Land management systems (LMS) are used by a variety of companies to manage their assets. Some of the companies that utilize land systems are E&P companies, mining companies, law firms, pipeline companies, and royalty partnerships.
These systems maintain an electronic catalog of leases, company owned fee lands, rights-of-way, unit designations, and any other type of agreement that may need to be tracked. These systems not only allow easy record keeping and reporting, but also provide help in managing those properties.
When an organization's land assets become too complex to be managed via spreadsheet, it is time to evaluate the purchase or license of a proper land system.
The implementation of a land system will provide a boost in productivity in many areas. The most obvious way is having a database of all leases that are acquired, and having the ability to organize those leases in a variety of ways. Most systems have a scheme for grouping leases by prospect, project area, organizational ownership, and tract.
Another seemingly obvious thing that a proper land system can do is track lease provisions and generate reports on those provisions as necessary. For example, if a block of 300 leases are being sold, the landman or lease analyst could quickly build a report to list all leases which had provisions requiring notice or consent for assignment.
A great use of land systems is to generate a calendar of upcoming lease obligations. It’s great to be able to, at a glance, determine if primary terms are ending, Pugh clauses are activating, or lease rental payments are coming due. While there are many ways to manually track these items, an automatically generated calendar is a great solution. Some systems provide a calendar module that can send automated emails, or even integrate with MS Outlook.
When a company makes the decision to begin evaluating land management systems, it is the beginning of a process that could take 3 to 18 months. This open-ended time frame is largely dependent on the sales, design, implementation and testing processes that are required by the system provider and their client.
While many of the land systems offer an “out of the box” package that is appropriate for use by most oil and gas companies, many companies require some customization for their business flow. Others have more complex needs that may include production revenue management, AP/AR tracking, and other finance/revenue needs. Those companies typically decide to utilize an Enterprise Resource Planning (ERP) solution that can be customized to their needs. A short list of those companies:
When most companies get to the point where they need an LMS, one important thing on the list is integration with their current or future accounting system (unless they choose a fully integrated ERP).
A few of the major accounting software packages that many land systems integrate with are WolfePak, OGsys, Waterfield and OGAS. In addition, many “enterprise class” land systems also have their own proprietary accounting module that is available.
An investment in an LMS can be a costly venture. There can be three, or more, different types of costs that the purchaser must agree to:
Initial Licensing Fee
This fee can range from as little as $10,000 up to several hundred thousand dollars. For systems with multiple modules (land, accounting, reporting, GIS, etc) you should expect to pay a licensing fee for each module you choose. They may not present the licensing fee in this way, but rest assured that each module increases the price incrementally.
Per User Fee
Some software packages charge a low up-front fee and a larger per user fee ($500/mo or more), others charge a large licensing fee and little (or no) per user fee ($50/mo or less). There is no free lunch, if you save on one fee you will likely pay on the other.
Annual Support / Maintenance
Many land systems have an annual support fee built into their pricing. This fee could be from $5,000 to $20,000 annually. In some cases this fee is negotiable.
It is important to evaluate the workflow in each land system. Some systems offer a workflow that allows faster entry of data than others. While one system might be less expensive, is it really cheaper if your lease analyst team takes twice as long to enter data because of the interface?
Finally, a word about these licensing agreements. Just like everything else in life, they are negotiable — if you aren’t experienced in negotiating contracts with software companies then you should find someone who is. If you are interested in evaluating options for a land management system, or are currently implementing one please share your experience with us in the comments below!
If you have any questions about land systems, please contact me.