After the previous article introducing some basic tenets of land systems I have received plenty of emails inquiring about land systems. One reoccurring question has been about the trade-offs between tract based and agreement based systems. Rather than give my own (biased) opinion, I thought that it would be a great idea to get some experts on the subject to discuss the differences. This article is styled as an interview between two different companies who have competing land management solutions in the marketplace. P2 Energy Solutions and Bluetick graciously volunteered to take the time to answer a few questions and educate us on the past, present and future of how software will affect land management in the oil & gas business.
1. Tell us how your company got started in the land software business.
Bluetick: Bluetick LMS was derived to meet the demands of managing and interrogating the immense amount of data acquired during a large seismic shoot for a mid-sized E&P. As the leasing phase began expanding, GIS was incorporated and additional functionality was included to support the modern land department. An affiliation was made with a large Land Broker and utilizing the knowledge of the talented individuals at these companies, our designers and engineers were able to architect a web-based land management system that incorporates an easy to use interface with efficient task administration. Merging with Bluetick Incorporated in 2008 provided a bank of technology minded individuals and the necessary hardware and security backbone needed to support software in an industry as prevalent as Oil & Gas and paved the way for us to launch the Bluetick LMS to the public in 2010.
P2: Even 40 years ago, the challenges and complexities of managing oil and gas lease records posed a problem to the industry. The best technology at the time was the mainframe, and the original land software, Lease Data, was developed in the mid 1970’s as a mainframe lease records system. The system was cutting edge in that it enabled companies to accurately track and report lease information by managing variations within a lease (such as producing and non-producing acreage) through tracts. A module for managing contracts was added and dubbed KSYS (legal acronym for a contract is K, and SYS for system). KSYS was later renamed Contracts. Domain, LeaseCost and WellInfo followed.
In 1982, the technology was refreshed to fancier mainframe technology, and all input was done via keypunch. In 1984 the system got another makeover as LeaseData III and was rewritten to take advantage of on screen mainframe technology, resulting in more efficient input and retrieval of information. The next decade saw technical enhancements, with client-server technology in 1987 and Microsoft Windows in 1995. During this time, the challenges of tracking leases continued, however the ability to view information spatially with the integration of mapping made life easier for Landmen everywhere. Tobin land was introduced in 2007 as the entire suite, with a modern architecture (Microsoft .NET and SOA) to enabling Web access and to simplify reporting/data extractions/analysis. Today, the Tobin Land suite includes new modules to automate land calendars through the eCalendar module, seamlessly integrating leases acquired via Brokers/Brokerage firms through use of Tobin Broker/Lease Acquisition. Map visualization and analysis is introduced directly from all modules within Tobin Land. Some additional data points:
- P2 is the leading provider of land management solutions in North America – currently serving more than 500 Land customers.
- Tobin Land Suite (TLS) was the P2 solution for land management – launched more than 30 years ago – and has represented more than 75% of the major NA E&P companies at different times.
- P2 commenced a re-write of the Tobin Land product in 2005, resulting in the development of Tobin Enterprise Land (TEL). Tobin Enterprise Land was introduced to solve a variety of new challenges:
- SOX compliance was driving new auditing and security requirements
- International customers required support, a feature not available in TLS
- Integration with other systems and support for software extensions was a primary business requirement
- Tobin Enterprise Land was designed to replace Tobin Land Suite and Enterprise Upstream Land with tight integration to Enterprise Upstream Revenue.
2. Can you explain, in your own terms, what ‘tract based’ and ‘agreement based’ land systems are for our readers?
Bluetick: The major difference between the two types of land systems, Tract based and Agreement (Lease) based primarily comes down to the architecture of the database. In other words, the structure of how the data is stored. Modern databases (collection of tables of data) are referred to as Relational Databases since they allow data in different tables to “relate” to each other through some identifier and thus allow queries (questions) of the data through several tables at a time.
Agreement based systems typically have their architecture designed to wrap everything around the Agreement or Lease. Lease data is stored in a table and other data can be “joined” to that table through the lease # or id. Typically, with this type of system, a user can look at a lease and see its tracts but cannot look at a tract and see its leases.
Tract based systems are designed so that ALL data stored has a tie in some way back to a tract. Tracts are stored in a table, owners in another, leases in another and so on. This allows the user to look at a lease and see its tracts, look at a tract and see its leases, or even look at an owner and see its tracts or leases.
Tract based systems – Land tracts are typically set-up independently of the actual lease, and cover the lowest common denominator of legal acreage specified with the granted lease. These tracts are specific to the legal description and ownership/mineral interest. Once created within the application they are then linked back to the lease agreement.
Agreements based system – Agreements based land systems focus on the individual executed lease in its entirety, allowing the lease analyst to abstract all data pertinent to that individual lease without linking back to independently created tracts. Lease tracts are still created for the individual lease, but are not shared across other lease agreements.
3. Why did you choose to use a tract based or agreement based approach to organizing your land system?
Bluetick: It is oftentimes faster to enter a Lease into a lease based system because the user can simply type in whatever they want for the Tract and Owner without regard for whether the Tract or Owner already exists. If not properly designed, these systems lend themselves to duplicate data and inaccurate information since a tract or owner’s information may be updated in one place but not always automatically updated in all other places that it exists. If your lease based system does not store a specific ID # for each tract, you could be in trouble.
Lease based systems generally work fine for Leasing and Permitting jobs (especially if you don’t mind storing redundant data), but once you add other objects such as ROWs, Abstracting, Title Transfers, Wells, etc. they become more cumbersome to manage since they’re designed to tie data back to a Lease instead of to a Tract or set of Tracts. The design of the data structures of Lease based systems simply do not provide the most efficient means for proper management of land data. Some are able to put a nice wrapper on top so that they look good and feel like they are being efficient and that is not the answer. Maybe you’ve heard the old saying, “a pretty face is a passport”. Well, it’s not, it’s a Visa and it has a limit.
The structured form of data in a Tract based system is a natural fit and lends itself easily to growth. Tracts exist and they have owners with interest. That basic foundation allows for practically any other feature to be added and attached to it either at the tract, owner or ownership level. Not only is the architecture easier to implement but operations and reports run faster since you are not left querying mounds of redundant data. Any system can store a mass of data for you but it takes one properly designed to provide you with accurate information in a timely fashion.
Suppose you have a Unit containing tracts that are leased and some that are not. With a Lease based system you would only see those leases within the unit and would have no way of seeing the unleased tracts. Suppose then you wanted to attach a WI or ORRI to the leases and unleased tracts; this would certainly not be possible in a leased based system. With a Tract based system, this is not only possible, but can be expanded even further to include ROWs on those tracts, wells in those units, title transfers of the ownership of those tracts, and so on.
There are literally hundreds of examples that you could examine but in the end, we chose the Tract based approach because our engineers recognized the inefficiencies of the Leased based systems at the architecture level. Our pretty face not only has the look, but also the functionality and longevity of construction to back it up.
P2: P2 supports and invests in a few Land Management Systems because our customers use a variety of products and require flexibility in integrating with the systems they have chosen over the years. Tobin Land has been an agreements based system since its inception. Excalibur Land Management is a tract based system. The BOLO Land Management System can be used as either an agreements based or tracts based system depending on customer preference.
4. What question do you hear most often from potential clients about the tract/agreement organizational system of your software?
Bluetick: We are quite often asked why we chose the Tract based approach and often hear the horror stories from those that have experienced Lease based software that was poorly designed. We simply show by example the natural flow of our Tract based system and its ease of use generally speaks for itself.
P2: We don’t necessarily hear arguments for or against tract versus agreements based systems. What we hear most often is the need for all customers to produce accurate acreage reports for both gross and net acres across their inventory of leases. They need to quickly and easily determine whether they have leased 100% mineral interest of a given tract, and if not, how much of the tract is left to be leased.
5. What types of features do you view the ‘next generation’ of land management software having over the next 5-7 years?
Bluetick: Web based programming is generally referred to as a “4th generation” language because of the availability to be viewed on any computer platform, i.e. Windows, MAC, Linux, etc. We are fortunate enough to have engineers on staff that embrace that technology and are not only fluent in writing it but are driven to stay on the cutting edge of development. Technology is changing rapidly and handhelds and tablets are becoming the norm. The future success of land departments will depend greatly on employing tools that help maintain a competitive edge.
Tasks as simple as taking a picture of a receipt with a phone and attaching it to a timesheet and submitting it to accounting or managers for approval will become commonplace (they already exist). Mapping technology is improving at an exponential rate and any land department that cannot pull up maps on their phone or tablets will be “behind the times” just as any company that doesn’t have their maps integrated with their land system is right now. The ability to be able to view, interrogate, and manage data over the internet will become an essential and integral part of the new age of land management.
P2: Great question. In no particular order, we see land management solutions trending in the following manner:
- Ease of Use – Pure mobility for creating and management of data. Tablet (ex. iPad) access, importing/exporting of data to facilitate acquisition/divestiture, defaults for data elements auto-populated for quick and easy lease entry, mass change features for all data elements when changes to data impact more than one lease.
- eCalendar – moving Landmen to new technology to better facilitate obligation and payment handling, dashboards to better facilitate analysis of those obligations, and full tracking/documentation of all decisions for handling of same.
- Connectivity to 3rd party application – Fully recognizing Land as the single source of data without replicating data entry in 3rd party applications which make use of that data to trigger other activities. Automation of managing shut-ins, lease expirations, moving a lease from exploratory to producing, etc., by connecting to a company’s single source of well information.
- Depth Tracking – Providing geological correlation based templates by Basin/Play/Prospect to facilitate data entry into land management solutions, allow acreage reporting by depth/formation and visualization of a company’s assets by depth/formation on maps.
- Map Visualization – Embedding GIS into land management solutions to better facilitate lease numbering, acreage overlaps, prospect mapping and full analysis of all attributes through a GIS system connect.
- Automation/Integration with Lease Broker Tools – Full lifecycle lease management within a single system to facilitate management of data from point of AFE through expiration/divestiture of same.
6. How important is customization of the final product for your average client?
Bluetick: Adapt or die. Every company is different and while the majority of tasks for each company are the same, there are demands to make software work for specific and sometimes unique needs that arise in the everyday workplace. Land software must adapt to these needs and meet the requests of their users in order for those clients to become efficient at the essential tasks they perform.
P2: Extremely important, but it is equally important to define the word ‘customization’. Primarily, our customers need flexibility to manage data in a manner specific to their business processes while receiving support through standard software maintenance and support agreements. Our customers value a flexible Land platform. Tobin Land provides full software customization through supported site customization. For example:
- customers are enabled to change field definitions on our form templates
- exit points are provided throughout the software to enable companies to input specific business logic for determining which fields are required for input outside of the standards provided in the software.
It is rare for us to see customization that results in a customer being unable to make standard updates or upgrades.
7. What do you view as the single most important thing you are doing to differentiate yourself from the competition?
Bluetick: Updates, updates, updates. We roll out updates containing new functionality based on client requests about every quarter and see no end in sight. We pride ourselves in having some of the best engineers in the business though everything we have in our system is a direct result of the requests from the users that use it. Users know what they need and only by listening and addressing those needs will any system survive. We have engineers that know more about land than a lot of landmen do simply because we have had to learn every aspect of every task in land and there is no way to design a system for users properly if you do not completely understand the processes.
P2: We build software to meet the needs of Land departments today and we are building for the future. P2 listens to our customers through advisory boards, and then take customer feedback into account during a rigorous product development and test process. In addition, we build Land solutions to will integrate with the rest of the Upstream value chain. The ability to customize our Land solutions is a core theme, but our solutions don’t require massive implementations for companies of all sizes to utilize them.
8. Is any company ‘too small’ for a land management system?
Bluetick: No, if you are an E&P operator or a land broker and you are still using spreadsheets to manage your data then you are doing your company an injustice. Spreadsheets are not databases. Databases allow you to get information from data and without a proper land system that has at its foundation an accurately designed relational database, your company’s efficiency will suffer. You will also be susceptible to missing lease expirations as well as missing rental payments which we know can be a costly experience.
The right land management system will pay for itself by improving efficiency and accuracy and assisting users by automatically notifying personnel of upcoming dates of interest. Bluetick has a land solution regardless of your company size. Our client’s managers get answers to questions quicker than ever before and we often have clients tell us, “I can’t believe we ever operated any other way”.
P2: Not today. All companies who are charged with land stewardship have many affordable options for implementing software. Subscription-based pricing with hosted options all the way to full outsourcing of Land solutions can enable any company to have a premium land management system that can scale up or down with their needs.