Landmen exiting jobs in Western Pa. as gas, oil prices drop
Charles Zane Keslar held on as long as he could. Then he saw the writing on the wall.
After nine years as a landman — a person who negotiates leases and other agreements between oil and gas companies and landowners — Keslar, 66, of Donegal in Westmoreland County left the business because the work has dried up. This week he'll start a new job, auditing car dealership inventories for a finance company.
“I knew I had to find something else. I knew the end was coming,” he said.
Persistently low natural gas and oil prices over the past year cut into drilling in the Marcellus shale, so fewer landmen are needed, companies and industry veterans say. Furthermore, much of the land that was available during the earlier part of the shale boom that started in Pennsylvania about a decade ago has been locked up by now, experts said.
Membership in the American Association of Professional Landmen, a trade association in the United States and Canada, grew from about 8,300 members in 2006 to nearly 18,000 members today, but the number declined from 19,074 in 2013, the Fort Worth-based association said.
“They don't have a choice. There isn't any work,” Keslar said of landmen leaving the industry. “Everybody I talk to, everybody has been looking for other work and trying to adapt to a completely different vocation.”
Landmen first came to be with the rise of the oil and gas industry in the mid- to late 1800s, according to the association.
Before Marcellus shale drilling started to take off in 2005, there were hardly any landmen in Pennsylvania, said Jim Bourbeau, owner of Jim Bourbeau Land Service Inc., which is headquartered in Conneaut Lake and has an office in Cecil. Most landmen are independent contractors, though others work in-house for energy companies.
Within three years, the boom brought with it thousands of landmen, who were drawn to the high-paying jobs in the state. Landmen earned an average of $122,800 annually in 2014, according to the most recent data available from the Bureau of Labor Statistics.
Their roles have expanded from just negotiating leases to working on the acquisition or sale of oil and gas; determining gas-rights ownership by researching public and private records; conducting title searches; and helping negotiate rights-of-way agreements, the association said.
“Before we're able to prepare a title opinion, there needs to be research performed as to all the transactions that have occurred on a property. All the deeds have to be pulled, all the mortgages, all the rights of way. They go into the courthouse and get those materials for us,” said A.J. Racioppi, an associate attorney at Pine-based law firm Lawrence D. Brudy & Associates Inc. who specializes in oil and gas transactions.
Not only are there fewer people doing the work, but their rates of pay have fallen.
“When I started working, it was really kind of an industry standard for contractors to be offered a day rate for their services. Now we're seeing more flat rates being offered,” Racioppi said.
Landmen who have survived understand it's a cyclical business. With the low gas and oil prices, companies have slowed their drilling and leasing, but that could return with higher prices in a few years.
“If you're going to be a landman ... you have to be kind of transient because you have to go where the work is at,” Bourbeau said.
In the past year, Range Resources Corp.'s Southwestern Pennsylvania in-house land department has declined about 10 percent to 40 employees, while the number of land agents with whom it contracts declined 75 percent to 35 people, spokesman Matt Pitzarella said.
“We've been able to accomplish this through a reduction in activity and in large part by bringing more work in-house, helping us to further reduce costs, which is very important during down cycles such as the one we're experiencing,” he said.
EQT Corp. has decreased its number of land team members slightly in the past few years. As of Dec. 31, the company employed between 80 and 90 full-time landmen and between 225 and 250 contracted landmen, spokeswoman Linda Robertson said.
“Many of our contractors have responsibilities associated with preparing wells for permitting. While we are drilling fewer wells, we are still actively preparing wells. This will allow us to respond quickly when gas prices rebound,” she said.
Bernard Ulincy, a land operations manager for Houston-based Southwestern Energy, said he is seeing landmen shift to jobs with pipeline companies, which continue to negotiate leases. Land available for drilling is between 80 and 90 percent taken, he said.
“The Marcellus is pretty much leased up, until some of the leases start falling off and companies start releasing what they have,” he said.
Keslar was an independent contractor who worked for Cabot Oil & Gas, Chesapeake Energy, EQT, Range Resources and others.
He saw the rates he was paid, which were secured by a broker, fall twice in the past two years. His salary in his new job will be 25 percent less than what he was making most recently as a landman, he said.
Still, he considers himself lucky, since his new job is starting less than a month after his last landman's contract job ended.
“I can't deny I've been very fortunate, because I've had friends who've been out of work for over a year,” he said.
Tory N. Parrish is a Tribune-Review staff writer. Reach her at 412-380-5662 or email@example.com.