Acquisition Due Diligence Defect Review Crews
Between signing a Purchase and Sale Agreement (PSA) and the title defect notice deadline, the buyer's land team has a fixed window, often 20 to 45 calendar days, to verify that the seller holds Defensible Title to the scheduled wells, units, and undeveloped net mineral or leasehold acres.
What a due diligence crew checks during the PSA window
Acquisition due diligence is different from a ground-up drilling runsheet. The crew works against the allocated values on the PSA schedules (Exhibit A-1 leases, Exhibit A-2 wells/units, and the allocated value schedule) to test the four elements of Defensible Title before the defect clock expires:
- Working Interest (WI) and Net Revenue Interest (NRI) verification: Checking the seller's scheduled WI and NRI decimals on each producing well and drilling spacing unit against the underlying leases, overriding royalty assignments, farmouts, joint operating agreements (JOAs), and division order decks.
- Net Mineral Acre (NMA) and Net Leasehold Acre reconciliation: For undeveloped acreage or mineral/royalty acquisitions, verifying the gross tract acreage, mineral interest fraction, lessor royalty burden, and remaining primary term on each scheduled tract.
- HBP and retained-acreage compliance: Testing whether older leases scheduled as Held by Production (HBP) have suffered partial vertical or horizontal termination under Pugh clauses, continuous-drilling clauses, or cessation-of-production provisions.
- Consents to assign, preferential rights, and liens: Auditing every scheduled lease and contract for hard vs. soft consents to assign, preferential purchase rights (ROFRs), area of mutual interest (AMI) obligations, and unreleased deeds of trust or mechanic's liens in the county records.
How the crew splits between the data room and the courthouse
| Workstation | Records examined | Deliverable to deal counsel |
|---|---|---|
| Virtual / physical data room | Seller lease files, prior attorney opinions on title, division order pay decks, JOAs, farmouts, and revenue/suspense ledgers. | Asset-by-asset verification tracker comparing scheduled WI, NRI, and net acres against the seller's own title files. |
| County Clerk & Parish gap check | Grantor-Grantee and tract indexes from the date of the seller's latest title run forward to the PSA effective/closing date. | Gap-period runsheet identifying intervening assignments, depth releases, mortgages, judgment liens, or adverse top leases. |
| Consent & pref-right schedule | Lease assignment clauses, State/Federal lease transfer rules, and JOA preferential right provisions. | Master consent and preferential-right notice schedule distinguishing hard consents (punitive termination/void language) from soft consents. |
| Defect backup packets | Recorded instruments, well production histories, and decimal calculation worksheets supporting each asserted title defect. | Numbered defect packages organized by PSA Exhibit line item, threshold check, and supporting exhibits for buyer's deal counsel. |
Scoping an A&D due diligence crew call
To help us size a due diligence crew before your PSA signing or defect deadline, include:
- Asset type and county footprint: Whether the package is operated working interest, non-operated working interest, or mineral/royalty interests, and which counties or parishes hold the concentrated allocated value.
- Well, unit, and lease count: How many allocated-value wells, drilling units, or lease lines are on Exhibit A, and whether you are running a 100% check or an 80% allocated-value Pareto sweep.
- Defect notice date: The exact calendar date and time when title defect notices must be delivered under the PSA.
Other crew guides on the board: Permian Basin title and curative crews, East Texas and Haynesville landman crews, and Pipeline and transmission ROW agents.