Friendly Advise for New Landowners

Friendly Advise for New Landowners

I met with an associate of mine in the industry last week who works directly for smaller operators. This person told me that there are a lot of people from the larger cities purchasing land/homes in their area…many of these are second or third properties. Some of these new landowners are putting pressure on operators who have producing leases on their land. In some cases, it’s a matter of simple cleanup and maintenance, which is totally legit. However, some of these new landowners are simply harassing beyond reason. I heard stories about landowners telling operators to paint equipment, add “cute” fencing, only run equipment at certain times, etc. without monetary compensation.

It goes beyond this…

Some are pushing legal limits of rights-of-way, lodging illegitimate complaints to governing bodies, and even using legal system “extortion” (serving papers to simply outspend them in legal fees) to force operators to plug and remove surface equipment just because the landowner doesn’t like how it looks. Many of these landowners don’t even have subsurface rights!

Let me talk directly to new or those thinking about purchasing acreage with operating wells…

Most independent operators can make decent profits on marginal wells that large companies cannot because the Operator turn the wrenches themselves. Most are salt-of-the-earth people. Most marginal wells do maybe around $100 a day in gross revenue only. Unnecessarily harassing an operator because you want an uninterrupted view on your lot on a 3-day weekend hurts families and the community directly.

So, how should one conduct due diligence with producing wells on your prospective acreage?

  • Ask your real estate agent about the relationship with the current landowner and Operator. See if there’s any complications or unwritten agreements.
  • Read up on the regulations before making a purchase. Know your rights and an Operator’s.
  • Ask to meet with the Operator(s) before you make purchases. Who knows? You may be coming in as a hero!

In Conclusion….be good stewards of the land and the community. Don’t be an Ass Hat.