Land Management Pitfalls & Trends

Full Transcript

ELIZA WITH PANDELL Welcome to today's Pandell Leadership Series webinar called Land Management Pitfalls and Trends. My name is Eliza; I am the customer engagement and training manager.

We are lucky to have Matt here with us. So Matt is the manager of land services with EY and is a lifetime land professional with heavy experience in renewables, linear rights, and oil and gas sectors. He's a member of the American Association of Professional Landmen, and the Houston Association of Professional Landmen. And he has experienced managing large teams and projects and is the ideal person to discuss land management pitfalls and trends in today's world. So welcome Matt, thanks so much for joining us today.

Matt Absolutely, thanks for having me. A former Pandellian as well, so hopefully all of the rest of the Pandellians on here would be good to see everybody, though I can't see you. So, as Eliza mentioned, right?

So, I just wanted to spend a moment up here up front and kind of talk about what's going on with EY. You know, I don't know that everyone understands what type of offerings we have. Looking at our NextGen energy services and really where I sit within the firm. We wanted to take a new approach to an old problem where traditionally managed service models that focus on cost reduction and FTE free update. They struggle to keep up with changing demands and technology landscape. You know, they usually fail in regard to scalability and supporting ever-evolving business needs.

You know, our solution really looks to take a more modern approach to create a foundation of continuous improvement, right? Coupled with AI, cloud, data. And when looking at our approach, it's really our goal to bring all of EY. Traditionally EY services are looked at on a project basis, right? We have a need or a problem EY can help solution that problem, but we really wanted to take a more enterprised look at that and okay, we can solve the problem, but along the way, we want to do a better job of modernizing the solution, which could be an upgrade legacy IT or a migration to the cloud or integration of digital twins.

We want to be able to optimize by leveraging AI and automation where we can. Provide better transparency and analytics, which can help reduce costs. We want to be able to operate where need be on a daily basis of functions. So really just having humans do from EY do, you know, some of the work where we provide the most value in the day to days. And then we want to be able to evolve our solutions where we're always looking at continuous transformation of our offerings to stay up to date with changing landscape in regard to business needs and technology.

So, you know, if there's any questions specific to EY after this, you know, I'd be happy to answer as well, but really wanted to jump into what we're here for, right? And it's kind of a bit of dialogue that we wanted to come up with around some of the pitfalls and trends that we've seen in land management along the years.

I've been in this industry for 15 years now in a couple of different capacities and lived through some acquisitions, lived through some job changes and role changes, and met a lot of great people along the way that have helped influence some of these answers to kind of what we see in the market and, you know, what we're still dealing with things that might be age-old problems.

ELIZA WITH PANDELL So, as Matt mentioned, today's format is a little bit of a discussion more than anything else. So, we're going to dive on in. We've got some of our top questions we thought would be relevant and interesting to the audience.

So, the first one, Matt, is what key trends have you observed in land management over the years from an industry professional and consultant standpoint?

Matt Yeah, so I think it's a really good question to start off with. The forefront of these trends has to be the tech evolution over the last 15 years, you know, with energy operators looking to move to the cloud and SaaS products. You know, when I got started, it was a very heavy on-prem installations with long UAT times and down times for maintenance and heavy customization and integrations were clunky or manual. And then, you know, layer that on with tons of swivel chair.

You know, with newer SaaS products in cloud environments, it makes it easier for operators to offload some of those costs related to infrastructure and have seamless upgrades to always be on the latest and greatest versions. You know, as a direct result of that, I also think the M&A activity in the software market has changed things quite a bit. You know, when I got started, there were several boutique shops and more competition in the land management software market, but really now there's, you know, five or six with major market share. You know, and these players grew the same way that their customer base did, you know, merging and buying up the little guys.

And that's really contributed to the need for data analytics and maintenance of big data when we're talking about M&A from, you know, the customer base. You look at some of the super major oil and gas companies that have millions of net acres and unconventional strategy alone, you know, that's an unbelievable amount of maintenance and tracking of land agreements, especially when you have sometimes multi-national teams that own portions of the workflow to sustain the business and how the data has relied on every step of the way and where those handoffs happen.

Or you look at even some of the largest pipeline companies where, you know, the big ones have almost 100,000 miles of pipe or more. So, you know, if you put that in perspective, that'd be like having a 40-lane highway wide of pipelines from LA to New York, you know. So, the number of parcels that those things cross and the amount of agreements that are needed there from maintenance is an undertaking. So, you know, you can imagine sustainability coupled with risk mitigation across all of those large data sets and trying to ensure regulatory compliance are huge.

And so, you know, all it takes is one mis provision or obligation and you can be in breach of contract, which can sometimes lead to litigation. So, you know, with that in mind, I think recently there are trends towards automation and really embracing AI where we can to help streamline some of those processes, ensure accuracy, really drive the confidence up on some of those project controls that are so necessary.

You know, obviously keeping humans in the loop, of course, but doing more with less more accurately would be the goal there to help with those integration points. So, you know, those integration points have also seen software companies push more towards a suite of products where you might have a land management and accounting and ECM and GIS tools and a host of other applications that surround the land and accounting efforts.

So that way you can kind of have one preferred vendor for all of your solutions. And it really wasn't always that way. That way, you know, all your solutions play in the sandbox role with each other, right? If you think about like a Microsoft solution, we don't want to sell you just Word. We want to sell you Excel and Edge and PowerPoint and everything, well, this goes on, right?

So I'd say a lot has changed since I got started and it'll continue to change, but the consistent technology evolution and changing businesses and government regulation, you know, so I think to sum it up, the real trend is that change is constant and the operators that succeed in that market are the ones that are able to, you know, adapt to all, and survive.

ELIZA WITH PANDELL So true, so true. Yeah, some really good points there. Thank you for that. So, in your opinion, what are the biggest challenges currently that landowners and energy operators face in managing their assets effectively?

Matt Yeah, we, you know, we just kind of mentioned some about data at scale, right? And how cumbersome some of those data sets can be. So that's definitely a challenge, first and foremost. And again, it's the quality of that data to begin with. So, you know, everything an operator might want to do with AI integrations, reporting some of the stuff that we just called out, they're only as good as the data that's behind it, right? All downstream tools are meaningless if the source is from reliable data or unreliable data that is. So, you know, I think the integration and data flow is an issue, but most of the time it's from bad data. It's not a technology limitation.

If I were to look at the question from a private landowner to an energy operator relationship scenario and how communication between those parties is conducted, I think that land ops and agreement procurement, you know, the people in the field actually acquiring these agreements, regardless of industry, face some of the same challenges around how to identify the targets. How's the best way to communicate, how to negotiate, how to get those executed agreements back into the flow for the back office. And then how do we maintain those relationships with grantors and lessors over the agreement lifecycle? You know, and to that end, owner relations efforts can go a long way in mitigating risk by making sure we have the right agreements in place with the right languages up front and therefore ensuring compliance kind of every step of the way.

And then that we compensate those grantors and lessors appropriately. I think now more than ever, you know, owner relations have taken more of a customer success vision than ever before, and I think it'll continue in that direction.

I think one thing that should be called out as well, that we just have much smarter landowners now. You know, the information age has changed how much knowledge is out there over what's the value of what I own, what's a good price for it, what are the terms that I should negotiate, and what should I bend and not bend on?

You know, the modern negotiation cycle is a painful one for operators and brokers in that contact with the landowners themselves. And that's no fault of landowners, right? Everybody's trying to get the best deal possible for themselves. Of course. I think that that environmental concerns might even play into this sometimes, and maybe misinformation around those environmental concerns can drive decisions and pushbacks from the landowner.

So, you know, having a great strategy around that relationship, I think, is a big telltale on, you know, how do we go about this the right way and ensure that owners of the land are being respected and feel respected and treated likewise from energy operators.

ELIZA WITH PANDELL Yeah, so quality data and really respectful relationships is what you're basically saying there in summary. And this kind of relates to what you just said, but we'll ask it anyway in case it brings up other points. So, common mistakes that you see energy operators make when handling land records and contracts, because that relates to the quality of the data, right?

Matt Sure, yeah. And to your point on the quality of the data, it's the lack of due diligence in maintaining the data. You know, it's been a common trend, I feel like through our first few questions here, like we just talked about, but, you know, it still rings true for this one.

For land admin in particular, you know, the work isn't done when the agreement is executed, it's really just the beginning. You know, so making sure that the land department is on top of all the provisions, that we have a clear obligation calendar, and a great way of electronically tracking those obligations, that we're updating ownership, owner of contacts, wells in the vision order, or asset tracking from other industries, you know, outside of oil and gas, yes, where these assets reside and what agreements influence them.

Not to mention the amount of due diligence required in making any trade or acquisition, right? So when, you know, when you're receiving agreements that aren't your own, that were not drafted by your departments, you know, there can be ambiguity in those documents that don't really fit into your normal rules and practice. So, you know, curating those deficiencies can be difficult to get them in line with your standards. And not to mention you'll need a well-trained staff with clear tasks and communication, all while combating attrition and rollover, right? So how do we maintain that staff and train those people up appropriately? So, you know, when you look at that all-encompassing work that I'm gonna dump into due diligence, that's a pretty daunting task. And to get it all done accurately and efficiently is even more daunting.

So, you know, scaling a blame department can be an issue at the same time. And I really think that any company not embracing a managed service, or a code service model is not taking advantage of, okay, how do we eat this elephant, right? That these managed services can leave strain on staffing. They can help companies take a step back and evolve their practice and ensure that, you know, the people-process technology are always evolving to defeat the problems that we just literally called out.

You know, I think sometimes there's a bit of pride that's hard to swallow for some larger companies in the view of, you know, we're a super major company and we always know best. Which sometimes they do, you know, but the fallacy there is that, you know, a service provider brings a fresh view of how competitors might be doing something better or a different vision on how to solve a problem through best practice. So, you know, I think that's one of the biggest pitfalls for them is how do we scale? How do we stay accurate? And all of that surrounds due diligence and comes back to the data is at the heart of everything that we're doing.

ELIZA WITH PANDELL Yeah, so true. And you already alluded to this a bit, but technology has changed a ton. So, in your opinion, how has technology changed the way land assets are managed over the years?

Matt Yeah, you know, I think we talked to some of the cloud migration and SaaS offerings, but, you know, we haven't really called out a few specific technologies that are kind of, I would say revolutionizing land management outside of just the tech stack, right? Outside of just, hey, what does our back end look like? What's our product offering look like? And outside of land management system design, right?

So, I would say first off, that would be GIS. And I feel like, you know, GIS is not new. I mean, Esri was founded in 1969. Our GIS desktop's been around for 25 years now, you know, but the evolution of GIS and the application of it has changed so much. And gone are the days of just, you know, agreement polygons with attributes on a map. Now with web-based interfaces, 3D mapping, the sharing of data, the number of data vendors in the market, you know, the industry know-how and how do we bring all the elements of our business, all the intel that we have, so that we can be the best at decision making is much different than it's ever been, and even much different than it has been in the last five to 10 years. You know, I'm a bit of a GIS nerd, so for those on the call that know me, probably assumed I might start off there.

But, you know, there's other ancillary technologies outside of the land management system that are influencing land management. And I would say, you know, remote monitoring and SCADA data, where real-time data flows are happening for real-time decisions is important. You know, these can span all kinds of needs from land management related to assets.

And, you know, they can be used where things that used to be very time intensive, you know, the amount of time to report back from the field on what's happening with operations. You know, the ability to use mobile applications for field data capture and communication for ops and the reporting of that back to land, integrations of every one of those data points to the company, you know, can decrease cross-departmental question asking and delays at a minimum, you know, decrease the swivel chair from system to system.

And then, hitting on AI again has been a really revolutionary most recently. To have that over the top of all that, so that, you know, the human hours that are spent are more strategic and less administrative. You know, everything that we can offload from automated task lists, you know, and free up the everyday employee to do things that are meaningful has been a major change in the last couple of years there.

ELIZA WITH PANDELL Yeah, absolutely. And I can say that I am not a GIS expert, but I have worked with Pandell ESG for some time now, and I've seen a huge change in growth in the GIS tools. And how much efficiency they've gained, both us and our customers. It's been pretty amazing. So that's a really good point. So, moving on, when advising your clients, what factors do you tell them to consider when choosing a modern land management system?

Matt Yeah, I think first and foremost here is user friendliness and adoption, right? Like this isn't, if you aren't going to have a user group that's engaged, you end up just selling shelfware, right? It never gets used and it provides no value.

Does the ideology of how you store your agreements and structure make sense to how you view land? Everybody has a different angle and perspective on land management and the way that the applications fit in there needs to match with that view. A classic one is kind of a tract versus agreement-based systems, and the impact that that has on the level of maintenance and the way that your department views land, like I said. So, if you're getting something off the ground from scratch and that was the ask or a new implementation, I would say with no previous system, the user group in the market is important too, right? If you don't already have a user group that's eager to learn, who's gonna maintain the data? And basically, you need competent people that understand the system and your view that are coming from the outside.

And that flows a bit into scalability, right? Does it meet your needs where you expect to be with your business in five to 10 years? Does it possess integration capabilities for all the systems we've kind of called out in some of the previous questions? Does it feed things like documents and GIS and accounting, et cetera? Can you report out of it with some level of customization? Or even better, does it give you access to the data where you can expose that data to other systems and report more robustly off of it?

Does it have security level that you're looking for? From a role in a user level, but also from a data storage level, right? Is that data in the cloud? What compliance does the vendor have from a tech stack? And how comfortable are you with the way your data is stored and backed up? I mean, ultimately, it's your data and you wanna make sure that it's protected, right?

That it's SOPS compliance. If it applies to you and your business, if you're publicly traded and from a compliance perspective, all other regulatory compliance, right? Does it meet state and federal as well as some of the EU mandates that we've had over the last few years surrounding data controls, FASB compatibility for accurate reporting. And I also think role configurations for light customization so that the vendor doesn't change their data model or create custom versioning for you, but rather each user having some set of functionality that gives a bit of a tailored look and feel.

And lastly, what does it cost, right? How is the cost structure divided by data? Is it a user license thing? How great is the support? Do you have to pay for the support? Is there robust training to help with the familiarity and all the scalability that we talked about before? And so, it really, I think when you're looking at what solution is best, it also teams up with what does the vendor look like, right? How long have they been around? Do they have customers like you? What's their net promoter score in relation to customer success? So, I think it's just as much the vendor as it is the product on finding the perfect fit.

ELIZA WITH PANDELL Yeah, that's a really good point. And you already said it, but I was gonna say it because I'm biased because I'm in customer engagement, but I think there's a lot to be said for good support and good training education materials that can support the customer, not through just the initial phase, but the lifetime that they're using the product and that those resources stay up to date so that they're always supported as things change. Because things change so quickly. It's crazy how quickly technology is changing. So yeah, that's a really good point.

Matt And if you look at it from even just a people relationship standpoint? If it's a, I'm mad and I always call Eliza for my issues and Eliza's no longer there. Yeah, yeah. Well, that's the way Google can handle that, that carry over and hand off our responsibilities. I think-

ELIZA WITH PANDELL Absolutely, yeah, those relationships matter. They do, they really do, yeah, for sure. Well, we've got one more question, what's the outlook for renewable projects? Next12 to 24 months and how can project leaders use land products and services to accelerate development while staying on budget?

Matt Yeah, I think it's positive for sure. With the increased investment in the area from equity and private equity, you couple that with the available tax credits that are out there from a government standpoint.

There should be favorable market growth for the sector over the next 12 to 24. I think there'll be tech advancements and new ideas for energy capture and for what we mean when we say renewables, like.

Traditionally, we think of that as wind and solar, but what about thermal? What about hydro? What about carbon capture? What about battery storage? There's a lot of new emerging technologies and some have been around, but I think the broad umbrella of renewables will start to break down over the next few years into these niche areas with solutions tailored for those assets themselves.

So, this really applies for the field services as well. Not only the back-office software and the technologies that support it, but how the assets themselves are constructed and sourced. And that might be one of the negatives to focus on is supply chain.

How do we source all the goods for production to prevent project delays? And to the questions that point to how does that relate to land? I would say, how do we cross the hurdle with site selection? All the variables that go into choosing the perfect site from tree coverage, drainage, meteorological surveys and studies, et cetera, the list goes on. That we're really choosing the best sites and there's a direct correlation between the renewable energy growth and utility industry growth. Those are very tight at the hip.

Having a wind farm or a solar farm or any electricity generating renewable energy for that matter without having a substation or expansive battery storage system is like having an oil well without a tank battery or a pipeline. You have a product to sell, but there's no way to take it to the market. So, if you think of the same rate that renewables will grow, you will see grid scale utilities growing at the same rate due to those needs.

ELIZA WITH PANDELL Yeah, that makes sense. That makes perfect sense. What are the business motivations for choosing renewable energy sources over traditional? That's a great question.

Matt Yeah, and it's a great question. And I think to summarize it up, we've seen most recently several upstream oil and gas companies dabbling into the renewables market, most of them into the carbon capture areas because a carbon capture normally works off of the brine injection well, which is usually can be used from an older gas storage well, right? So, it's an easy crossover in all of the carbon capture credits that are out there for us to make sure that we're decarbonization is at the forefront of the strategy.

You'll also see in the places where surface lease-use has the ability to be coupled for solar and wind technologies. We've seen several companies dabbling between that industry as well, where we have dual purpose land, right? Maybe we still have old lasting production on a massive piece of property, but we have the ability to reuse some of that for solar and wind projects. There's been a couple of them in the news in the last couple of years on large multinational companies applying those types of strategies. So, I don't think that the answer to the question is, I don't think that they're deciding one or the other.

ELIZA WITH PANDELL Right, right, it's not that black and white. We got a couple more questions, so this is awesome. Do you happen to utilize a few different programs to get your data and if so, how do you merge them together?

Matt Yeah, so data can mean so many things. We do a lot with GIS at EY, and we obviously have a couple of data providers that help us get our data days done for the clients that we support.

The other side of data on being able to maintain data, usually as a service provider, we're dealing with what's on base at the customer already, at the client, right? So, every one of those looks different in how we're able to integrate those data, how we move data, what individual restrictions look like, how those departments are set up. And so, it's refreshing because anybody that's worked in services, even from a software standpoint, every door that you walk into is a little bit different in the way that the client views their data, the way that the technology stack is there, what vendors are in place. So, it's a constant on your toes about what makes the most sense for this situation right now, what's the best opportunity for this client. And so that's really what it is, it's Pandora's box every time.

ELIZA WITH PANDELL Yeah, very true, very true. One more it looks like, are economic uncertainties impacting traditional versus renewable energy in different ways?

Matt So, I'm sure there are. I would say that the difference between those is, there's kind of an inverse in the value of electricity compared to the cost to generate it. So, if you look at it from an upstream standpoint, when upstream is in the dumps, renewable energy and electric transmission are doing well. And the reason for that being is, when oil and gas is in the dumps, you don't pay less for your electricity, right? That's a pretty constant thing. So, the feed stocks that go into supplying that electricity are only cheaper, right? So, the margin is better for those types of customers. So, there's many impacts to that need. And it's a lengthy question on what influences the price of all these things.

And I'm no economics major, but I would say that they, that's the direct inverse relation between the two, between traditional feed stock, oil and gas type provided energy and what renewables have to offer.

ELIZA WITH PANDELL Awesome, thanks Matt. What role can solution providers play in shaping the future of land management with energy companies?

Matt We play a different role than normally the software company would be in as far as seeing the specific use cases at a customer are a bit different when, if you're a vendor that provides land management software, you kind of have a view of what you think your product does in the market, what you're really good at, where your home run ball is, right?

And for us, we see a bit different on all the ancillary systems that feed into that, how all of the stuff I talked about from an integration standpoint and the availability of data, the user friendliness of it, and the willingness to maintain it, the due diligence that's involved with it. We bring a bit of a different all-encompassing view to the ecosystem that creates the entirety of the land department because it's not just the land management software. So, I think that there's a bit of feedback and knowledge base from a service provider perspective that doesn't have just one vision of what our land management software does, but rather a conglomerate of best-in-class offerings pinning the client on what would work best for you.

And again, back to that Pandora's box of everybody's environment is different in software selection and the way that they store data and maintain it, our view's a bit just more of a variety than compared to a single view from a software solution.

ELIZA WITH PANDELL Yeah, that makes sense. That makes perfect sense and incredibly valuable insight, I'm sure. So, I think we'll wrap it up there, but thank you so much, Matt, and thank you to everyone in the audience for participating and yeah, it was great to see you again, Matt, and great to have your time today. Thanks so much.

Matt It was as well. Thankyou guys so much for having me. It's always a pleasure.