Acquiring Oil and Gas in West Virginia? Read This.
The current state of commodities value has created an environment in which oil and gas assets are on the market. However, the fire sale, “as-is,” and “quick close” mentality may not be the best approach to such transactions. If you do not consider the condition of the title of the assets you are buying in West Virginia and factor that into your acquisition cost, you may be in for a disappointing and costly surprise when the time comes for lease extensions or re-leasing and, ultimately, production. The good news? An experienced West Virginia title attorney can help you get a reasonable sense of the status of title on your proposed asset without breaking the bank.
West Virginia oil and gas title is among the most challenging in oil and gas producing jurisdictions. The instances of difficulty, confusion and ambiguity frustrate many who seek to develop these assets. The biggest problem areas encountered are tax sales, ambiguous reservation language and dead end heirships. There are legal processes than can provide relief to dead end heirships in the form of partition actions and missing and unknown heirs court-ordered lease actions, but tax sales and ambiguous reservation language are two areas that contribute to more serious title confusion than anything – as in, adverse chains of title and competing ownership claims which can lead to title litigation.
These two problem areas in West Virginia title – tax sales and reservation language – are complex and require legal review and interpretation in order to draw a reasonable and relevant conclusion regarding ownership. An experienced West Virginia title attorney who is well-versed in these issues will be capable of spotting trouble with ease. A less experienced person may need to spend many hours on research and analysis in order to draw conclusions – or, worse, he or she may miss issues entirely, leading you to believe the ownership is as it appears.
Hopefully, you will be provided with title opinions which delve into these issues as part of the due diligence process. Read them carefully. Read the comments and analysis. Is the rendering attorney someone who is experienced in West Virginia title? Do the title opinions delve into the difficult areas of tax sales and reservation language where relevant? If not, you should consider obtaining the advice of an attorney who can review the title opinions and analyze the trouble areas.
If you are not provided with title opinions or there are areas on which you need to perform your own title searches, you should ensure that an experienced West Virginia title attorney is guiding your efforts. Court house title searchers cannot be expected to perform legal review and analysis. It is their job to comprehensively gather and collect all relevant documents. If he or she can pick up the phone and present an issue an experienced oil and gas title attorney and receive guidance along the way, precious time in the courthouse and beyond can be saved --and time is money.