Nate Richards, President of Entrance, presented a case study on lease compliance at the conference, “Managing Regulatory and Legal Issues in Shale Plays” in Houston, Texas.
Nate shared the innovative solution implemented for one shale E&P client. He explained how the platform allows proactive notification about lease compliance and is protecting key assets in multiple domestic shale plays from potential lease jeopardy by improving administration of common shale lease language. The case study included an explanation of industry drivers that are causing a new set of pressures on compliance.
What’s interesting is that lease compliance is not a new concept; as long as there have been leases, there have been lease contracts and lease compliance issues. Concern around lease compliance is mounting due to many factors. Rising attention from royalty owners to their monthly checks as natural gas prices drop, is causing companies to be ‘increasingly besieged’ with litigation. In fact, more and more lawyers are moving from chasing ambulances to chasing royalty and lease cases. Combined with the increasing speed of operations and high competition in areas of significant value, these trends are causing more pressure on compliance than ever before. And surprisingly most companies don’t even know whether they are in compliance, because the relevant information is haphazardly spread throughout their organization.
Departmental data silos are common in Oil and Gas, and have other negative implications, but are particularly dangerous in the case of compliance. Knowing whether current activities are compliant requires information that’s owned by different departments – no single area of the company has the complete picture. So when the person responsible for lease compliance (sometimes known as the land administrator) tries to track down the information they need, there are sometimes multiple versions of information available. For instance, NRI could be one number in one department’s system, and a different number in each of three others. This makes it nigh impossible to really know whether you’re in compliance – much less actually take preventative action before an issue arises.
With scattered data and an increasing need to know the real story, Entrance was brought into the picture for one of our clients to create a system that proactively warns the client when they are potentially in jeopardy of violating a lease commitment. The client’s lease stipulations were used to guide information structuring to produce valuable notifications based on consistent information sources, clean data and tailored guidelines. Entrance configured the system to alert end users based on specific cases related to potential compliance issues. Automated and regularly scheduled custom reports based on each user’s organizational level and needs were implemented in order to match organizational processes with critical information.
Entrance has created an extended white paper on the subject, guiding readers through the industry drivers for compliance to the methods behind our solution.