Navigating Fiduciary Obligations
Trustees, Executors, Administrators, and Personal Representatives all share the fiduciary obligation to act in the best interest of the entity they represent. If the entity has oil & gas interest, the obligation and liability become more challenging. Fiduciaries need to stay on top of their assets.
What is the fiduciary being asked to do?
Many times, the oil patch can seem like the wild, wild west. Is the document presented to the fiduciary a lease or does it convey the mineral and or royalty interest? Is the lease or offer to purchase conforming to market conditions on the ground? Is the company making the offer currently drilling a well on your tract with out mentioning it? The American Association of Petroleum Landmen advises their member’s to withhold information unless specifically asked. It is buyer beware; the golden rule does not apply. Is the company drilling an offset well or has one been drilled? Is your asset being drained by offset production? Should your asset be in an adjoining unit? Should you place the asset in the proposed unit? These issues need to be researched fully before a fully informed decision is reached.