Dropping Oil Prices – Rethinking Title Research

With a drop in oil prices it’s a good time to evaluate how landmen, brokers and producers (those who pay the bills) think when it comes to courthouse research. When times are good, the costs to research and acquire leases is less of a concern. Landman generally have the freedom to charge hotel, mileage, per diem, a day rate and courthouse document copies without much push back.

As the price of oil drops and money is tighter, landmen and brokers should do their best to minimize costs for their clients. If you are able to save your client money without sacrificing quality you will likely build loyalty and keep your projects working. It’s common in business to take care of those who take care of you.

If grantor/grantee indexes and document images are available online, but landmen are still driving to the courthouse, then they are wasting their clients’ money. A landman is less effective if he/she is standing in line waiting for books or computer terminals. Also, landmen are limited to the hours when the courthouse is open. Have you ever driven to a courthouse to find out the county is celebrating “Pioneer Days” or some other local festival and the courthouse is closed? Did you know that some courthouses close between noon and one o'clock for lunch? In light of these constraints, why wouldn't a landman consider other options?

We've heard the concerns about using online records such as:

• We are not sure we can trust the quality of the data
• Our client requires us to search records at the courthouse
• It’s cost prohibitive to pay for fifty or more documents we need to view each day
• We are not reimbursed for document images unless they are part of our run sheet
• Our landmen are not very efficient on computers

I agree these are legitimate comments - except perhaps a landman’s inability to use a computer.

Producers and brokers reimburse landmen for mileage, hotels and document copy costs even though online resource are available because they are not aware there is a better alternative.

Allow me to address these concerns and break it down for you:

Quality of Data and Courthouse Searching: A multi-million dollar oil and/or gas well may ultimately be drilled based upon research performed by a landman. It is extremely important for landmen to trust their online resources. It’s true some data providers do not have good quality control measures to assure they have workable databases. It does not take much to lose credibility with landmen if records are missing or not searchable in an effective manner. The possibility of a private data provider improperly indexing a record is reason enough for a producer to require searches be done at the courthouse.

Solution: First, make sure you are using a reputable data provider. Secondly, use private online records as your first pass. There is absolutely nothing wrong with building a run sheet from online sources and then double-checking your results at the courthouse. Although this may seem counter-intuitive, it is what I call, “belt and suspenders." A landman may build a run sheet online but might still go to the clerk’s office to meet the client’s requirements of “searching at the courthouse.” This way, the time physically spent in the courthouse is minimal. By searching online resources first and then double-checking those results in the courthouse, a landmen provides a higher quality product while saving money for their clients. When landmen and brokers understand and implement this concept they give themselves a market advantage.

Reimbursement and Cost of Documents: A landman may need to view 50, 60 or even more documents per day when running title. Even at a discounted cost of $2 per document, it is usually too expensive to pass those costs onto a client. Therefore, landmen and brokers make an economical decision to physically go to the courthouse because they are only reimbursed for mileage.

Solution: Of course, everything is predicated on online records being available, but if a landman is able to view and download documents at a very low cost, then producers should reimburse them for the cost of viewing documents instead of mileage.

There are several benefits of reimbursing landmen for copies viewed in lieu of mileage:

• Landmen spend more time researching instead of driving
• Document viewing costs, many times, may be less than the cost of mileage
• Documents viewed are already downloaded and are easily added to run sheets
• Tracking mileage and courthouse copy receipts requires less accounting time
• Landman become more efficient and more productive

Example: In Texas, a landman views 100 documents in a day but only needs 10 documents for a run sheet. At an average cost of $4 per document from the clerk, the landman will seek reimbursement of $40 for the documents PLUS mileage for that day’s work. But, if the cost to view those 100 documents were 50￠ per document ($50 total) then the client’s costs would be less AND the landman will be doing more searching and less driving.

Landmen are not alone. In the same way I’m suggesting landmen need to change the way they do business, as a data provider, we must also rethink the way we deliver document images and indexes to our clients. Viewing older historical grantor/grantee indexes and documents in Texas are already free on our website, but there is a charge to view more current images. If your client is willing to pay for a minimum number of downloads per month per landman, then our company is willing to make documents more affordable.

Our firm is committed to providing oil and gas landmen the most effective tools available for building chains of title, performing lease checks and other due diligence projects. We want to help landmen increase their efficiency while lowering costs. We accomplish this by providing quality indexes and document images at a reasonable cost. I hope you consider CourthouseDirect.com as a viable option in the near future.

Paul Cones
President
CourthouseDirect.com
[email protected]
Direct: 713.683.4012

Paul Cones is Founder and President of CourthouseDirect.com. Mr. Cones began his career as a landman working primarily in central and south Texas. CourthouseDirect.com was the first private company in the nation to put a grantor/grantee index on the internet. CourthouseDirect.com is the parent company of Integrity Title Information, Ltd, LLP which is the largest provider of title plant facilities for title insurance in the state of Texas.