Lease jeopardy in shales ppt
-
Upload
entrance-software -
Category
Documents
-
view
225 -
download
1
Transcript of Lease jeopardy in shales ppt
Avoiding Lease Jeopardy in Shale Plays Leveraging information assets to minimize risks of non-compliance
“Cheated out of millions?”
engineering intelligence
Plaintiff’s Attorneys are Taking Note
engineering intelligence
Search Results: “Oil and Gas Royalty Lawsuit”
engineering intelligence
Royalty “Specialists” Emerging
“There may be circumstances that provide an opportunity to break an existing oil or gas lease, freeing you to negotiate a new, more favorable lease at current market royalty rates.”
engineering intelligence
8/31: HBJ, “Chesapeake faces lawsuits…”
“…increasingly besieged with landowner lawsuit claims of underpayment of gas royalties and related leasehold disputes.”
engineering intelligence
Lease Compliance: A Critical Issue
Not a new concept Uniqueness in each play – O&G Law Maturity
› E.g. AR, PA vs. TX
– Lease standardization extremes, for example: › Barnett (many small tracts – high degree of standardization) › Eagle Ford (large ranches – proprietary lease documents)
– Plaintiff lawyer quality and ability Risks: – Lease jeopardy – Fees – Litigation – Time
engineering intelligence
Case History
BB Energy, L.P. v. Devon Energy Production Company, L.P., 2008 – (WL 2164583)
– Contract language held that Pugh clause not relevant since no pooling had taken place
ANDERSON v. HESS CORPORATION No. 10–3116. – http://scholar.google.com/scholar_case?case=4159234918805300864
– Affirmed sensitivity date of Continuous Drilling to be date of cessation of general
operations due to contract language
Bledsoe vs. Forest Oil (decided in 2011) – http://scholar.google.com/scholar_case?case=3498925303401075223
– Found that continuous drilling savings provision was in effect after frac date upon appeal
(vs. perforation or casing dates)
Many, many more...
Illustrates critical care needed in crafting and tracking these provisions
“You feel like you’ve got a gun to your head:
you’ve got to drill a well or you’re going to lose a
lease.”
Gary Evans - CEO, Magnum Hunter
engineering intelligence
Business Drivers for Change
Operations
Novelty
Competition
Velocity
Value
Legal
Tort Reform
“Deep Pockets”
Sophisticated
Owners
Consumer
Perception
Land
Lease
Complexity
Lease
Standardization
IT
Data Silos
Data Quality
Issues
Product Feature
Lag
Land Administration Oversight
engineering intelligence
Lease Compliance: Strategy
Cross-departmental concern – No single department has “the whole story”
– Conventional land software not enough
– Land Administration oversight not standardized
Current state of the art – “Landman and a Spreadsheet”
– College interns
– Paper / Manual process
“Land Administration employees protect the Company’s assets, including its oil and gas leases and the wells which are drilled on those leases. Typical job duties include assisting in the analysis of provisions of various leases, deeds, rights of way, and agreements involving Company assets in order that a property record base can be created or maintained.” -Anadarko [on its website]
engineering intelligence
Case Study: Background Information
Operations – Eagle Ford under active development – Other Shale Plays
Legal – Land Administration responsibility
Land – Many complicated leases
IT – Multiple system vendors
Success Requires a Focused Team Effort
engineering intelligence
Case Study: The Process
• Enumerate Critical Provisions
• Define Input Parameters (Key Dates, Key Quantities) Step 1: Lease Review
• Locate Systems of Record
• Map to Destination Systems Step 2: Data Mapping
• Correct inconsistencies in existing data set Step 3: Data Cleansing
• Link Disparate Systems
• Synchronize copies to master Step 4: Integration
• Capture initial lease provision inventory
• Establish go-forward workflow to maintain provision inventory
Step 5: Lease Provision
Tracking
• Assign business owners
• Define sensitivity cases
Step 6: Alert
Configuration
engineering intelligence
Case Study: The Whole Story
Production
Production
Volumes
Well Status
Drilling
Spud Dates
Casing Dates
Perforation Dates
Rig Release Dates
Fracture Dates
P&A Dates
Land
Standard Lease
Provisions
Custom Lease
Provisions
Other
Marketing: Sales
Price
ERP: DOI
DrillingInfo.com:
Offset Well
Locations
engineering intelligence
Enterprise Lease Compliance Solution
Case Study: The Solution
Drilling
Production
Land
Lease Compliance
Management
Sync
Reports
Alerts
Send
Lease Provisions
Capture
Other Configure
Key
Source Data
Entrance Solution
engineering intelligence
Case Study: The Results
Lease Provision Tracking – Royalty Escalation – Cessation of Production – Pugh Clauses – Continuous Drilling/Operations
› Well-based: including Banked Wells
› Time-based: including Deferment Days
– Other Custom Provisions
Ongoing Iterative Process – Master data management (new systems, etc.) – Establishing “permanent” business data owners
Questions? Learn more at www.EntranceSoftware.com/LeaseCompliance