Thursday, January 3, 2019

New Ohio Law Clarifies Requirements for Oil and Gas Landmen

From McDonald Hopkins' Business Advocate:
Since the Ohio Supreme Court’s September decision in Dundics et al. v. Eric Petroleum Corp., Ohio’s oil and gas landmen have found themselves in a precarious position. That decision held that oil and gas landmen, specifically leasing agents and mineral rights brokers, are subject to the requirements of R.C. 4735. Effectively, that statute would require landmen who negotiate oil and gas leases or the sale of mineral rights, as well as pipeline rights-of-way, to become licensed real estate brokers, or face potentially severe penalties.

Because the requirements of R.C. 4735 bear little to no relation to their long-established and highly-specialized profession, many landmen had hoped for a wholesale evisceration of the Dundics holding by the Ohio General Assembly. On December 19, they received good, if slightly disappointing news in the form of SB 263. That bill, which passed in the Ohio Senate by a 31-0 vote and was signed into law by Gov. John Kasich, generally resolves the most burdensome implications raised by Dundics, but also includes some compromises and additional requirements that many will undoubtedly find bothersome.

SB 263 adds section GG to R.C. 4735.01, defining an “Oil and gas land professional” as “a person regularly engaged in the preparation and negotiation of agreements for the purpose of exploring for, transporting, producing, or developing oil and gas mineral interests, including, but not limited to, oil and gas leases and pipeline easements.”
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