4. Search Results:
“Oil and Gas Royalty Lawsuit”
engineering intelligence
5. Royalty “Specialists” Emerging
“There may be circumstances that provide an
opportunity to break an existing oil or gas lease,
freeing you to negotiate a new, more favorable
lease at current market royalty rates.”
engineering intelligence
6. 8/31: HBJ, “Chesapeake faces lawsuits…”
“…increasingly besieged with landowner lawsuit
claims of underpayment of gas royalties and
related leasehold disputes.”
engineering intelligence
7. Lease Compliance: A Critical Issue
Not a new concept
Uniqueness in each play
– O&G Law Maturity
› E.g. AR, PA vs. TX
– Lease standardization extremes, for example:
› Barnett (many small tracts – high degree of standardization)
› Eagle Ford (large ranches – proprietary lease documents)
– Plaintiff lawyer quality and ability
Risks:
– Lease jeopardy
– Fees
– Litigation
– Time
engineering intelligence
8. Case History
BB Energy, L.P. v. Devon Energy Production Company, L.P., 2008
– (WL 2164583)
– Contract language held that Pugh clause not relevant since no pooling had taken place
ANDERSON v. HESS CORPORATION No. 10–3116.
– http://scholar.google.com/scholar_case?case=4159234918805300864
– Affirmed sensitivity date of Continuous Drilling to be date of cessation of general
operations due to contract language
Bledsoe vs. Forest Oil (decided in 2011)
– http://scholar.google.com/scholar_case?case=3498925303401075223
– Found that continuous drilling savings provision was in effect after frac date upon appeal
(vs. perforation or casing dates)
Many, many more...
Illustrates critical care needed in crafting and tracking these provisions
engineering intelligence
9. “You feel like you’ve got a gun to your head:
you’ve got to drill a well or you’re going to lose a
lease.”
Gary Evans - CEO, Magnum Hunter
10. Business Drivers for Change
Operations Legal Land IT
Novelty Tort Reform
Data Silos
Lease
Complexity
Competition “Deep Pockets”
Data Quality
Issues
Sophisticated
Velocity
Owners
Lease
Standardization Product Feature
Consumer
Value Lag
Perception
Land Administration Oversight
engineering intelligence
11. Lease Compliance: Strategy
Cross-departmental concern
– No single department has “the whole story”
– Conventional land software not enough
– Land Administration oversight not standardized
Current state of the art
– “Landman and a Spreadsheet”
– College interns
– Paper / Manual process
engineering intelligence
12. “Land Administration employees protect the
Company’s assets, including its oil and gas leases
and the wells which are drilled on those leases.
Typical job duties include assisting in the analysis
of provisions of various leases, deeds, rights of
way, and agreements involving Company assets in
order that a property record base can be created
or maintained.”
-Anadarko [on its website]
13. Case Study: Background Information
Operations
– Eagle Ford under active development
– Other Shale Plays
Legal
– Land Administration responsibility
Land
– Many complicated leases
IT
– Multiple system vendors
Success Requires a Focused Team Effort
engineering intelligence
14. Case Study: The Process
• Enumerate Critical Provisions
Step 1: Lease Review • Define Input Parameters (Key Dates, Key Quantities)
• Locate Systems of Record
Step 2: Data Mapping • Map to Destination Systems
Step 3: Data Cleansing • Correct inconsistencies in existing data set
• Link Disparate Systems
Step 4: Integration • Synchronize copies to master
Step 5: Lease Provision • Capture initial lease provision inventory
Tracking • Establish go-forward workflow to maintain provision inventory
Step 6: Alert • Assign business owners
Configuration • Define sensitivity cases
engineering intelligence
15. Case Study: The Whole Story
Production Drilling Land Other
Spud Dates
Marketing: Sales
Production Standard Lease Price
Volumes Casing Dates Provisions
Perforation Dates
ERP: DOI
Rig Release Dates
Fracture Dates Custom Lease
Well Status DrillingInfo.com:
Provisions
Offset Well
P&A Dates Locations
engineering intelligence
16. Case Study: The Solution
Key
Lease Source Data
Provisions
Entrance Solution
Drilling
Capture
Production Reports
Sync Send
Lease
Compliance
Land Management
Alerts
Configure
Other
Enterprise Lease Compliance Solution
engineering intelligence
17. Case Study: The Results
Lease Provision Tracking
– Royalty Escalation
– Cessation of Production
– Pugh Clauses
– Continuous Drilling/Operations
› Well-based: including Banked Wells
› Time-based: including Deferment Days
– Other Custom Provisions
Ongoing Iterative Process
– Master data management (new systems, etc.)
– Establishing “permanent” business data owners
engineering intelligence
