December is chock-full of fun. Crackling fireplaces, holiday ornaments, eggnog, and three major leases expiring under their own terms.
Wait…….what??
That’s right. One well, which held 640 acres of leasehold and millions of dollars of PUD value, went down in late October. The production team is covered up with work, but they see value in restoring production, so they put it on their schedule for a February workover. Done and dusted!
Yet, with everything going on, the production team did not sync up with the land team. Away went the rest of October, November and a week of December. All the while, that lease mandated 60-day cessation clock was ticking down and lease expiration quietly edging closer and closer…
January rolls around, and by now the lessor notices consecutive months with no royalty from the well. The lessor digs further in public data to determine the operator has overrun the cessation period allowed in the lease. The land department gets a call seeking a release of the oil and gas lease. This situation rapidly makes its way up the chain of command in the land department.
The production manager and land manager have a long overdue conversation on the matter. Fingers are pointed. Tempers are flared.
In a perfect world, the production manager would have promptly brought up the matter to the land manager. The land manager would then quickly review leases held by the well. They review the cessation timeline, discover the discrepancy and coordinates for an earlier workover to meet the deadline. Crisis averted!
But let’s review a few of the hurdles to clear in order to avoid disaster…
– The production manager and land manager quickly communicate
….during the holiday season
…..about a single well within an asset of tens, hundreds or even thousands of wells
– Land department staff have the time to verify which leases are held by the well (which could be dozens) and confirm their cessation of production clauses. [Land professionals reading this just started laughing….]
– The production team has a flexible enough workover schedule to accommodate quick changes.
– You only have this problem with one well at time.
It’s a recipe for catastrophe. At the very least, it creates a chaotic, reactive workflow. At the most, it could prove financially crippling to the company’s balance sheet.
There is an easier way.
There are affordable business intelligence tools that leverage your existing data (within your existing software tools). We really like Microsoft Power BI, and it fits nicely alongside the Microsoft Office suite most companies run on.
Velocity Insight’s Land Dashboard can help you streamline this workflow. Check out the Shut-In Report page below.
With the shut-in report, the whole production team can immediately identify associated lease tracts and other related wells for your subject well.
In the Gonzalez 1-8H example below, a team member can quickly discern the financial implication of this well going down – $1.6M in PUD value at risk.
Integrated, up to the moment data provides positive outcomes for your team:
– Land immediately knows what lease it might need to extend/amend.
– Production has full clarity around prioritizing the workover schedule.
– Everyone avoids a meeting to discuss “how detrimental would this be?”
– A 20 person, 5 message email thread is prevented.
– Engineers and Landmen don’t have to point fingers over an avoidable loss.
Cross-functional data with actional insights is not a luxury reserved for super majors with robust analytics teams. Finding data and matching it across land, production, accounting, and reserves systems does not have to be a manual excel, grunt-work party. Tedious data gathering and lease name matching does not need to be the status quo. Velocity Insight helps clients achieve improved business workflows like these time and time again. Successful outcomes of reduced administrative work for technical folks empowers teams to make quicker and more accurate decisions.
How can we help you unblock your team today?