First of all, would you briefly describe the primary responsibilities of the Texas General Land Office (GLO)?
The General Land Office was founded in 1836 and is the oldest state agency in Texas. The GLO is responsible for managing and maintaining public lands in the state of Texas, which consist of hundreds of thousands of acres and includes everything from oil and gas leases, to leasing land for people to graze cattle, and any public land that has potential for a greater generation of income via sale or long term lease of that land. The GLO also has an asset management department that oversees types of non oil and gas lands and keeps an inventory of the value of all the property that is on prisons, state parks, state public land, and more.
The GLO is also one of the few state agencies that actually turns a profit. Most of the oil and gas proceeds go back into the Permanent School Fund. The proceeds from fund investments are to be pumped into the public school system. The theory being that it lowers local property taxes because there is money coming in from the endowment. The more money that a local ISD can get from the Permanent School Fund, the less they have to charge taxpayers to keep the schools going.
How long did you work at the GLO, and what were your main job responsibilities?
I worked there from January 1998 to December 2011. During my first 6 years at the GLO, I was an auditor and reconciler of oil and gas leases. Auditing entails verifying the volume (barrels of oil/MCFs of gas) that is claimed to be sold and ensuring the price paid for it is accurate. I would determine this by cross-checking with Railroad Commission (RRC) production reports, gas plant statements, or oil run tickets (purchase statements). Reconciling is the process of balancing the charge that is set up on the production report (GLO1 or GLO2) versus the actual cash payment the GLO received, and ultimately making sure they are equal. The object is that the charge (due) is exactly the same as what is paid.
After auditing and reconciling, I spent my last seven years providing technical support for oil and gas reporting. My main responsibilities were assisting oil and gas operators and producers with their production royalty reporting, payment of royalty, and filing monthly production royalty reports through the electronic reporting system. I would also perform gas plant accounting, which included teaching people actual versus theoretical of necessary percent of proceeds contracts, how the royalties were distributed on processed gas and natural gas liquids (NGLs), non-processed gas, as well as royalty calculations for oil. My responsibilities also included helping people distinguish between unitized and non-unitized leases, or what they call unit wells and lease wells. During my last year at the GLO I was one of the leads on a project to rewrite the electronic reporting system that is currently in place.
How did you help Texans remain in compliance with GLO regulations?
I analyzed lease components for people, interpreted lease language, and helped people understand GLO policies and procedures. Primarily, what operators need to do to stay in compliance – in terms of production reporting and royalty payments – is to meet each monthly deadline. For oil sales, payments must be made by the fifth day of the month. For gas sales, payments must be made on the fifteenth day of the month.
In general, I would answer any questions related to the GLO that people may have. For example, sometimes not all the gas that is produced on a lease is sold. The gas can be used to run equipment on the lease site, which is called Lease Fuel Gas. Even though it is not sold, the gas still has value. Some leases contain lease language stating that the GLO expects royalties for all gas produced, not necessarily all gas that is sold. In other cases the GLO isn’t as strict and the lease language may not require compensation for gas that is produced but not sold. Reading these types of clauses in the lease would be an example of how I identify if the lease is in compliance or non-compliance, and in turn communicate that to the lessee.
Now that you’re here at the Banks Group, how are you leveraging your GLO experience with helping people in the private sector?
I’ve basically transferred my thirteen years of GLO experience directly over to Banks Oil & Gas Consulting. My client base is virtually the same as the customer base at the GLO. The types of questions operators and individuals may have in dealing with the GLO are the same as before, it’s just simply that I’m now parting my knowledge to them on behalf of Banks and myself rather than doing it from behind the desk at the GLO.
If you could give one piece of advice to operators working with the GLO, what would it be?
I would recommend people to educate themselves on GLO policies and procedures. You should know them inside and out so that you don’t fall behind on payments because there are pretty severe monetary penalties if you are delinquent, underpaid, or nonpaid of royalties.
To learn more about the Texas GLO consulting services Lannie offers through Banks Oil & Gas Consulting, visit our GLO page.
Jordan Schmidt jschmidt@banksinfo.com
Editor