American Oil and Gas Reporter - August 2015 - 144

ConventionCoverage: Kentucky Oil & Gas Association

Richard Adkins (left), CPL, owner
of Adkins & Associates Land Services LLC, and George Mason, principal at George Mason Law Firm
PSC, pose following their presentation on possible civil penalties
for landmen at the Kentucky Oil
& Gas Association's annual meeting, held July 14-16.

are drilling, because they profit anyway."
Over the past few years, the United
States has gone from being 70 percent
self sufficient in energy to nearly 90 percent, thanks to the shale revolution in oil
and natural gas production, Smith praised.
"We are in a great situation compared
with where we were a decade ago. Even
though we have not felt the full benefits
of low oil prices until recently, perhaps
in the last year, we have been feeling the
benefits of low natural gas prices as a
country for a number of years," he concluded. "That is a very good thing."

Landmen Issues
As Kentucky braces for a possible
shale production boom, it will be wise to
study how other states regulate leasing,
advised Richard Adkins, CPL, owner of
Adkins & Associates Land Services LLC,
and George Mason, principal at George
Mason Law Firm PSC. They warned that
several court cases suggested landmen
could face civil penalties for unauthorized
practice of law.
Already an issue in West Virginia,
Ohio and Pennsylvania, Adkins said the
legal issue was what made a good landman. "Any landman worth his salt tends
to be a problem solver," he said. "The
beginning premise with the landman is
to build a sense of trust with land and
mineral owners. That trust can be a twoedged sword, because many times, once
trust is built, the mineral owner or
landowner may look to the landman for
legal advice in areas we are not qualified
to speak to. Unauthorized practice of law
comes into that in many ways."
Mason pointed out Kentucky law limited laymen to real estate closings, but
prohibited them from answering legal
questions that arose in the closing or offering the parties any legal advice. "However, preparation of deeds and mortgages

constitutes the practice of law, and must
be prepared by an attorney. What I thought
was fascinating was the next line: preparation also is considered filling in blanks
on a preprinted form," he said, noting
the similarity to what landmen do in securing leases.
Decisions by the Kentucky Supreme
Court in 2003 and 1976 addressed the
issue of what constituted the unauthorized
practice of law during real estate transactions, Mason reported. Part of the 2003
case involved a layperson pointing out
the signature line on a preprinted document, he noted, adding that situation was
similar to common landman practice.
Adkins urged landmen to stay within

their area of expertise. He said his company attached a short disclaimer form to
all its produced documents that stated
the landman was not a lawyer and could
not act in a legal capacity.
Focusing on the commonwealth's leasing
boom, Wesley Cate, executive vice president
of Global Natural Resources Management
Co., reported on activity related to the
Rogersville and Berea plays in three eastern
Kentucky counties: Magoffin, Lawrence
and Johnson. Since January 2014, he said
at least 3,863 leases had been filed. Johnson
and Lawrence counties have averaged 100
leases a month during that time, but Magoffin County is seeing several hundred a
month, he pointed out.
During the past 18 months, he said
more than 2,000 leases had been recorded
in Magoffin County, and noted 432 were
issued in March alone. In contrast, activity
in April 2014 was 25 leases. Across the
county, leasing prices range from $150
to $300 an acre, up from the typical $5$10 an acre seen a year ago.
"Landowners are getting more comfortable with us, and so you are paying
as much as a 3⁄16 lease," he advised. "Be
prepared if you are looking at that area.
There are a lot more dollars needed. You
are going to start seeing Pugh (mineral
rights) clauses, and potentially landowners'
coalitions."
❒

Industry Working On Methods
To Ease Public's Fracture Fears
LEXINGTON, KY.-The oil and gas
industry has the tools in hand to change
public perceptions about industry practices
such as hydraulic fracturing, J. Steven
Gardner told the Kentucky Oil & Gas
Association. Addressing KOGA's annual
convention, he asserted oil and gas advocates needed the will to employ those
tools.
Gardner, president and chief executive
officer with ESCI LLC, recalled one sign
he saw held aloft at an anti-energyindustry rally that stated "No Coal, no
Nukes, no Fracing," or rather no nothing,
he said, calling it a mindset held by too
many in the environmental community.
"Hydraulic fracturing has become the
equivalent of mountaintop removal to
the environmentalists," he posed. "Hollywood has weighed in on fracturing with
movies, including Promised Land and

144 THE AMERICAN OIL & GAS REPORTER

the so-called documentaries Gasland I
and II. The Sierra Club started with a
noble purpose, but now has become the
lead organization opposing almost all energy development. You have heard about
its Beyond Coal Campaign; well, it now
has Beyond Oil and Beyond Natural Gas
campaigns."
Operators must get their message out
by working with media sources, and learn
to cooperate with responsible environmental groups, he urged. KOGA members
should use fact-based tools and social
media to change public perceptions, Gardner added. Other options include thirdparty groups such as the Appalachian
Research Initiative for Environmental
Science. The program started at Virginia
Tech University and now is coordinating
efforts at universities across the region
to counter misinformation on mining with

American Oil and Gas Reporter - August 2015

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