Acquisition of Oil & Gas Properties: Land and Title Data Checklist For a Due Diligence Review
by Jack M. Wilhelm
THE WILHELM LAW FIRM, 5524 Bee Caves Road, Suite B5, Austin, Texas 78746; (512) 236 8400 (phone); (512) 236 8404 (fax); www.wilhelmlaw.net
Okay; a sale is going to be made. Let’s get started on the due diligence review – let’s make sure the seller owns what he says he owns and that the buyer understands the liabilities he is purchasing.
You have to start somewhere - Land and Title Data
Before your “small army” of consultants descend upon the seller’s records, making sure that you have asked for all documents is important. Sellers and buyers, alike, struggle with how to best provide information – and how the information is requested, may well make the task more manageable.
Make a copy
A “bonded” copying service can be invaluable. Often, their costs charged in making a complete working set of documents (and reducing them to a diskette or thumbdrive) are surprisingly reasonable. But, as a word of caution, more likely than not these documents are being reviewed subject to a confidentiality and noncompete agreement. It is important that each individual involved in the due diligence process be properly advised (and in some cases identified and documented) and you may have to return “all” of the copies if the sale does not “go through.”
A Land and Title Data Checklist – be sure and request:
- Title Opinions, including supplements and division order title opinions
- Oil & Gas Leases and Oil & Gas Lease files (including assignments, ownership change records, lease summaries or abstracts); of course leases (or memorandums of lease) should properly reflect recordation in the governing official records of the county or parish
- Conveyance documents, including leasehold assignments, assignments creating overriding royalty interests, and files pertaining to lessor assignments (sales and devolution due to death)
- Farmout, Exploration, and Participation Agreements
- Pooling and Unitization Agreements (and unit pooling authority agreements), all of which should reflect book and page recordation information
- Joint Operating Agreements; Joint Venture Agreements; and Areas of Mutual Interest Agreements
- Division Orders/Transfer Orders/Paydecks/Net Revenue Interests
- Right-of-Way, Easement, and Surface Use Agreements
- Third party and internal Correspondence (including emails and royalty relations correspondence & files)
- Maps and Plats
- A schedule of all liens or encumbrances covering or affecting the properties and copies of the documents creating such liens or encumbrances (reflecting recordation information)
- A schedule of outstanding litigation affecting the properties
Edward Wilhelm and Jack Wilhelm provide assistance to buyers and sellers of oil and gas properties. If you would like to know more about Edward and Jack, view their respective profiles: Edward Wilhelm-LinkedIn Jack Wilhelm-LinkedIn
DISCLAIMER: The information on this site is not intended to and does not offer legal advice, legal recommendations or legal representation on any matter. You need to consult an attorney in person for legal advice regarding your individual situation.