Successful Oil and Gas Leasing and Development Program
With over 140,000 acres of freehold mineral title in western Canada, the client required an effective process to market their assets for oil and gas leasing and development. They needed active management of their leases to deal with a rapidly evolving industry and maximize value.
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Project Highlights
- Over 140,000 acres of freehold mineral title
- Challenging management of leasing in an evolving industry
- Processes created to actively manage full cycle leasing
- Maximum value extracted from each freehold lease
Challenges:
A client with over 140,000 acres of freehold mineral title in western Canada required an effective process to market their assets for oil and gas leasing and development
Though the client had successfully leased out certain properties, there was no active management of the assets to deal with a rapidly evolving industry. The proliferation of horizontal drilling techniques, unitization, waterflooding and EOR required lease preparation practices to advance as well
Once properties were leased to E&P companies, there was no mechanism in place to manage lease compliance with respect to competitive drainage (offsets), production allocation on horizontal wells, royalty calculation and payment
Though the client had successfully leased out certain properties, there was no active management of the assets to deal with a rapidly evolving industry. The proliferation of horizontal drilling techniques, unitization, waterflooding and EOR required lease preparation practices to advance as well
Once properties were leased to E&P companies, there was no mechanism in place to manage lease compliance with respect to competitive drainage (offsets), production allocation on horizontal wells, royalty calculation and payment
Solutions:
The Sproule ERCE team implemented an ongoing process to track industry activity near the title lands, which enabled us to efficiently market the lands for leasing and incorporate competitive lease terms
We created a “tool box” of varying lease formats, production allocation, operating, drilling commitment and other precedent land agreements in order to maximize the client’s earnings for each parcel of land
We developed procedures to effectively track lease compliance, which actively reviews potential offset obligations, potential defaults, and ensures royalties are paid correctly
We created a “tool box” of varying lease formats, production allocation, operating, drilling commitment and other precedent land agreements in order to maximize the client’s earnings for each parcel of land
We developed procedures to effectively track lease compliance, which actively reviews potential offset obligations, potential defaults, and ensures royalties are paid correctly
Values:
Sproule ERCE continues to actively manage the client’s assets, and the processes implemented allow us to extract maximum value from each parcel of freehold land over the life of the leases
Since Sproule ERCE began managing the assets, we’ve issued hundreds of mineral leases. Over 250 wells have been drilled on the leased lands, and we have been successful in recovering previously unpaid offset compensation and incorrectly paid royalties.
Since Sproule ERCE began managing the assets, we’ve issued hundreds of mineral leases. Over 250 wells have been drilled on the leased lands, and we have been successful in recovering previously unpaid offset compensation and incorrectly paid royalties.