November 01, 2014

Title Due Diligence in Oil and Gas and Mining Transactions

Karol Kahalley, Amy Mowry, and Jean Feriancek

Traveling north from New Orleans in 1853, George Bissell, an American educator and lawyer, encountered “Seneca Oil,” crude oil that burbled to the surface at certain Pennsylvania locations and was widely embraced for its perceived medicinal qualities. Envisioning this “rock oil” as a market rival of coal gas and other sources for lighting—and lubricating—the nascent industrial age, Bissell soon gathered a group of investors to form the Seneca Oil Company. Their agent, “Colonel” Edwin L. Drake scoped out land around Titusville, Pennsylvania, and quickly secured title rights—presumably for a song—to what would become the first oil field. Daniel Yergin, The Prize, 19–30 (New York, Free Press 1992). Drake’s early land negotiations, and the frenzy of oil land deals in the wake of the Titusville boom, rivaled the rudimentary contracting of 1850’s gold prospectors, who simply staked claims to a “reasonable” amount of land, governed by makeshift local codes. Keith L. Bryant, Jr., Entering the Global Economy, in The Oxford History of the American West, Ch. 6, p. 198 (Clyde A. Milner II et al., eds., Oxford Univ. Press, 1st paperback ed. 1996) (1994). Thus was mining and oil and gas deal-making born in America. Times have changed for oil and gas and mining explorers in the United States since then, at least when it comes to title due diligence.

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