Study: Energy Companies Not Capturing Value

Friday, August 29, 2014

NEW YORK -- Continued increases in the volume of oil and gas transactions and drilling activity have strained oil and gas land organizations, PriceWaterhouse Coopers reports. This has led to missed opportunities in building efficiencies and capturing value, according to the firm's “2014 Land Management Benchmarking” study.

The study, which concludes that rapid shifts from land acquisition to development have intensified the resource and organizational gaps in land administration and operations, is based on responses from oil and gas professionals who have varied functions across 20 top oil and gas companies in the United States.

"Land functions are being challenged to do more and provide greater value, yet they are finding it difficult to keep pace with today's accelerated rate of deal and drilling activity as leases change hands at greater levels than in the past," said Reid Morrison, U.S. energy advisory leader at PwC, in a prepared statement.

"Our study also showed that managing the ever-growing volume of data combined with fragmented communications and coordination across the organization [are] exacerbating the challenge of maximizing the value of their land operations. With so much at stake, [exploration and production companies] are beginning to elevate the strategic importance of land from the back-office to forefront of operations, and well-positioned organizations are implementing new systems, processes and operating models across their operations to capture the full value of their upstream investments."

PwC presnted these key trends among successful land operating models:

• High-ranking land leadership is essential for promoting the value of land across the business, effectively partnering with other business functions, and ensuring land has the necessary resources to be successful.
• Successful organizations tend to more centralized with closer links between land operations and land administration.
• Organizations able to create clear roles and responsibilities, performance metrics and technology tools that drive transparency, responsibility, and accountability are successful.
• Leveraging the next generation workforce is crucial. Field experience is required for developing well-rounded corporate/mineral land men. Lease analysts require broader experiences -- the 30-year lease analyst is a thing of the past.
• It is essential to build a strong foundation before looking for organizational improvements in other areas, including land administration and land operations.

SOURCE: PriceWaterhouse Coopers.

Published by The Business Journal, Youngstown, Ohio.
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