1. 1 AAPL Meeting — March 17, 2015 Tina Grovier, Joe Perkins, and Ramona Monroe Stoel Rives LLP, Anchorage, AK AAPL Meeting — March 17, 2015 Ethical and Legal Responsibilities of Land Professionals

2. 2 AAPL Meeting — March 17, 2015 Four key areas Duties and responsibilities to employers/clients Duties and responsibilities to the “other side” (other parties to a transaction; regulatory agencies from whom you are seeking permits, authorizations, approvals, consents, etc.) Duties and responsibilities to former employers/clients Duties and responsibilities to the profession, and to the public at large

3. 3 AAPL Meeting — March 17, 2015 Hypothetical 1 (Oil and Gas) Landman works for XCO. XCO wants to lease Whiteacre. Blackacre (2,560 acres) (owned by ACO, leased to XCO) º Whiteacre (2,560 acres) (owned by BCO, not yet leased)

4. 4 AAPL Meeting — March 17, 2015 Hypothetical 2 (Mining) Landman works for ACO. ACO wants to acquire BCO’s claims. ACO 96ACO 101BCO 1BCO 6 ACO 97ACO 102BCO 2BCO 7 ACO 98ACO 103BCO 3BCO 8 ACO 99ACO 104BCO 4BCO 9 ACO 100ACO 105BCO 5BCO 10

5. 5 AAPL Meeting — March 17, 2015 Underlying Themes Difference between aspirational guidelines and legal duties Difference between –Violations of ethical rules (see AAPL Code of Ethics and AAPL Standards of Practice) that can result in professional discipline and –Violations of legal duties that can result in your employer’s liability to the third party or your liability to your employer or the third party Violation of ethics rule or standard may be evidence of violation of law

6. 6 AAPL Meeting — March 17, 2015 Duties to your employer or client Land professional is a FIDUCIARY with respect to all matters within the scope of his agency –A fiduciary is bound to exercise the utmost good faith, loyalty, and honesty toward his principal –The relationship exists whether you are an employee or an independent contractor Land professional must be: –Competent –Loyal

7. 7 AAPL Meeting — March 17, 2015 Duties to your employer (cont.) Duties of the land professional (agent) to his or her employer or client (principal) —what to do: –Know the relevant laws, policies, and market conditions –Keep your principal fully and timely informed –Use care, skill, and diligence in performing your duties –Act with integrity

8. 8 AAPL Meeting — March 17, 2015 Duties to your employer (cont.) What not to do: –Do not use information acquired as agent for personal gain –Do not put yourself in a position where your personal interests conflict with your duties to your principal –Do not take a corporate opportunity for your own –Do not use confidential information to the disadvantage of your principal or former principal –Do not share confidential information with others without first obtaining consent from the owner of the information –EXCEPTIONS???

9. 9 AAPL Meeting — March 17, 2015 Hypothetical 1 (Oil and Gas) Landman works for XCO. XCO wants to lease Whiteacre. Blackacre (2,560 acres) (owned by ACO, leased to XCO) º Whiteacre (2,560 acres) (owned by BCO, not yet leased)

10. 10 AAPL Meeting — March 17, 2015 Potential duties to third parties Duties of both the employer (principal) and agent (landman) to the “other side”—what to do (or what not to do): –Do not misrepresent (or fail to disclose) material facts in circumstances where you have reason to expect the other party to rely upon what you say or do not say –Correct any misrepresentations as soon as you know they were made, before transaction is consummated (to prevent reliance and thus to prevent or mitigate damages) –Maintain arm’s length status unless employer desires to discuss something other than basic sale, purchase, or lease

11. 11 AAPL Meeting — March 17, 2015 Potential duties to 3Ps (cont.) There is no general duty to disclose proprietary information or trade secrets, but disclosure of some information (including proprietary information or trade secrets) may be required –When fiduciary or other similar relation of confidence exists between the parties (e.g., when negotiating a JV or LLC) –When necessary to prevent prior misrepresentation or prior partial or ambiguous statement of facts from being misleading –When later-acquired information makes untrue or misleading a previous statement believed to be true when made

12. 12 AAPL Meeting — March 17, 2015 Potential duties to 3Ps (cont.) How much disclosure might be required? –Between possible partners or joint venturers? –When correcting or retracting a prior misrepresentation or prior partial or ambiguous statement of facts? ***** Be aware that “implied covenant of good faith and fair dealing” may not be limited to period after the agreement is signed

13. 13 AAPL Meeting — March 17, 2015 Practical advice re 3Ps Be careful to correct any apparent misunderstandings –About your role as landman vis-à-vis the 3P –About what you have said (or not) to the 3P –About what you have delivered (or not) to the 3P –About the proposed transaction, what will be received by the 3P before or as a result of the agreement, and what will occur under the agreement

14. 14 AAPL Meeting — March 17, 2015 Practical advice re 3Ps Be wary of circumstances that might enable a seller or lessor to avoid or rescind the agreement –Lack of capacity (minors, mentally ill, intoxicated, etc.) or lack of authority –Illiteracy in the language of the contract –Misrepresentations (or Non-Disclosure when there is a duty to disclose) –Duress (e.g., as a result of a threat by the other party or a third party) or undue influence Be wary of a deal that is “too good”

15. 15 AAPL Meeting — March 17, 2015 Hypothetical 2 (Mining) Landman works for ACO. ACO wants to acquire BCO’s claims. ACO 96ACO 101BCO 1BCO 6 ACO 97ACO 102BCO 2BCO 7 ACO 98ACO 103BCO 3BCO 8 ACO 99ACO 104BCO 4BCO 9 ACO 100ACO 105BCO 5BCO 10

16. 16 AAPL Meeting — March 17, 2015 How to contact us Tina Grovier:tina.grovier@stoel.com 1.907.263.8424 1.907.632.0231tina.grovier@stoel.com Ramona Monroe:ramona.monroe@stoel.com 1.907.263.8445 1.206.498.0151ramona.monroe@stoel.com Joe Perkins:joseph.perkins@stoel.com 1.907.263.8414 (desk) 1.907.903.2710 (mobile)joseph.perkins@stoel.com