- Lease Data Entry
- Division Order Setups
- Lease Maintenance
- Rental, Royalty, and Shut-in Payments
Imagine a small operator who has a few producing fields, or has broken into a shale play, but doesn’t have the level of staffing to keep up with the requiring administration of all the contracts (leases, JOAs, gas balancing agreements, etc). It is reasonable to believe that the operator could plan on selling the assets in a short term time frame (1-3 years), and they don’t want the expense or burden of hiring, training and overseeing staff to manage these responsibilities. Office space is also a big issue for most companies — they simply don’t have any desk space for new bodies — and more office space causes the expense of adding employees to be even higher. Alternately, envision an operator who has acquired 1000 producing leases and the associated wells. Many of these leases allow different types of royalty deductions (all post production costs, gathering costs, compression costs, H2S treatment costs, etc), a operator strapped for time might just pay all the royalty deduction leases a cost free royalty to lessen the burden of complexity. Whereas if they were able to outsource the lease data entry to a professional who:
- Understood what royalty deductions were allowable in that state.
- Understood how to setup the lease data to allow as much deduction of costs as allowable by law.
- Understood the best way to link that deduction information to a PRA system used to generate royalty checks.
There are several companies out there doing this work that can integrate with the software your currently use, or provide their own if you are still using spreadsheets to keep up with your data. When you evaluate the cost of outsourcing land administration duties many people find that they come out ahead until their company reaches a ‘critical mass’ that requires in-house staffing. So what costs can outsourcing alleviate? Here’s a short list:
- Land Management Software (Licensing, Support, General Expertise)
- Lease Analyst, Division Order Analyst, Land Analyst, Business Analyst Staffing
- Best Practices Expertise (A Pound of Prevention)
- Monthly Check Write Functions for Required Payments
- APO/BPO Tracking
- Shut-In Well Analysis (Watch for a new post on this topic soon)
- Document Management (Hard copy file generation, digitization / scanning, organization)