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Conflicts of Interest in the Oil and Gas Industry

Frank H. Morison, Proceedings of 8th Annual Rocky Mountain Mineral Law Institute (1963)

The preceding paper by Mr. Richard M. Davis covers the general doctrines and current trends in the filed of corporate conflicts of interest. This paper is directed to the application of these legal doctrines to the oil and gas industry specifically and, most importantly, to the various persons employed therein. It is limited to the exploration phase of the oil industry, as it appears that the marketing, refining and transportation phases are so similar to other industries in general in the filed of conflicts of interest that such phases do not warrant special treatment.

PECULIARITIES OF THE INDUSTRY

First, one might wonder why special consideration should be given to conflicts of interest problems in the oil industry. Interestingly enough, this industry seems more replete with such law cases than any other. In analyzing the situation, there appear to be certain factors which make the oil industry more susceptible to conflicts of interest problems than many other industries. One of these factors is the research and discovery procedure involved in finding an oil or gas filed. There are many, many people involved in the over-all operation. First, reconnaissance geologists are involved, then there are specific or detailed studies and geophysical tests. There is then the leasing activity involving landmen, abstractors and lawyers. Next is the drilling operation wit