Oil and Gas and Securities

Many oil and gas drilling programs involve selling undivided fractional interests to “investors”. Who would imagine that every time they draw up an assignment of an undivided fractional interest they should think about securities law? Well, they should. A lawyer who prepares participation agreements, operating agreements, or working interest assignments for such programs is working with securities. Incredibly, many, and possibly most, oil and gas lawyers do not realize (or maybe just do not acknowledge) their practice involves securities law.

Whether the drilling program is set up for investors to receive working interest assignments, limited partnership certificates, LLC membership certificates, or some other evidence of participation, it falls within the purview of federal and state securities laws. Usually, it will be state securities commissioners taking enforcement action, often in the form of a “cease and desist” order, for starters. Most oil and gas drilling programs offered by small independent producers are eligible for exemptions from registration under securities laws. In practice, most offerors don’t bother to attend to qualifying for such exemptions. Most of the time, this causes no problem. This is called “being lucky”.

We’re now seeing drilling programs offered via the internet. For an introduction to the risks and pitfalls, see “Oil & Gas Investment Solicitations on the Internet” at Lewis Mosburg’s excellent Internet Oil & Gas Newsletter.

Starting an Oil & Gas Career

This started out as a reply to a comment in the previous post. It ended up so long I decided it should be its own article. A commenter asked how to get a career started in oil and gas law. A couple things come to mind. One is look at industry related websites such as Rigzone. Google for more, or check my Oil Links page. Another is sign up on LinkedIn and join one of the oil related groups. I get frequent newsletters from the Oil and Gas Industry group; there’s always something about jobs, though not so much for lawyers. There’s probably a similar way to make contacts on FaceBook.

Although oil and gas law is an esoteric specialty area, there’s a broad range of career choices, depending on whether one wants to work for a big company, a law firm, go solo, work in transactional practice (contracts, sales, etc.) or in litigation, work for a federal or a state regulatory agency, etc. Whatever your focus is, that’s where you’ll want to work on getting known, making contacts, etc. In my case, FWIW, it started with a single phone call from a landowner, which got me known by the company that leased his property, which got my name mentioned to another company, and so on. I got my oil and gas career by word of mouth, hard work and building a good reputation. Unfortunately, too much hard work plus cigarettes and caffeine got me a heart attack at age 44 which sort of derailed things a while, and then I got hit with another health issue eight years later. So, I didn’t progress to “rich” and my retirement plan is to keep working. But, they tell me other things are more valuable than money, like reputation, character, honor, loyal clientele, friends. I guess I’m wealthy in that context. Still, it won’t pay for a trip through Europe, or a retirement condo near a beach.

Back in law school I couldn’t imagine anything more boring than property law, especially law about substances in the ground. Turned out to be challenging, rarely boring, and rather satisfying, for the most part. Independent producers are an interesting breed. And farmers are, well, salt of the earth. Neither are much impressed by fancy offices and Brooks Brothers suits.

Long Time Between Posts

Obviously there’s a long time gap between posts to this blog. It’s not that I have nothing to say, I just don’t have the time to say it. Which is the same as saying this isn’t a high priority. Any more, the way time seems to fly by, it’s hard (impossible?) to take care of the higher priorities. It seems like some higher power has been throwing so many unexpected (definitely unwanted) annoyances in my path that I can’t get to the “normal” demands of making a living (taking care of my clients). Can you just do nothing when the post office loses two weeks of your mail? When your internet connection goes down? When the credit bureaus put incorrect data in your credit file? When the crown on your tooth falls off? Etc.? No, all these things rob a person’s time and, at the end of the day, there’s none left for blogging, for sure.

If anybody reads this blog, I apologize for the infrequency and for the lack of good substantive content dealing with oil and gas issues. I’m working on some strategies I hope will improve the time situation. I really want to put something worthwhile here.