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Drafting Basic Agreements Used in Developing Oil and Gas Prospects

Terry I. Cross, Donald G. Sinex, Susan A. Stanton, Oil & Gas Agreements; The Exploration Phase (2009)

The basic agreements used in developing domestic onshore oil and gas prospects today are not only a product of the evolution of the oil and gas industry, but themselves reflect the changes that have occurred in the industry. The basic agreements upon which the industry relies today evolved to their present forms as the pace of activity, the players and the focus areas of the exploration and development industry changed over the past fifty years.

A. 1960s. By the 1960s, most of the major oil companies, large and small, were actively engaged in domestic onshore exploration. The major oil companies and larger domestic oil companies acquired substantial inventories of oil and gas leases, generally making their acquisitions on a prospect basis and/or a trend basis. These companies acquired their leases primarily using their own company landmen, whom they hired in large numbers and trained extensively in-house using other experienced company landmen. The company landmen conducted all of the in-house work and almost all of the field work for their employers. They handled not only title search and curative, leasing, map and lease maintenance and division orders, but they also drafted basic oil and gas contracts. Occasionally, the companies would use individual independent landmen and small brokerage firms; however, large full service land brokers did not exist then as they do