These five companies have all harnessed technology within the last four years to manage their lease acquisition and management of leased assets. In their own words, they all contend they have grown their respective firms three to four times larger and faster than what would have been possible with the methods they used previously.

From Disparate to Disciplined

E&P companies Westward Energy and Escondido Resources both knew the projects they were embarking on required better ways to organize all of the leases they were pursuing. Each had crews working in a half dozen different locations. Westward (Albuquerque, NM) was working with multiple partners in six states to secure more than 200,000 acres. Escondido (Houston, TX) was an early entrant into the Eagle Ford play, obtaining 60,000 leased acres in a 200,000 acre area. Between the two companies they were using spreadsheets, paper, email, and attempting to use Google docs--none of which solved the disparate nature of organizing the information or providing a reliable forum for all parties to communicate with one another without duplicating effort. They had no reliable way to know exactly what they owned, nor a way to display or manage their assets.

John Sandager, partner with Westward Energy, had previously managed a $500-million trust with 600 clients. His trust firm utilized a five-tier accounting system so he was accustomed to having detail and reliability on demand. Travis Walne, South Texas area landman with Escondido, was just beginning a 200,000-acre lease check in the Eagle Ford and his crew recognized the challenges paper, email and spreadsheets were posing for them. Both firms explored technical options to centralize their efforts before identifying the only real-time, tract-based, uniform land management solution that gives all stakeholders access to up-to-the-minute project information--and mapping--as current as the day’s work.

What have they learned about leveraging this technology? “At Westward, we now manage to the opportunity, rather than merely react to it.” Sandager says. “The system brings together all the variables that are needed to make faster and smarter lease decisions. It is simply better time management. Westward now is able to digest large amounts of tract and contract data visually, using the system’s database and integrated mapping capabilities. The company can also add GIS mapping layers of its own or purchase and integrate third-party mapping data that are important to a given project. Management can focus on key areas and capitalize on these opportunities. With consistent and time-efficient data coming in from the field, Westward personnel know where they are at any moment.”

Escondido’s Walne underscores this point.“This technology changed our lives in terms of organization and productivity,” he says. “It became one of those moments where you couldn’t believe you ever did it any other way. This system has led to a sense of leadership from our land group. Everything we need is right in front of us, and if we have a question it is usually answered in the data or we can refer to the online help instructions.” If management has questions, Escondido land has answers. Walne continues, “It has been a phenomenal feat for our group. The whole company is enjoying and benefiting from our new work style. We know where to find the information at any time of day. It has become our online office.”

From the broker perspective, John O’Niell, partner with R&O Energy (Shreveport, LA), expresses a similar sentiment but from a different point-of-view. O’Niell explains, “We began using the solution to bring coordination to our projects and avoid stagnant and outdated database sets. What happened was we gained an entirely more efficient way to manage and run our business.” 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 confidently report its entry and status.”

Uniformity Equals Efficiencies

The uniformity this solution has brought to R&O has completely streamlined the way they work, all the way down to how they train people. As O’Niell describes, “Especially for new hires, it is easy to train them to learn the processes and command structure.”

Roland Dugas, partner with Louisiana Oil Group (LOG) agrees, but his firm has more of a benevolent mandate. At LOG (Lafayette, LA), “When we hire people we explain this system is part of the job to help us work more efficiently because we want people to have the freedom to get their work done with limited supervision. We are confident LOG has [some of] the most competent landmen in the industry because they not only understand land work, but they are able to utilize a system that allows us to save money for our clients on lease acquisitions.”

In the last 20 months, LOG calculates they have saved their current clients more than $500,000 a month in broker costs due to their use of technology. LOG is confident their clients recognize their investment and preference to work more efficiently because it comes up in client management meetings. How long before this technology becomes the standard?

Sandager suggests, “It is the standard in our minds, because it creates convergence of all our project information and allows all of it to reside in one place so we can truly work as a team without duplication or redundancy. A centralized portal, and the real-time maps we are able to create are simply game changers.”

From Harried to Streamlined

Sandager’s Westward Energy clearly experienced the benefits of centralizing their information operations as an E&P company. He explains, “We had 14 landmen in six states with multiple partners working several AMIs (Areas of Mutual Interest). The company typically would have to wait at least a week to get reporting from the field or office. Often, so many touch points meant that the left hand did not know what the right hand was doing. What leases did the company own? What were the terms? When were the leases reported, or had they even been recorded? Management simply did not know the answers to these rather fundamental, yet critical questions. There was no centralization of information. No way this comes off with the accountability we accomplished without the technology we adopted.”

Meanwhile, Magnum Land Services (broker in Traverse City, MI) demonstrated how to take a large area and simplify it to the benefit of their client roster. From June 2007 to May 2009, Magnum managed up to 150,000 acres under lease and, according to accounting manager Bryce Hundley, “There is no way we could have managed the lease process without this technology.” In that time period, Magnum grew its lease holdings 10 times. Hundley continued, “What’s amazing is we considered bringing on some additional people, but once we understood how to leverage the program’s features we didn’t need to do that. At a minimum, the cost of using the product saved us more than 80% compared to what would have been required to add headcount.”

Real-time Maps. Real-time Decisions.

Magnum leveraged the system’s reporting capabilities for a better presentation of their assets upon divestiture. Hundley explains, “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-sized divestitures in 2009 and 2010. 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 have value in any market environment.

Dugas at LOG elaborates further about the autonomy this technology provides to their crew and some of the benefits clients see with real-time mapping. “We like being able to bring our client in with our leasing crew and our title crew so we can all focus on the project visually. We can turn on a lease layer; we can turn on an overlay of all the wells. In one of our prospects, we downloaded all wells drilled into our map for the entire state we were working. Within the database that generates the map we are provided a link, and from this we can get information on any well immediately as the link connects us directly to the well file in the records for the Department of Conservation. This has been extremely helpful because we didn't have to get out of the system and go into the state's database. We can just select the link and it automatically pulls up that current well file as it exists today.

“The other nice thing about the map is that well status and well information is changing everyday on our entire prospect, but everyone authorized on the project has access to this information in real time. Without this convergence of information, our crew would have to go into the state's web site and pull up a map and then convert it onto the prospect map on a weekly, daily, even hourly basis. The time savings is significant. In this case, when we pull up our map and we open the layer to the web to put in our wells, the well status automatically shows up on our map in real time. This is important to us because the status of the well can change daily. The well status may be permitted, it could be producing, or it may be plugged and abandoned, or any number of circumstances which affect our decision-making. We can change and configure the (mineral) lease legend of the map on our own as the need arises. Now we can have it in real time [and] available to my entire crew 24 hours a day no matter when they want to work. The workflow makes us highly efficient from management throughout the activities of the crew.”

In LOG’s most recent project, management contends they accomplished their client’s lease objectives with one-third fewer people than would have been required without the technology: 100 people instead of 150. Dugas continues, “Sure, the way we work reduces our top line, but it improves our bottom line by alleviating our administrative burden. We would have to hire four or five more administrative people to manage an additional 50 crew members. Where’s the sense in that?”

Drilling and Finance Obligations. Clarified and Prioritized.

More and more, this land system is relied upon to assist drilling and finance because the unique tract-based identifiers make no mistake about which land asset is the subject of discussion. Whether the discussion entails establishing a drilling plan or insuring bonus payments are accurate down to the grantor on a tract-by-tract basis. For 2012, Escondido will use the system to plan out their drilling priorities, taking into account their drilling obligations which are housed in the system’s database. Finance departments throughout the industry are taking notice because it is the only front-end land system that verifies (self-checks through comparative program routines) assets with net acreage. Most landmen and executives in finance know the No. 1 reason leases are lost is when payments are incorrect or missed. As the former trust executive, Sandager says, “We know of no more efficient workflow path to an accurate NRI (net revenue interest) in the industry, and it all begins with how the information is captured from the field. And believe me, we’ve done our diligence on systems.”

These land executives are making great strides on behalf of their companies because they are choosing to work differently, and it is yielding dramatic improvements in profitability and productivity as oil and gas firms are as much in the business of managing assets for their undrilled acreage as they are for what they intend to produce.

Richard A. Hines is Vice President and Partner of iLandMan, the provider of the lease acquisition and management software technology deployed in the operations described above. Hines oversees all operations. Based in Lafayette, La., he has 26 years of experience as a practicing landman. He also owns interests in Heritage Resources LLC and Shelf Minerals LLC. Hines serves on the American Association of Professional Landmen’s Certification and Website/IT committees, and is a past third vice president on the AAPL board. He holds a degree in petroleum land management from the University of Louisiana at Lafayette.