Steptoe & Johnson have just published a report titled "Below the Surface 2: Digging Deep on Deals". This second in a series report takes a look at energy transactions and deals to find where natural gas producers are exploring for energy, their level of involvement, lessons they've learned, and what roadblocks they must overcome to succeed.

1. Biggest transaction challenges
Outside counsel needs
Top lessons from the field
Words of wisdom
Participant profiles and demographics
About Steptoe & Johnson PLLC
Breaking ground, part two
DIGGINGDEEPONDEALSTransactionChallenges
BELOWTHESURFACE2

2. The first edition of our Below the Surface shale
gas research focused on legal challenges and
costs in U.S. shales, particularly disputes and
litigation. This follow-up study expands the field of
respondents, takes a harder look at transactions
and deals, and offers words of wisdom from major
players in the shale plays. Explore more findings at
research.steptoe-johnson.com.
A deeper look
at transactions
and deals
Breaking ground, part two
BREADTH OF INVOLVEMENT
Acquiring Land and/or Leases
Transporting Oil & Gas Field Products
Drilling
Supplying Water
Seeking Permits
Processing Oil & Gas Field Products
Producing Gas
Providing Drilling Equipment
Producing Oil
Other
Land Reclamation
Manufacturing
Real Estate Sales/Leasing
Breaking ground, part two
The majority of respondents’ companies are
working in two shales and expect an increasing
presence over the next twelve months.
0
10
20
30
40
50
60
70
80
88%
82%
80%
77%
68%
54%
44%
38%
29%
27%
10%
6%
8%
1005025 750
Less than half of the respondents’ companies are
working in the shales below. As many as 16%
expect to increase their presence in an area below.
68% 75% 23% 23% 35% 35% 29% 30% 24%
Utica
Shale
Marcellus
Shale
Woodford
Shale
Barnett
Shale
Eagle Ford
Shale
Niobrara
Shale
Permian
Basin
Bakken
Shale
Haynesville
Shale
DEPTH OF INVOLVEMENT

3. Dealmaking headaches are most often caused
by title and real estate, regulatory, environmental,
and government challenges. Respondents are
most concerned about lack of clear or current title
law, poor records, and increasing or changing
regulations. These pressures show no sign of
waning: 97% say the volume of challenges will be
the same or increase in the foreseeable future.
Biggest transaction challenges
Murky title law
and changing
regulations pose
greatest challenge
100
50
75
25
0
23%
32%
74%
67%
62%
58%
Labor&
Employ-
ment
Title&RealEstate
Private
Financing
Regulatory
Environmental
Government
3% Down
Biggest transaction challenges
Heirship and Legacy
Lack of Precedence
or Poor Records
60% 37% UpSame
Lack of Clear or
Current Title Law
PERCENTAGE OF RESPONDENTS NAMING THESE TRANSACTIONAL
AREAS AS “MODERATELY TO EXTREMELY” CONCERNING
TOP CAUSES OF CONCERN
WILL TRANSACTIONAL CONCERNS
INCREASE IN 2015?

4. Outside counsel needs
Nearly all of those working in U.S. shales engage
outside counsel for title and real estate transactions;
more than half do so often. Two-thirds engage
outside counsel for regulatory transactions,
and more than half use outside counsel for
environmental and government relations needs.
Local experience
wanted for
transactions
Outside counsel needs
PERCENTAGE WHO USE OUTSIDE COUNSEL OFTEN OR SOMETIMES FOR
Title & Real Estate
87%
5025 75 1000
Other Transactions
58%
5025 75 1000
Regulatory
67%
5025 75 1000
Environmental
55%
5025 75 1000
Private Financing &
Related Securities
43%
5025 75 1000
Labor &
Employment
29%
5025 75 1000
Government
50%
5025 75 1000

5. Top lessons from the field
Respondents offer specific guidance for
newcomers with six categories of advice
dominating the lessons learned. These areas
range from “know what you’re getting into” to
“attract competent employees and partners.”
Also, respondents say good communication is key.
Knowledge
is power
Top lessons from the field
GAUGING LESSONS LEARNED
33%
0
10
20
30
40
Make Sure You Know
What You’re Getting Into
15%
0
2010 30
40
Allow Enough Time and Resources
23%
0
20
10 30
40
Establish Good Communication/
PR/Local Relationships
3%
39%
Up
Down
Same
23%
0
10
20
30
40
Understand
State/Local Concerns
Attract Competent Employees
& Partners
10%
20
30
400
18%
10
20
30
400
Use Legal Counsel

6. Words of wisdom
“Communicate.
Communicate.
Communicate.”
“Pay very close
attention to outsales
and well unitizations
that could be holding
an old lease.”
“Rules vary
state by
state—know
your state.”
“Use local people
whenever possible,
especially for legal
counsel.”
“Develop a good
process for vetting
title when evaluating
a transaction.”
“Plan ahead, focus on
details, and proactively
get out ahead of any
key public issues.”
“Make sure you fully
understand your issue
before attempting to
resolve it.”
“There is a lot
of misleading
information. Go
directly to the
source.”
“A lot of people can
produce oil and
gas, but not a lot
of people make
money doing it.”
Advice from
the field
Words of wisdom
When asked for their thoughts, respondents
were forthright about their own experiences and
lessons learned. Several of those comments are
shared below. One favorite among other gems:
“Understand what you know and don’t know about
shale and gas development.”
“Implement a CYA
approach and be
prepared to settle.”

7. Participant profiles and demographics
Shale
players
surveyed
A total of 176 individuals completed the online survey
from February 2014 through May 2014. They represent 119
energy companies of varying sizes doing business in
U.S. shales. Respondents are mostly landmen, in-house
counsel, and executives with an average of just over 11 years
working with outside counsel or legal issues in the field.
Participant profiles and demographics
INDUSTRY SECTORS
Oil & Gas
Extraction
35
52
17
70
0
Oil & Gas
Construction
Providers of
Oil & Gas
Title, Real
Estate &
Land
Upstream
(Exploration
& Production)
Consultant OtherTransporters
of Oil &
Gas Field
Commodities
Oil & Gas
Pipeline
Oil & Gas
Well
Drilling
AAPL
Acadian Land Services
Anadarko Petroleum Corp.
Antero Resources Corp.
Apex Energy, LLC
Assets International
Atlas Energy, L.P.
Atlas Resource Partners
Bertison-George, LLC
BG Group
BHP Billiton
Biehl Land Services, LLC
Bill Barrett Corp.
Billman Geologic Consultants, Inc.
Bonanza Creek Energy, Inc.
BP Production Company
Branzan Investment Advisors, Inc.
Breitburn
Brighton Resources
Caddo Bay Energy, LLC
Cardno MM&A
Chesapeake Energy Corp.
Chevron
Citation Oil & Gas Corp.
Columbia Pipeline Group
Conoco Phillips Company
CONSOL Energy/CNX Gas
Crestwood Midstream Partners
LIST OF RESPONDENTS
Dale
Devon
Dominion
Dorado E&P Partners, LLC
Drake Land Services, LLC
Edgewood Energy
EMG
Empire Energy E&P LLC
Enerplus
Enervest
Environmental Standards, Inc.
EQT Corp.
Ervin Equipment, Inc.
Fedoris Enterprises, LLC
FirstEnergy Services Company
Flat Rock Development, LLC
Freeport-McMoran Oil & Gas
Global Gas Law Consultants
Graves & Co.
Greenwood Energy
Griffin Petroleum Company
Gulfport Energy Corp.
Harbinger Land
Hat Creek Energy LLC
Hess Corporation
Honor Resources Co.
Hunt Oil Company
Huntington Bank
Independent
Key Oil Company
Marathon Oil
MCDRS LLC
McElvain Energy, Inc.
McFarren Group LLC
Memorial Resource Development
Midwest Land Services
Mogul Energy International, Inc.
Moody and Associates, Inc.
Mountaineer Keystone
MRO
NCPS
NiSource
Noble Energy
Northeast Natural Energy
Northwest Savings Bank
NuEnergy Operating, Inc.
Pardee Resources Company
PDC Energy, Inc.
PennEnergy Resources
Pennsylvania General Energy
Percheron
Pioneer Natural Resources
Range Resources
Reserve Energy
Rex Energy
RH USA
Rice Energy
RKI
Robert L. Bayless, Producer
Samuel Gary Jr. and Associates
Sierra Buckeye
Southwestern Energy
Spectra Energy
Statoil
Stone Energy
Talisman Energy
Tenaska Resources, LLC
Texas Keystone, Inc.
Total E&P USA, Inc.
TRC Environmental
Triana Energy
True Oil LLC
Ursa Operating Company LLC
Vanguard Natural Resources, LLC
Vista Ridge Resources, LLC
Vistar Oil Texas LLC
Vitruvian II Woodford, LLC
Western Land Services
Wolverine Gas and Oil Corp.
Wright Consulting
XOG Resources, LLC
XTO Energy Inc.
Several respondents identify themselves with multiple sectors.
66% 41% 17% 13% 10% 2% 2% 2% 2%1%
0
25
50
ANNUAL REVENUE
7%
40%
13%
$50 - 99
million
$100 - 499
million
$500 - 999
million
$1 billion+
Less than
$50 million
10%
30%

8. Signs of naturally
resourceful counsel
DEPTH & BREADTH OF ENERGY EXPERIENCE
30
75
Former in-house
energy attorneys
Seasoned energy litigators
8,500Recent mineral title opinions
FERCIn-house FERC and public
utility experience
Offices in key shale plays
$14BRecent transactions including SEC,
private placements, MLPs, JVs
15
350Attorneys
Multidisciplinary
emergency
response team
Labor & employment
attorneys
40
Dedicated
DOTO team
220In-house land
professionals
Years in the industry
100+
20Nationally recognized
environmental lawyers
and professionals
Attorneys licensed
in 23 states
1of the largest Mineral
Title teams in the country
steptoe-johnson.com/energy
About Steptoe & Johnson PLLC

9. DIG DEEP
research.steptoe-johnson.com