Maintain Leases, Manage Shut Ins, and Maximize Efficiencies in a Downturn

11/02/2020
Maintain Leases, Manage Shut Ins, and Maximize Efficiencies in a Downturn

NAPE recently dedicated a roundtable to the topic of maintaining leases while curtailing production, and we noted a few important takeaways that directly relate to our customers’ utilization of software to assist in this process. Curtailment decisions require cross-department collaboration and access to data within the different upstream domains. From lease clauses to revenue interests to historic production and scheduled maintenance in the field, each department offers valuable insight that a decision-making team relies on in determining where to curtail or shut in production.

Maintaining every lease may not currently be a company’s end goal, but maintaining the right leases and avoiding surprises when it comes to missed obligations certainly is. P2 addressed a related topic in our recent blog post, Lease Maintenance: Increasingly Important in Land Management. Taking a comprehensive view of our leases requires us to dive into well level details to present a relevant comparison with a full picture of value and risk.

When it comes to important information analyzed well by well, let’s have a look at the domains and some essential data within each.

Domain Questions Important Well Information
Land

Which lease provisions are most restrictive for a well?

Is production from this well critical to holding a lease?

Do we have accurate dates captured for provisions, e.g. shut in?

Leases

Conditions/provisions

Other wells associated with lease

Accounting

What interest could be lost if we do not hold the lease?

What is the impact to revenue if production is curtailed?

What are the expenses or LOE per BOE of production?

Division of interest

Lease operating expenses

Revenue

Operations How does shutting in a well modify the production forecast? Historic production
Field Can I reduce cost on a location by eliminating water hauls or lease operator trips?

Shut in date

Hours down

OGW daily production

To analyze this information at a granular level of detail like a well, then efficiently scale that for all wells in an area, takes the expertise of a team. Without details from each domain, we would miss critical information related to the importance of the well based on its lease, production, costs, revenue, and interest. Decision makers need access to data from different domains and, beyond that, benefit from having the information presented cohesively so they can make decisions about curtailing production efficiently. In our next blog, we will look at the collaboration involved in these decisions and the maturity model that companies traverse to ultimately access all the necessary information.

Watch our recent webinar on this and related topics. Our land, accounting, and production experts discuss how to best manage shut ins and maintain important leases, plus they offer best practices around optimizing production and minimizing costs. (Click the banner below to download the recording.)

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