Best Practices For Negotiating With Landowners 

To Acquire More Local Water Supplies And Lower 

Transportation Costs

November 20, 2014

Presented by

George A. Oggero, Senior Landman & Counsel
And so it begins...

10

This is the perception we face from landowners before even placing a 

stake in the ground:
Goals and Objectives

5

Throughout this presentation, my intention is to do the

following:

 Review a few basic concepts of negotiation as they apply to

the oil and gas industry

 Discuss the unique negotiation environments created as a

result of oil and gas operations, including, but not limited to

the procurement of water and transportation thereof, and

the agreements associated therewith

 Discuss various approaches and strategies to landowner and

regulatory negotiations

 Disclaimer: This presentation does NOT constitute legal advice or counsel; The

opinions and suggestions stated herein are NOT the opinion (i) of the

presenter’s company; or (ii) (necessarily) of the presenter at any point in the

future.
Overview of Vanguard 

Natural Resources

 Vanguard Natural Resources, LLC (NASDAQ: VNR) is a

publicly traded limited liability company based in Houston,

Texas, focused on the acquisition, production and

development of long-lived natural gas and oil properties.

 Our business strategy is focused on generating stable cash

flows to be distributed to our unit holders on a monthly

basis.

 VNR’s assets consist primarily of producing and nonproducing natural gas and oil reserves located in nine

producing basins within the continental United States.

4
Geographically Diversified 

Core Areas

4

Core Areas
Basic Negotiation Concepts

6

First and foremost, there is absolutely no

exception to negotiation concepts that

provide for a compromise of ethical

obligations!
Basic Negotiation Concepts...

continued

7

In our line of work, the company

negotiator IS the face of the oil industry

as far as the landowner is concerned.
Basic Negotiation Concepts...

continued

8

While strong-armed tactics, i.e. take-itor-leave-it perspectives, even if legal,

may get the deal done, they may also get

a company a lawsuit, and from a policy

perspective are not good for our

industry.
Basic Negotiation Concepts...

continued

10

Look for the win-win result.

In other words, during negotiations,

seek out fair and equitable solutions

that both the company and the

landowner can accept.
Negotiation Environments in

Our Industry

10

 Whether your business is part of the

upstream, midstream, downstream, or

a combination of all three, the

aforementioned concepts remain true

and relevant.

 However, today’s discussion will be 

limited to the negotiation 

environments created by...
Negotiation Environments in

Our Industry...continued

10

Regulators
Negotiation Environments in

Our Industry...continued

10

And...
Negotiation Environments in

Our Industry...continued

10

Difficult Landowners
Negotiation Environments in

Our Industry

12

General Guidance

 When negotiating with a regulator,

regulating body, or a landowner,

remember 3 P’s:

 Preparation

 Punctuality

 Politeness
Negotiation Environments in

Our Industry

12

 Formulate a strategy, including at least

one contingency

 Review all facts with each discipline, i.e.

Land, Legal, Operations, Accounting

 Involve local assistance, e.g. a field

landman
Regulators and Regulatory Bodies

12

Regulators, and regulatory bodies, differ from

landowners in terms of how to approach a

negotiation environment.
Regulators and Regulatory Bodies

12

 Regulators and regulatory bodies:

 Are well-funded via tax moneys

 Have control over all aspects of extractive industry

• This provides them considerable influence over

a company’s business

 Are able to

• Limit/eliminate permits and operations

• Impose civil penalties

• And in some cases, impose criminal penalties
Regulators and Regulatory Bodies

12

 Regulators and regulatory bodies:

 Receive favorable discretion from

reviewing courts

 Until recently, uniformly able to order

action without due process and without

realistic supercedeas rights

 So with this in mind, how does a company

negotiate?
Negotiating with Regulators

and Regulatory Bodies

12

 Have the right parties involved

 The regulator or regulating body should

have complete authority and a settlement

with that regulator or regulating body

should not leave the company open to

other regulator’s subsequent actions

 Consider the current relationship between the

company and the regulator or regulatory body

 Consider the company’s local reputation in

the area of operations or proposed operations
The Landowner

12

The Landowner

“Luck is what happens when preparation

meets opportunity.” – Seneca, Roman

Philosopher
The Landowner

12

Finding the landowner:

 Check the tax rolls, public

records, or other research

materials

 Involve local assistance, e.g.

a field landman

 Make the initial contact with

the landowner

 Visit the proposed location
The Landowner

12

Visit the landowner’s property:

Have alternate routes and locations
The Landowner

12

Visit the landowner’s property :

Determine the terrain
The Landowner

12

Visit the landowner’s property :

Determine the well placement
Negotiating with the Landowner

12

 When a landowner comes calling, whether

it be via email or telephone, they believe

their issue or question should be the most

important thing to the company

 Take the time to answer an email or return

a phone call

 Doing so fosters good relations
Negotiating with the Landowner

12

 “Demonstrating people skills (i.e. intangible ‘soft

skills’) is paramount to being an effective and

successful landman / businessperson...If you get the

highest score ever on the CPL exam and are very

technically competent, but you can’t listen, empathize,

show passion and compassion or demonstrate genuine

caring and selflessness, people will not be drawn to

you nor will they be energized in your presence. Your

credibility will be diminished and you will be, at best,

marginally effective in this business.” - Don Walker,

ExxonMobil Landman, Mentor
Negotiating with the Landowner:

Other Considerations

12

Agreements 

 Before entering into any lease or agreement

for water use or purpose, be sure to

determine how any agreement could be

affected by any local water district or

conservation organization

 Determine what permits are required, noting

any that could affect negotiations with the

landowner
Negotiating with the Landowner:

Other Considerations

Agreements – Specific to Each Operation

 Also consider the following when drafting

agreements for water use:

 Surface damages

 Surface usage/traffic

 Costs

 Easements

 Maintenance
Negotiating with the Landowner:

Other Considerations

Agreements 
Negotiating with the Landowner:

Other Considerations

Agreements – the Oil and Gas Lease

 Under the typical oil and gas lease, the lessee has

the right to use as much of the surface estate

(which includes subsurface water) as is necessary

to explore for and produce the minerals

 Some leases prohibit groundwater use without the

landowner’s consent, or require additional

compensation for use of the landowner’s water

 Consider addressing water gathering and

transportation facilities in the lease
Negotiating with the Landowner:

Other Considerations

Agreements – Litigation as a last resort

 As a last resort, consider litigation

 Certain states have codified rules regarding surface use, surface

owner compensation, in the mineral development environment

 AK, AK, CO, IL, IN, KT, LA, MT, NM, ND, OK, PA, SD, TN, UT, WV, 

WY

 The purpose of these are to provide guaranteed compensation

to surface owners for certain damages incurred as a result of

mineral operations, regardless of whether use was reasonable

 Most Acts require some form of attempt to first negotiate with

the surface owner prior to seeking relief in the courts.

Typically measured by “good faith.”
Negotiating with the Landowner:

Other Considerations

12

 Before any meeting or conversation, ask

yourself, “Am I in control of myself

today?”

 If you answer no, reschedule.

 Treat landowners with respect, even when

it is not served.

 Landowners talk.
Negotiating with the Landowner:

Other Considerations

12

 When communicating with a landowner, always speak in general

terms

 We plan to drill 3 wells in this section.

 Our expectations are to use only river water during operations.

 My goal is to have this completed within...

 Listen more than you speak

 Many times the landowner simply wants to be heard.

 Take note of all landowner issues and concerns with the proposed

operations/deal/agreement, regardless of relevance, value or age

 Never rush

 Let their priorities be your priorities

 Always ask, “Is there anything else?”

 Seek assistance from the courts only as a last resort
Negotiating with the Landowner:

Other Considerations

12

 When communicating with a landowner, always speak in general

terms

 We plan to drill 3 wells in this section.

 Our expectations are to use only river water during operations.

 My goal is to have this completed within...

 Listen more than you speak

 Many times the landowner simply wants to be heard.

 Take note of all landowner issues and concerns with the proposed

operations/deal/agreement, regardless of relevance, value or age

 Never rush

 Let their priorities be your priorities

 Always ask, “Is there anything else?”

 Seek assistance from the courts only as a last resort
Negotiating with the Landowner:

Other Considerations

12

There is nothing wrong with shutting a

meeting down and stepping away, whether it

be for five minutes, or rescheduling all

together.
Credits and Contact Information

12

My sincerest appreciation and gratitude goes to:

 Sharon Stephenson and Ira Lemm, for the

opportunity to present today, and for their

patience as I completed this presentation; and

 Monica Robb, who thoroughly critiqued and

contributed to this presentation.

If you have any questions or comments, please feel

free to email me at goggero@vnrllc.com.