• Oil Patch Press

Know the What and Why, Before Tackling the How

Years ago, desktop PCs did not exist in the land administration departments throughout the industry. They weren’t available yet. At best, the majors and large independents made computer terminals available to employees, but only as a look-up tool. It did not allow data entry. Training newcomers to division orders and lease records was done almost entirely by mentoring. ALTA in Houston was a fledgling organization back then, initially intended for networking. NADOA wasn’t established until 1974 and got off to a slow start on providing substantive training apart from the annual conference that didn't begin until later.


Today, there are various training programs available for division order analysts and lease analysts, but most teach on the basics in land title analysis. NADOA, NALTA, and their local chapters today emphasize court cases and new developments in the legal aspects of oil and gas land, avoiding what we call “the weeds.” The primary reason for this could be the wide variety of differing company policies governing the work of the division order analyst on the job level in the industry today.


The result of sparse training resources? The PC and the database it accesses becomes the primary training source for new hires entering this career. But that source is the “How” of division order and lease records work. Before a new analyst can get to the “How” with accurate and complete data to enter, the analyst first must master the “What and “Why”.


The “What” in division orders and lease records means learning how to identify and critically analyze the wide range of title source documents encountered routinely in this work. The main categories of legal documents are conveyances, probate documents, and contracts.


Most common types of conveyances are deeds and assignments. Probate documents include probated wills, administration of intestate estates, and affidavits of heirship. Conveyances and probate documents are title source documents most often encountered by the analyst as title maintenance and documentation. They serve mainly to update current division of interest (DOI) and lease records.


In the contracts category, the most common contracts encountered by the analyst are the lease (considered both a contract and a term conveyance), joint operating agreement, ratification, declaration of pooling (as a unilateral contract), and title opinion rendered by a licensed attorney.


The first step in learning to perform highest quality division order and lease records work is the step of learning, to the greatest degree possible, to identify and fully analyze documents in these two categories. This includes learning how to read and comprehend legal prose, a skill taught in the two-volume set “Common Clauses” and “Unclaimed Clauses” available online through oilpatchpress.com.


The second step is to learn how to properly apply the analysis of the title source documents, the “Why”. Too many analysts gloss over this step, inclined to apply the analysis directly to the database. Often this results in flawed database records. The “Why” step is necessary to determine how many separate, but interdependent, documents must be analyzed as a group, to extract final, accurate date to enter into the database for any single transaction.


The “Why” involves understanding why a particular document alters title ownership for the parties involved with it. Only then can an analyst determine if other documents must exist to accompany that one title document before the analyst can properly apply it to alter—or create—database records. In turn, that leads the analyst to decide if the supplemental documents needed must be filed of public record or not.


After both the “What” and the “Why” have been answered, and the title document or group of documents have been thoroughly and accurately analyzed within the context of company policy, that analysis can be applied to the database records, the “How”.


“How” is the final area of division order and lease records work, and is deeply intertwined with company policies. There is only one universal rule that applies to “How”. That rule is that every company has the right to decide what amount of financial risk it is willing to take in any given transaction. Every piece of data in the land administration database should be derived from a legal document, or set of documents, proving that the piece of data is correct. Even so, there is a universe full of assumptions bearing on that piece of data, and thus presents at least some degree of financial liability for the company.


It is the responsibility—the very duty—of the division order analyst and lease analyst to protect the company from financial loss, to the extent they are able to do so. Therefore, it is the responsibility of the analyst to pursue the highest degree of knowledge and skill as to the “What,” “Why,” and “How” of their work, throughout their entire career.


Next week’s blog will be “Owner Number Records: Maintaining Accuracy and Consistency.”


0 views0 comments