of oil before their IPO of Saudi Aramco later next year.

With A&D activity as one of the primary drivers of land work, the increased number of transactions volume of have created steady demand for experienced inhouse landmen to conduct due diligence. This includes due diligence for both acquisitions and divestitures. Once the acquisitions are completed, many companies are keeping the experienced landmen on contract to help perform highlevel land functions. After the price collapse in late 2014, many land departments are now staffed with a larger contingent of younger, inexperienced landmen. The experienced contract landmen are filling the skill gap when it comes to managing brokers, buying leases, preparing run sheets, curing title and acquiring surface access. They are also performing high-level functions such as preparing unit agreements, production sharing agreements and handling a myriad of other critical land matters required to drill a well. Land administration personnel are in demand again now that deals are happening. After an acquisition, the new lease and contract data needs to be verified and uploaded into the appropriate software system. If the acquiring company has been primarily a non-operator, but now plans on operating, they may need to buy and stand up a new land system which can take several months to complete. We are also seeing a flurry of new companies focusing on buying minerals which are backed by private equity. Each of these companies will require a team of landmen to run mineral title on the target properties to determine the interest owned. If the interest is producing, landmen will be retained to ensure that payments made by the operator/first purchaser are correct under the oil and gas lease.

I believe that the future looks bright in 2018 and beyond for all landmen in the districts covered by this report. There is a renaissance with gas drilling in South and East Texas as the demand from Mexico and Gulf Coast LNG facilities continues to increase. New technologies in drilling and completion will provide even more opportunities for oil and gas development. To be ready for these challenges, and to ensure you stay on the top of the list, continue to grow your knowledge by attending seminars/webinars, reading industry publications are covering technical, legislative and current events and keeping your AAPL certification (and membership) current. I think the single most valuable tool in accomplishing this is the AAPL website. Check it out.