The better the question
Are your operations adapting as fast as your markets are changing?
Land management in oil and gas is a complex, data-intensive process, ripe with inefficiencies.
The land function within an exploration and production (E&P) operation is responsible for keeping chains of titles up to date, tracking and managing ownership interests, regulatory permitting, business reporting, and negotiating and acquiring rights to drill. It is one of the critical value drivers in oil and gas, and responsible for building the foundation of everything else the company does. These tasks aren’t easy. Land ownership is complex, and land functions typically oversee thousands of individual transactions.
A large oil and gas company approached the EY energy team for help in optimizing its lease management. Despite its importance, most land tasks continue to be performed manually. It’s not unusual for landmen to rely on paper printouts of contracts for review. Stand-alone spreadsheets and siloed emails that cannot be accessed by others are also common.
This lack of automation can be costly. Overlooking a continuous drilling clause in an acquired contract, for example, can lead to hundreds of millions of dollars in lost value. Missed opportunities in one-off contracts often result in higher lease prices and well costs due to additional surface and mineral payments.
Relying on traditional workflow methods is also time-consuming. Landmen are forced to focus on “putting out fires,” transferring data manually and responding to requests for information — limiting the time available to analyze opportunities to drive value.
In addition, since multiple people and functions are involved in well planning and drilling, the company faced an ongoing challenge to determine which document or spreadsheet was current. Emails or phone messages regarding contracts or drilling plans weren’t accessible across the organization.
These gaps create confusion, delay decision-making and often lead to expensive rework. Just as important, relying on an old-school approach to data management eventually limits knowledge transfer and hampers the ability of others to step into the job.
Faced with an unfavorable long-term price environment, surviving this current crisis will involve protecting liquidity and making the most of the capital on hand.
The better the answer
Leveraging technology to address operational challenges
Built on the Microsoft technology stack, EY DEEP integrates key processes and uses a common data model.
The EY Digital Energy Enablement Platform (EY DEEP) team of industry experts, engineers and landmen collaborated with the company to create a bespoke solution that would expand the use of digital technology to streamline and automate operational activities. The right digital tools — deployed properly — generated a significant return on investment in a short time.
The technologies created provided a “single source of truth” for complex processes — up-to-date data and information that everyone could access in real time. Digital tools removed the organizational inefficiencies that set in when there were uncertainties around data, and eliminated the unnecessary costs and time involved in updating or communicating information across functions.
EY DEEP’s primary land function modules include land acquisition, broker communications, regulatory and permitting, owner relations, ownership and document management, shut-in dashboard, competitor activity, land execution or rig schedule alignment, and authorization for expenditure (AFE) management. These modules were tied directly into software and applications already in use — such as SAP, the company’s current land system, Office 365 and even regulatory agency databases — to be accessed via a convenient, intuitive dashboard.
Beyond streamlining the land function’s day-to-day activities, rig schedules had to be constantly reworked because data from the land group was not integrated with well planning and production. Since well engineers, and production and operations staff lacked clarity on what leases the company owned and where those leases were located, rig schedules frequently had to be redone, leading to drilling delays and cost increases. EY DEEP gave everyone up-to-date insight on lease status and reduced, or even eliminated, the need to rework rig schedules.
The better the world works
Beyond land management
Integration across the oil and gas value chain allows the land team to feed into well planning, thereby expanding cost savings.
The company identified approximately US$30 million to US$50 million in value following implementation of EY DEEP by its land group, primarily by helping minimize surface constraints and increase working interest in alignment with the company’s short- and long-term development plans. It also simplified the management of permits and land documents in relation to chains of titles.
In the wider world, oil remains critical not only to the global economy but also to the daily lives of billions of people. It is of vital importance that oil and gas companies are given the necessary tools not only to update their systems to bring their business models into today but also to adapt to survive tomorrow. EY DEEP is helping oil and gas companies operating in major basins continue to serve those customers by substantially shortening the time it takes to turn natural resources into energy that powers businesses, homes and automobiles. At the same time, it helps oil and gas companies create safer, more productive and more rewarding job experiences for employees, while reducing the risk of negative environmental impacts by minimizing errors in key upstream processes.