NEW YORK, Aug. 27, 2014 /PRNewswire/ -- The continued increases in oil & gas transaction volume and drilling activity have strained oil & gas land organizations, leading to missed opportunities in building efficiencies and capturing value, according to PwC's 2014 Land Management Benchmarking study. The study was based on responses from more than 70 oil and gas professionals from different functions across 20 top oil and gas companies in the U.S. and concluded that rapid shifts from land acquisition to development has intensified the resource and organizational gaps in land administration and operations.
Findings from PwC's Land Management Benchmarking study are featured in the report, Organizing for success: Designing and enabling a successful land organization.
"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, US energy advisory leader at PwC. "Our study also showed that managing the ever growing volume of data combined with fragmented communications and coordination across the organization is exacerbating the challenge of maximizing the value of their land operations. With so much at stake, E&Ps 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."
According to PwC, key trends among successful land operating models include:
- Executive Leadership – 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.
- Centralization – Successful organizations are generally more centralized with closer links between land operations and land administration across geographies. Ideally, land operations are imbedded with the asset teams and have functional reporting lines to land and apply a common operating model, processes, KPIs, etc.
- Accountability – Organizations that are able to create clear roles & responsibilities, performance metrics, and technology tools that drive transparency, responsibility, and accountability are generally more successful.
- Talent Development – Leveraging the next generation workforce is crucial. Field experience is required for developing well-rounded corporate/mineral landmen. Lease analysts require broader experiences – the 30-year lease analyst is a thing of the past.
- Foundation for Success – It is essential to build a strong foundation prior to looking for organizational improvements in other areas, including land administration and land operations.
"Drawing on the key takeaways of the study, we created a land value framework for helping the oil and gas industry understand what 'good' looks like within land organizations," added Morrison. "Our framework is centered on three value pillars – creating value through acquisition or divestiture, unlocking value through exploration, drilling and well completion, and realizing maximum value through the life of the asset."
In highlighting the importance of executive leadership, results from the study also indicate that a single land organization leader strengthens communication and data flows across the land value chain. Among those with functional alignment under a VP of Land, 82 percent rated communication and coordination as excellent or good, compared to only 57 percent of those without a VP. In terms of data flows, 83 percent rated data flows as excellent or poor, compared to 59 percent of those without a VP.
Measuring the value that land can bring to the organization was also lacking, according to the results. More than a third of the companies surveyed did not utilize key performance indicators to manage the land organization, while more than half lacked metrics specific to land operations performance.
The use of sophisticated technology to improve data flows, measurement and efficiencies is gaining traction among those surveyed. The study found that 55 percent of companies saw increased integration and leverage of Geographical Information Systems (GIS) as a key enabling technology. According to PwC, the extensive capabilities of GIS provide a unique way to approach traditional land management activities and business processes in order to improve information sharing and decision quality across the organization. PwC is hosting a webcast entitled, "Technology trends in land management: Geographic Information Systems" on August 27, 2014 at 1:00 pm CT that will discuss the benefits of GIS across land operations.
PwC is also in the field for its second Land Management Benchmarking study. E&P companies interested in participating should contact Stephen Wright at [email protected].
About the PwC US Energy Practice
We focus on customizing three things- assurance, tax and advisory services- to meet the unique challenges of energy companies. How we use the knowledge and experience we've gained from serving the largest and most complex energy companies to the entrepreneurial start-ups depends on our clients' goals and culture. Taking the time to get to know our clients and listening to their needs lets us use our energy team-- of 3,100 people located around the world -- to create the value our clients want.
For more information about PwC's Energy practice, visit: www.pwc.com/energy.
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