T ips to Be tte r Co mmunic a te with Mine ra l Owne rs De nve r - - PDF document

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T ips to Be tte r Co mmunic a te with Mine ra l Owne rs

De nve r Asso c ia tio n o f Divisio n Orde r Ana lysts Ho lida y L unc he o n No ve mb e r 12, 2018 Ro b Pre ntic e Co lo ra do NARO Pre side nt

My Ba c kg ro und

 Se c o nd g e ne ra tio n in the o il pa tc h  Co lo ra do ra ise d  18 ye a rs e xpe rie nc e  Wo rke d o n pro je c ts in a ll we ste rn sta te s  Wo rke d o n pro je c ts in o ve r 30 c o untrie s wo rldwide  Curre ntly c o nsulting with a firm c a lle d T

urre tt

 L

ive in Bo ulde r

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Ab o ut NARO

NARO – Wha t is it?

NARO – Na tio na l Asso c ia tio n o f Ro ya lty Owne rs E

sta b lishe d in 1980 – 38 ye a rs o f suc c e ss

501(c )6 e duc a tio n a nd a dvo c a c y o rg a niza tio n NARO is vo lunte e r le d

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NARO – Missio n Sta te me nt

T he missio n o f NARO is to e nc o ura g e a nd pro mo te e xplo ra tio n a nd pro duc tio n o f mine ra ls in the Unite d Sta te s while pre se rving , pro te c ting , a dva nc ing a nd re pre se nting the inte re sts a nd rig hts o f mine ra l a nd ro ya lty

• wne rs thro ug h e duc a tio n, a dvo c a c y a nd

a ssista nc e to o ur me mb e rs, to NARO c ha pte r

• rg a niza tio ns, to g o ve rnme nt b o die s, a nd to

the pub lic .

NARO - Cha rte re d Cha pte rs

1. NARO-T e xa s 2. OK

• NARO

3. NARO-Ro c kie s 4. NARO-Arka nsa s 5. NARO- Appa la c hia 6. NARO-Pe nnsylva nia 7. NARO-Ne w Yo rk 8. NARO-L

• uisia na

9. NARO-Ca lifo rnia 10. NARO-No rth Da ko ta 11. NARO - Co lo ra do

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Mine ra l Owne rship

8.5 millio n mine ra l

• wne rs

Mine ra l o wne rship

69% Priva te

c itize ns, sta te s, a nd lo c a l g o ve rnme nts

31% F

e de ra l Go ve rnme nt

NARO Me mb e rship

1/ 3 Re pub lic a n, 1/ 3 De mo c ra t, 1/ 3 I

nde pe nde nt

T

he a ve ra g e NARO me mb e r is o ve r 60 ye a rs o ld, wido we d, a nd re c e ive s le ss tha n $500 in mo nthly ro ya ltie s a s a supple me nt to the ir so c ia l se c urity re tire me nt inc o me .

F

a rme rs, ra nc he rs, fa mily trusts, wido ws, c ha rita b le o rg s. c hurc he s, ho spita ls, unive rsitie s, e tc .

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Wha t NARO Do e s

 E duc a tio n

 Ho ld to wn ha ll me e ting s to e duc a te mine ra l o wne rs a b o ut c urre nt e ve nts  T ra in mine ra l o wne rs ho w to ma na g e the ir mine ra ls

 Ne two rking  Po lic y  Co unte r ha lf-truths a nd lie s put fo rth b y a nti-o il a nd g a s pro po ne nts with fa c tua l b e ne fits o f e ne rg y de ve lo pme nt  I nse rt the vo ic e o f mine ra l o wne rs in the me dia thro ug ho ut Co lo ra do a nd b e yo nd  Stro ng input o n b ill ma king pro c e ss a nd le g isla tive se ssio ns  T e stify a t the Sta te Re g ula to ry He a ring s  T ra in mine ra l o wne rs to b e c o me sto ryte lle rs a b o ut the b e ne fits o f the o il a nd g a s industry  Gro w NARO's me mb e rship to inc lude mo re de fe nde rs o f industry o n ha nd a c ro ss the sta te fo r future b a ttle s

NARO E duc a tio n

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Wha t We T e a c h Mine ra l Owne rs

 Mine ra l Ma na g e me nt 101 is ta ug ht a t a lmo st e ve ry a nnua l e ve nt

 1 ho ur c o urse  Co ve rs the b a sic s

 CMM (Ce rtifie d Mine ra l Ma na g e r)

 8 ho ur c o urse  T wo c o urse line s

 Asso c ia te re q uire s 20 e duc a tio n c re dits  Pro fe ssio na l re q uire s 50 e duc a tio n c re dits

 T hre e pro c to re d e xa ms

10 Dutie s o f a Mine ra l Owne r

1) KNOW WHAT

YOU OWN!

2) K no w wha t infor

mation yo u ne e d a nd whe re to g e t it.

3) K no w wha t is going on in yo ur a re a o f inte re st. 4) K no w wha t the futur

e impac t the sma ll print in the o il a nd g a s

le a se / divisio n o rde r will ha ve o n yo ur ro ya lty pa yme nt. 5) K no w who has your

le ase, yo ur we ll, yo ur pro duc tio n.

6) K no w what que stions to ask, a nd to who m to a sk the m. 7) K no w your

limits.

8) K e e p c opie s/ or

iginals o f e ve rything a nd o rg a nize it.

9) K no w tha t yo u must r

e main vigilant a nd DO so me thing .

10) PL

AN.

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4 Ma jo r Mine ra l Owne r E ve nts

1) Owne rship 2) L e a sing 3) Divisio n Orde rs 4) T he Che c k

R

Divisio n Orde rs A Divisio n Orde r is…..

• I

ssue d b y the c o mpa ny a fte r pro duc tio n is e sta b lishe d.

• Sta te s the de c ima l inte re st o n whic h yo u will

b e pa id.

• I

s the link to info rma tio n o n yo ur c he c k stub .

• I

s NOT re c o rde d a t the c o unty c o urtho use .

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Divisio n Orde rs A Divisio n Orde r is…..

a n instrume nt whic h se ts fo rth the pro po rtio na l

• wne rship in pro duc e d hydro c a rb o ns,

inc luding c rude o il, na tura l g a s, a nd NGL ’ s. So me time s the Divisio n Orde r is re fe rre d to a s a divisio n o f inte re st. Mo re o fte n tha n no t, a sing le we ll o r le a se will ha ve multiple o wne rs. I n fa c t, it’ s no t unc o mmo n to ha ve hundre ds o f pa rtie s

• wning a n inte re st in a sing le we ll.

Divisio n Orde rs

T he ma in purpo se o f a divisio n o rde r is to pro te c t the pa yo r o f the pro c e e ds o f pro duc tio n fro m do ub le lia b ility.

T he c o mpa ny issuing the divisio n o rde r is re q uiring the ro ya lty o wne r to (1) ve rify tha t the ro ya lty o wne r’ s de c ima l inte re st se t o ut o n the divisio n o rde r is c o rre c t a nd (2) a g re e tha t the c o mpa ny c a n ma ke pa yme nts b a se d o n tha t de c ima l inte re st until no tifie d b y the ro ya lty o wne r tha t the o wne rship ha s b e e n c ha ng e d.

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Divisio n Orde rs

• A Divisio n Orde r is g e ne ra lly

re c e ive d b y a mine ra l rig hts

• wne r thro ug h the ma il within

3 to 4 mo nths a fte r we ll c o mple tio n.

• T

he re isn’ t a de a dline fo r re turning yo ur divisio n o rde r, b ut o pe ra to rs will b e re q uire d to withho ld ta xe s if it isn’ t re c e ive d in a time ly ma nne r.

Make c opie s for your r e c or ds and r e tur n the doc ume nts in a time ly manne r .

Divisio n Orde rs

• I

t mig ht b e 3-6 mo nths fro m the time a we ll is c o mple te d to the time yo u re c e ive a divisio n o rde r.

• Afte r tha t, it mig ht b e a no the r 2-3

mo nths b e fo re yo u re c e ive yo ur first c he c k.

• Pla n fo r up to nine mo nths b e fo re

re c e iving o il & g a s re ve nue .

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Divisio n Orde r

Only T e xas R e quir e s a Division Or de r .

Wha t we te a c h in the CMM Co urse

 De c ima l I

nte re st Ca lc ula tio ns

 Se nd a W-9 to yo ur Divisio n Orde r Ana lyst to pre ve nt

a uto ma tic de duc tio n o f 28% se nt to the I RS

 Use the NADOA Mo de l F

• rm Divisio n Orde r to ha ve a n

unde rsta nda b le , sho rt, sta nda rdize d fo rm tha t me e ts a ll sta tuto ry re q uire me nts

 We c ite the NADOA Mo de l F

• rm Divisio n Orde r ha ndb o o k

(1995) http:/ / www.na do a .o rg / fo rms/ NADOA_Mo de l_F

• rm_DO_Bo o kle t

.pdf

11/13/2018 11

Mine ra l Owne r Co mmunic a tio n

Ga llup Po ll o f I ndustry T rust, 2018

 25 industrie s  Oil a nd g a s is 22nd o f 25  Oil a nd g a s is o ne o f fo ur with a ne t ne g a tive ra nking  Go o d ne ws: T he 2012 Ga llup Po ll ra nke d Oil a nd Ga s la st pla c e , so impro ve me nt ha s b e e n ma de .

So urc e : https:/ / ne ws.g a llup.c o m/ po ll/ 12748/ b usine ss-industry- se c to r-ra ting s.a spx

• Aug. 1‐12, 2018

Total positive Neutral Total negative Net positive % % % Computer industry 60 28 10 50 Restaurant industry 58 31 10 48 Farming and agriculture 56 24 18 38 Grocery industry 53 27 18 35 Travel industry 50 35 13 37 Retail industry 48 31 20 28 Automobile industry 47 33 19 28 Accounting 39 46 12 27 Real Estate industry 46 32 21 25 Publishing industry 43 34 20 23 Airline industry 43 31 24 19 Internet industry 45 26 27 18 Telephone industry 41 34 25 16 Electric and gas utilities 42 28 29 13 Banking 42 28 29 13 Sports industry 42 27 30 12 Movie industry 40 28 29 11 Television and radio industry 40 26 32 8 Education 44 17 38 6 Advertising and public relations industry 35 31 32 3 The legal field 34 30 34 Oil and gas industry 31 23 44

• 13

Healthcare industry 34 18 48

• 14

Pharmaceutical industry 30 16 53

• 23

The federal government 26 19 53

• 27

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I ndustry is Ge ne ra lly Pe rc e ive d Unfa vo ra b ly

 Pro po sitio n 112 ma de us lo o k a s if he a lth a nd sa fe ty wa s no t a prio rity  We a re judg e d ha rshly o n o ur mista ke s

 Re c e nt fire b y Milto n Re se rvo ir  T a nk b a tte ry fire s  F ire sto ne ho use  Spills

 T he g e ne ra l pub lic do e s no t re a lize ho w pro lific o il a nd g a s pro duc ts a re in the ir live s  T he g e ne ra l pub lic do e s no t re c a ll a time witho ut living with a n a b unda nc e o f e ne rg y  I f pub lic pe rc e ptio n is dic ta ting pub lic po lic y – e duc a tio n a nd o pe nne ss c a n he lp b ridg e the g a p.  T he Mo ra l Ca se F

• r F
• ssil F

ue ls b y Ale x E pste in

I nte ra c tio ns with Mine ra l Owne rs

 Pe rso na l c o nta c t le a ve s a la sting impre ssio n  Go a l is to c re a te a po sitive e xpe rie nc e  Go lde n rule still in e ffe c t: T

re a t the ro ya lty o wne r ho w yo u wish to b e tre a te d

 T

hink o f yo urse lf a n a dvo c a te fo r b o th the mine ra l o wne r a nd yo ur c o mpa ny

 T

he ima g e tha t the pre ss re pre se nts is o ut o f yo ur c o ntro l, b ut

 T

he re puta tio n o f yo ur c o mpa ny thro ug h 1 o n 1 de a ling s with pe o ple is 100% in yo ur c o ntro l

11/13/2018 13

He lpful I nfo rma tio n fro m yo u fo r Mine ra l Owne rs

 We b site info rma tio n a va ila b ility

 Ve ry we ll do ne

 Ac c e ssib ility via pho ne

 OK , b ut the re a litie s pre ve nt g e tting a pe rso n e ve ry time

 Ac c e ssib ility via e ma il

 OK , b ut the re a litie s pre ve nt imme dia te re plie s

 Re g ula r ma il

 Wo rks, b ut ma ny pe o ple a re unsure o f wha t the y ha ve re c e ive d a nd ne e d he lp

T rust a nd Ac c e ssib ility

 Mine ra l o wne rs fe e l like the “sma ll fry” up a g a inst the

pro fe ssio na l o il a nd g a s c o mpa nie s

 T

he y kno w the y la c k kno wle dg e a nd fe e l like the y c a n b e ta ke n a dva nta g e o f

 Wo rry the ir sma ll mine ra l inte re st is no t sig nific a nt to the

• ve ra ll mine ra l ho lding s o f o il a nd g a s c o mpa nie s

 Unc le a r who wo rks fo r who m. Who do the y trust? Are

la nd ma na g e rs c o ntra c to rs o r e mplo ye e s?

11/13/2018 14

T rust a nd Ac c e ssib ility

 Clie nt wa s a ske d to c o nfirm his de c ima l inte re sts. He

ha d no ide a a nd wa s untrusting .

 Re c e nt c a se – me mb e rs we re c a lling to a sk if the re wa s

a no tic e a b le dro p in re ve nue s a fte r o pe ra to r c ha ng e .

 So me thing s a re o ut o f yo ur c o ntro l

 I ndustry is lumpe d to g e the r a s a who le

Ope ra to rs L a nd Ma na g e rs Mine ra l Buye rs

Wo rking T

• g e the r

11/13/2018 15

Ho w Ca n We He lp Yo u?

Mo re tra ining o n pa rtic ula r to pic s? Jo int e ve nts “Mine ra l Owne r Appre c ia tio n Da y”

to me e t a nd g re e t with mine ra l o wne rs?

NARO T

• wn Ha ll Me e ting pa rtic ipa tio n?

Dire c t untrusting mine ra l o wne rs to wa rd NARO?

Sa ve the Da te –

Co lo ra do NARO Co nfe re nc e

F rida y June 14th, 2019

T his is a n e xc e lle nt c ha nc e to me e t yo ur mine ra l o wne rs Spo nso rships a re we lc o me Ge t CPE c re dits!

11/13/2018 16

Co nta c t I nfo rma tio n

R

• b Pr

e ntic e Color ado NAR O Pr e side nt r pr e ntic e @tur r e tt.c om 720-833-7090