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Winter Newsletter – 2011

The Lay of the Land

Real-time Ownership

Market Metrics Affecting E&P’s and Brokers: Pricing, Costs and Results

Gas prices oscillating around $4-$4.50/ mcf, oil prices surging above the $80/bbl mark, land rigs increasing by over 30%, offshore rigs have decreased by over 35% in North America within a year’s time frame. With this trend companies see a strategic movement of their investments toward oil and condensate production. Everyone is once again looking at how to cut costs without compromising production. Many are looking at new areas such as how we can make our land department more efficient? Regardless of the size of an exploration company or their field brokers, working more efficiently is a common theme this year for those who continue with active lease acquisition programs, or have needs to complete
their project lease holdings to make them more marketable.

Take a page from broker, Magnum Land Services, during the last couple years. Through June of 2007 to May of 2009 they managed up to 140,000 acres under lease and according to Accounting Manager, Bryce Hundley, “ There is no way we could have managed the lease process without iLandMan.” In that time period, Magnum grew their lease holdings 10 times. Hundley continued, “What’s amazing, is we considered bringing on some additional people, but once we understood how to leverage iLandMan’s features we didn’t need to do that. At a minimum, the cost of using their product saved us over 80% compared to what would have been required to add headcount.”

Hundley added, “Our staff under Chick Belanger does a great job in presenting our leases, but I have to mention one thing because we completed two good size divestitures in September, 2009. These are not second hand comments; these are buyers speaking directly to me. 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’s hard to quantify, but cost savings and a transparent representation has value in any market environment.

Return on iLandMan (ROI)

Return on Investment for a Buttoned-Up E&P: Westward Energy, Albuquerque, NM

Going from a five tier accounting system to attempting to manage 200,000 acres of lease holdings in six states with multiple partners with subordinate tools was not John Sandager’s style. Sandager is a partner in Westward Energy with longtime oil and gas land expert Knute Lee, and son, Cody Lee. Mr. Sandager had previously managed a $500 million trust with 600 clients so he was accustomed to detail and reliability. After a few months of trying to manage their projects and holdings with spreadsheets and Google Docs he said to himself, enough! When he discovered iLandMan at Winter NAPE in 2010 he was mesmerized.

See the January 2011 issue of American Oil & Gas Reporter for the full story.

Hines Sight

The Past and how a Better Way Emerged: By Richard Hines, Vice President/Partner

Twenty five years ago, land departments had 50 people in satellite offices, complete with phones, typewriters, and the first computers. Maps were colored by hand. They used Wordstar, Lotus 123, and because oil companies used many different brokers in different areas, it was difficult to compile all the data because they used different types of programs and forms. There was no real process; all you had was milestones and quality checks.

Net acreage reports could be off by as much as 10%—and up to 30% in large leasing or complex projects! Operators were unable to manage brokers in the field, as they worked independently without much communication with their clients. To my partner and I, the situation was untenable, so we decided to build a program to help with the identifiable problems and streamline this whole process. We formally began offering the solution to clients in 2005. We wanted a solution so intuitive anyone could use it so we requested input from our peers, the people who would use the solution and wanted more features than
their spreadsheets and self-created programs could deliver.

The Internet and cell phones have revolutionized how landmen work. Now, no satellite offices are needed, eliminating a significant expense. The information is only entered once from the source in the field, and the database links directly to mapping. So, reports and mapping are as current as the days work, and clients can add as many of their own layers to the map as they choose. The solution operates using a SQL database backbone, and about a year ago we moved to an ASP.net platform so anyone with an Internet browser can use this open and “platform neutral”, multi-tenant application.

Because it is web-based, updates are made frequently to the hosted application. No software version upgrade fees are required from our customers. Each user obtains a personal, secure storage area. Companies can add users to their license quickly and easily and provide project-based permissions for accessing data remotely and securely. Therefore the users can see and do what each license holder requires of them.

All of the landmen’s work, contracts, payments, communications, and reports are generated for them from the data they enter. Clients also have easy access to all this digital information as it resides in a central repository. Finance doesn’t have to make a request from land for net acreage updates, engineers no longer have to go to the GIS staff to get a map, and the land department can pick-up right where they left off on a project even if it has been months since they were working an area. There is a better way to do land work, check out our way because we’re ready when you’re ready.

Power Brokers

R&O Adopted Early – Reaps Advantages: R&O Energy, Shreveport, LA

R&O Energy was among the first to use iLandMan in 2004, and it has been a fortuitous decision ever since. Originally, they began using the solution to bring coordination to their projects and avoid stagnant and outdated database sets. What happened was they gained an entirely more efficient way to manage and run their business. John O’Niell, partner, explains “It is very easy to duplicate efforts in our field of work which can be quite expensive. We were looking for a way to avoid this and save time in the future when returning to a project or region so the data would be in tact where we left off. Immediately useful.” R&O wanted better data coordination, storage and ease of access for field brokers. A billing function for payments, and GIS mapping capabilities that linked to a database. “We found all of this with iLandMan, and real-time reporting to boot.” He continues, “When managing large acquisitions and evaluating new prospects, this is the fastest way to bring a broad variety of data in from the field and be able to report its entry.”

The uniformity this solution has brought to R&O has completely streamlined the way they work. All the way down to how we train people. As O’Niell describes, “Especially for new hires, it is easy to train them to learn the processes and command structure. After running through it a few times, they easily get the hang of it.” It has made us a highly competitive firm.

©2011 iLandMan. All Rights Reserved.

 

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