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Oil and Gas Investor: “Sifting Big Data”

Oil and Gas Investor

Sifting Big Data

New data systems are smoothing the way for analysts as they assess the value of complex lease holdings. The results can help in day-to-day operations as well as in A&D.

The complexity of today’s natural gas plays is well documented anecdotally, but the computations behind the assessments of these assets vary widely from one E&P to the next. The quality and detail of information presented also ranges widely as due diligence is conducted. And in many cases, the assets aren’t well presented or depicted clearly.

For E&Ps leveraging the new legion of platform-neutral, lease-acquisition and asset-management systems on the front end of their back offices, for accounting and production, the business improvements are many. Systems that are tract-based and integrate tract status, contracts, division orders, grantor comparisons, payment requirements and mapping can provide chief financial officers with the detail and audit trail they require.

Bradley Williams, managing member of Elephant Oil & Gas Co., a Dallas based E&P, has firsthand experience with the benefits of such databases. They have helped the company leverage its entire talent pool, from lease inception to raising capital to sale at the end of the land life cycle. “The system we use allowed our buyer to complete the due diligence period of a divestiture in nearly half the time it took to close a similarly sized divestiture without the software (system),” he says.

Databases are helping companies achieve better returns on investment for a variety of reasons. Most important, these systems offer a centralized place to conduct analysis, expediting and widening access for lease administration and other departments to be more efficient, rather than relying on the disparate files many E&Ps still use. Further, people can work together in a real-time decision-making environment to support and pursue company objectives.

In the past, the components of a lease file were checked manually by lease administration, probably in separate locations and using different file types, e.g., hard copy, spreadsheets and e-mail. Similar efforts were required for lease purchase reports, bonus payment receipts (with offer letters), source deeds, mineral ownership reports, and chain of title (not always included, or sometimes found in a main tract or contract file); a map (typically hand drawn and dated); and the lease.

New systems, by contrast, keep all these items in one place through a web-based real-time portal, and project members can view related aspects of a file or project in whatever format they choose for comparisons. Cross references are automatic and simultaneous. The operator runs these comparisons on the contract, tract and grantor comparison reports to confirm that the proper math and lease language has been used. If not, this information can travel back and forth within the database between the relevant parties until the issue is resolved and the project can be approved. In many cases, the exchange resembles more an e-mail chat than an interruption in the work flow. In the past, cross references were handled manually and could take weeks, instead of minutes or hours.

The ramifications of these efficiencies are also significant for the C-level suite, which benefits from reporting that is accessible and as current as the day’s work. In the past, for example, rental information might have been reported on a monthly or quarterly basis. If the manual data-entry window was missed or entered after reporting, there was a significant lag time in information. This was also true for damages and renewals. Today, using a system that is tract based, the senior financial management team can view as much or as little of a leasehold as they wish, in real time. They can also review the audit trail, which tracks changes along the way by individual, date and time.

Acreage analysis is also streamlined. The dashboard automatically provides acreage figures per project area, with no report required, and acreage can be viewed for producing and nonproducing assets. E&Ps don’t have to send field crews out (with the significant costs of travel, lodging, researching, recontacting owners, recreating lease documents, and using couriers) to randomly gather information on lease assets. Instead of spot-checking a leasehold, the entire asset is housed in one place.

Jordyn Gingras, land and legal manager for Elephant Oil & Gas, describes the system’s merits: “Being able to present the assets in a real-time map, and then allowing the buyer to drill down to the supporting tract or contract if they choose, is a formidable and credible tool. The cost eliminated for both the seller and buyer is mutually substantial, and we have a complete information set to work from on all assets in one place.”

As senior financial executives pursue a deal, they know exactly what the value of their assets represents, and it can be shown on a map.

Leveraging big data
The complexity of the new shale plays is widely recognized, and it presents a unique challenge for companies trying to manage and leverage “big data.” Charles Karren, director of energy industry strategy for Oracle, recently noted a comment from Jay Pryor, executive vice president of business development for Chevron Corp. Pryor said, “Chevron manages as much data as Google.” This data assessment includes financial spend and operational data.

Operators smaller than Chevron have fewer resources, so the idea of trying to manage spreadsheets with tens of thousands of lines of information while feeling confident about clarity is even more intimidating. What can be accomplished today, with a system that accesses a project’s many attributes all the way down to the singular lease, is powerful.

“The ability to generate numerous reports from the title database and quickly access images of recorded instruments can be extremely valuable in terms of meeting critical deadlines and closing a deal rapidly when the courthouse is overcrowded,” notes Williams.

Lease administration and division order analysts are frequently left out of decision-making aimed at improving the process of generating critical opinions and documentation for exploitation and drilling. Nevertheless, they are generally the stewards of the orderliness and quality of these approvals in making the decision to move forward. Generating drilling title opinions, division order title opinions, joint interest billing decks and entitlement decks involves time-consuming confirmation and approval processes.

Further, most states have statutes requiring division orders 90 to 120 days from first production. While much of this can be auto-generated through a database, many E&Ps are still handling these computations manually, leaving less time for analysts to review special royalty provisions.

Significant time is also expended gathering information from a variety of locations, when a centralized system can ultimately push this standardized information to the accounting system. Senior finance’s inclusion of lease administration and division order analysts in the decision tree is critical in order to improve results from the clearinghouse skills of the lease administration team. These professionals will be able to provide more true analysis and spend less time data checking if they are involved. This further leverages the system so that capable and high-value employees are used where their skills are needed most.

Lastly, an E&P’s value and credibility is significantly enhanced by the ability to demonstrate verifiable data and to visually present assets when pursuing a funding partner. E&Ps that can provide a potential capital partner with a one-stop information source for due diligence when seeking to raise funds for lease acquisition or production offer a buttoned-up view of their holdings and ease the pathway to engaging multiple financing partners simultaneously. This quickly broadens financing options.

One avid system user, Bryce Hundley, controller for Belmont Resources, Traverse City, Michigan, explains the benefits: “We completed two good-sized divestitures between September 2009 and August 2010. Both buyers explained they had looked at numerous other opportunities and our reports and presentations were far and away the cleanest they had seen.”

It is sometimes difficult to quantify these factors, but the cost savings and transparent representation offered by these systems have value in any market environment, bringing big
data to the fore.

 

Rebecca Wright is a project manager for iLandMan. Previously she was a division order analyst for Swift Energy Operating LLC.

 

If you have any questions about iLandMan, or want to set up a demonstration, please give us a call at 1-855-445-9629 or fill out our contact form.

Winter Newsletter – 2013

The Lay of the Land

Power Broker

Seeking Better Communication: Holland Services, Fort Worth, TX

FOSTERED A COMPELLING PARTNERSHIP
Initially when Holland learned about iLandMan the intent was simply to improve communication between the field, our various offices, and our clients. What the company found was a business partner that is as driven and knowledgeable as Holland Services. Bryan Gaudin, our VP & General Manager, explains “We find our two companies collaborating with some frequency because Holland has a certain way of doing things and we generally have a sense that iLandMan can accomplish what we want. We just don’t always know how to leverage the system, but the people at iLandMan not only know their system inside and out they understand our business. We’re both industry leaders, and very compatible in how we work together.”

Holland handles a broad range of land services such as title, leasing, due diligence, mapping, and additionally, asset management and marketing, all on a nation-wide basis. Gaudin continues, “We service upstream, midstream, and downstream energy, and iLandMan is an ideal solution for us. Our clients find comfort in being able to check the status of any aspect of a project in one place. The system gives our clients peace of mind. Whether they check a project’s status once a month or a hundred times a month they know what they are seeing is in real-time.” iLandMan underscores Holland’s ‘One Stop Shop’ promise to our clients and that has fostered a solid partnership.

Map Tracts

MAI Oil Takes Flight with iLandMan Mapping: By Chase Lybbert, Landman, MAI Oil Operations, Inc.

Mai Oil Operations has been an iLandMan client since 2010, and we portray the mapping function of iLandMan as giving the operator the ability to see an area as if one were flying over it. In the past, pilots used their flight instruments to determine where they and others were in the air. This method can be compared to looking at a spreadsheet of oil and gas leases and trying to extrapolate the information and how it relates to the areas we are leasing in. Now, new technology allows airplanes to be equipped with advanced GPS devices that give the pilot the ability to see himself and others in real-time on a moving map; just like the user of iLandMan can when using the map and its many features.

Viewing the Whole Situation
The mapping features of iLandMan allow us to see “the whole picture” of our current leaseholds, new areas of interest, and areas in which competing operators are leasing or have current production. All the while, providing features that allow us to see trends and key areas and how our areas of interest fit within the County, the State, and even the whole Country. Creating an ArcMap document and loading it into iLandMan is a feature we use daily. iLandMan’s mapping provides great “situational awareness.”

We get a bird’s eye view of the area we are working in which is helpful in learning leasing trends in certain areas as well as where our areas of interest fit in with the “big picture” of what is happening around us.

Overall, the mapping feature has become an invaluable tool. We can delve into the details of a tract just by clicking on that tract which is more efficient than scrolling through a spreadsheet looking for a single lease hidden in the many pages of most oil and gas related spreadsheets. The map is the database information and the information is the map. They are mirror reflections of our projects. iLandMan mapping also allows us to double-check areas of interest that may have been missed when researching the project. Using spreadsheets is helpful in many ways, but as the saying goes, “a picture is worth a 1000 words” and iLandMan is the best view going.

Caldwell Cares

Web-Based Training Yields Dramatic Results: By Sarah Caldwell, Training Manager

Because we care about our clients success, we make sure they receive first class training as soon as they sign up with us. We’ve seen first hand the business benefits for the companies who start leveraging the iLandMan program. Our complete online, web-based training program was launched one year ago, and the comparisons and metrics we have observed both internally and within our clients’ organizations are resounding. The training modules are “self-paced” and can be taken anywhere, any time of the day. Here are a few of the facts we have obtained to help us know how iLandMan’s web-based training is contributing to faster results and a more efficient workflow:

– Prior to iLandMan web-based training, our help desk would get calls from new clients for 60-90 days before they were fully oriented—now, clients are up and running and using iLandMan effectively, 50% faster. The cost savings to your business to get a project started 50% faster is measurable.

– Before the web-based training was available, iLandMan would formally train about 1/3 of our new clients through a variety of channels with varying results. Since the online modules were released these figures have reversed. Almost 70% of our new users are taking advantage of the web-based training and becoming proficient in iLandman almost immediately.

Our Training can occur anywhere, anytime—it’s all online! Your team can train today, and start using iLandMan tomorrow. iLandMan customers can login anywhere, anytime, to our on-demand, interactive web-based training.

The training is divided into multiple sections according to the workflow of the program. It can be started and suspended, allowing the learner to pick-up right where they left off. Each section requires interaction from the user and ends with a quiz. The quiz allows the learner to use their new found knowledge and gauge their proficiency instantly. This sets iLandMan’s training apart from traditional training programs because iLandMan provides the hands on experience needed to apply the new skills immediately in the field.

Learners are enrolled in the following courses:

– Introduction

– Owners

– Tracts

– Contract Preparation

– Lessees

– Reporting

– Contracts

Once the training is complete, learners will be “iLandMan Certified” and will be able to print out a certificate demonstrating their new proficiencies. As business managers we all inherently know our people are among our most critical assets. Providing solid tools such as iLandMan is smart. Training them up is wise.

©2013 iLandMan. All Rights Reserved.

 

If you have any questions about iLandMan, or want to set up a demonstration, please give us a call at 1-855-445-9629 or fill out our contact form.

iLandMan Welcomes Chapman to Headquarters

Lafayette-based lease acquisition and land management software company iLandMan welcomes marketer Adam Chapman to their team.

Adam Chapman, Marketing Executive - iLandMan

Adam Chapman, Marketing Executive – iLandMan

A New Iberia native, Chapman is a graduate of Louisiana State University in Business Administration with a focus in Marketing, and has been working in Lafayette since 2007. Chapman comes from a family of newspapermen and began his advertising career locally in retail sales with The Daily Advertiser. After over three years in sales, Chapman transitioned to the role of Brand Developer with local branding agency The Russo Group, working with both local and regional clientele on branding and marketing projects with a strong focus in digital marketing and new technologies. He joins the iLandMan team as Marketing Executive assisting in the growth of their software brand and national user base.

Along with his role in the marketing profession, Adam is serving a second term as board member of the705; Young Leaders for a better Acadiana, and organizes the monthly Social Media Breakfast.

“We are pleased to have Adam join our staff to help us expand the marketing of our software services to landmen throughout the U.S.” said President Tim Supple. “Adam’s experience with advertising and marketing will help us more effectively tell the story of iLandMan and how it can save landmen and brokerage firms time and money….” Supple added.

About iLandMan: iLandMan has offices in Lafayette and Houston and is the only real-time, tract-based, uniform land management solution that gives all stakeholders access to the project management process online.

 

Local Media Coverage:

KATC

Acadiana Business

The Advocate

 

If you have any questions about iLandMan, or want to set up a demonstration, please give us a call at 1-855-445-9629 or fill out our contact form.