WHITE PAPER MODERNIZING LAND MANAGEMENT: BOOSTING CASH FLOW, REDUCING RISKS, AND GEARING UP FOR THE ENERGY TRANSITION Page 2 CONTENTS Essential Digital Oilfield Skillsets ................................................................................................................................................................ 3 Creating a Digital First Culture ..................................................................................................................................................................... 3 Harnessing the Power of Big Data .............................................................................................................................................................. 3 Revenue Generating Asset Optimization Strategies .......................................................................................................................... 4 Confidently Meeting Royalty Obligations ................................................................................................................................................ 4 Mining Inventory for the Best Wellsites ................................................................................................................................................... 5 Accelerating Acquisitions and Divestitures ............................................................................................................................................ 5 Sustainable Cost Containment Strategies .............................................................................................................................................. 6 Growing the Bottom Line Without Growing G&A ................................................................................................................................. 6 Eliminating Multiple Versions of the Truth .............................................................................................................................................6 Energy Transition: Opportunities for the Land Department .......................................................................................................7 Redeploying Land Skillsets .......................................................................................................................................................................... 7 Upskilling into New Contractual Territory ............................................................................................................................................. 7 Key Takeaways for Land Leaders ............................................................................................................................................................... 8 Meet the Author: Nick Vandivere, CEO, ThoughtTrace Nick Vandivere serves as CEO of ThoughtTrace. During his tenure, he has led the transformation of ThoughtTrace into a company that is a technology and thought leader for the application of applied artifi cial intelligence and machine learning. As a software CEO, Mr. Vandivere believes that product innovation, reliability, and an outstanding user experience are the required ingredients for exceptional performance and long term value. Mr. Vandivere joined ThoughtTrace in 2010 as Director of Business Development. Prior to joining the company, he served as an offi cer in the US Army and later in an advisory role with the US Department of State. Mr. Vandivere holds a Bachelor of Science degree in Economics from Texas A&M University. © 2023 W Energy | WEnergySoftware.com Page 3 As land leaders think about the strategies needed to navigate the complexities of today and tomorrow, multiple business priorities are top of mind. Generating ESSENTIAL DIGITAL free cash fl ow has become more important than reserves, shifting the emphasis from growth to OILFIELD SKILLSETS shareholder value. However, many land teams are stillCREATING A DIGITAL FIRST CULTURE stranded in a reactive mindset where daily decisions about what acreage to develop and sites to drill are Volatile commodity prices that render basins clouded by poor access to reliable data, staggeringlyunprofi table overnight, growing emphasis on ESG, large data volumes, and manual workfl ows. Teams are and fi erce competition for acreage have created a simply overwhelmed with managing massive catalyst for change. Energy companies will need to leaseholds, thereby creating risks as organizations look very different in the future to survive and thrive. struggle to meet royalty obligations and assess A&D In an industry that historically responds to growth by opportunities. adding people, and to downturns with layoffs, the energy company of the future is one that is digitally Land leaders are also under intensifying pressure to fi ndenabled and agile, empowering teams to do more new ways to increase productivity and output from their without adding headcount. The land department is at teams while containing G&A costs. At the same time, the digital center, a hub and spoke model of the modern organizations must successfully navigate the energy oil & gas enterprise. transition as they add lease and contract complexity from wind, solar, and geothermal projects. The land department will always be crucial even as organizations increasingly take on new challenges in renewable energy. The complexities of oil & gas development and the demands of the future have created an imperative for land teams to achieve lean planning and anticipate and proactively solve business challenges. The land department will need to leverage technology, and a data-driven culture to create a clear view of contractual obligations at the wellhead, and integrate business intelligence into day to day processes. Armed with the right asset optimization strategy and technologies, energy companies are gaining the confi dence needed to understand the breadth and depth of obligations, eliminate risks, and increase The new energy enterprise is managed by people who cash fl ow. not only understand land and lease complexities, but also the technology side and how to extract value from The following sections provide valuable insights and the digital oilfi eld. The big crew shift is well underway technology strategies that land teams can begin as a generation of energy professionals retires and a deploying today, to future proof their organizations new, digital-fi rst generation leads the way ahead. by leveraging cloud-based ERP solutions, artifi cial Shaped by the digital economy from an early age, the intelligence, automation, and a single version of thenew generation of energy professionals instinctively truth. This will lead to increased business agility, lower reaches for data and digital solutions. They don’t want technology and G&A costs, and higher margins.to be held back by legacy technology and they expect answers in minutes, not days or weeks. © 2023 W Energy | WEnergySoftware.com Page 4 Succeeding in the digital oilfi eld requires better data. Teams also need to understand how tocreate a data-driven culture that attracts the digital-fi rst generation. There are only two paths totake: one that positions oil & gas companies to excel with a lean, digitally-enabled team, or onethat holds them back with under-powered capability; the innovators vs. the digital laggards. HARNESSING THE POWER OF BIG DATALeveraging artifi cial intelligence (AI) to automate lease analysis, navigating big data, andgetting answers from vast volumes of land records - these are the new digital skill-sets that canmake or break a company going forward. The right technology choices will future-proof the landdepartment, allowing teams to confi dently move forward with the digital capabilities and skillsrequired to meet evolving business and market conditions head-on. The energy company of thefuture will instantly construct very elegant solutions to complex business processes, and alsorapidly scale and consume big data - such as importing 40,000 contracts and thenincorporating them into land workfl ows within hours, not days. Land teams share a common big data challenge with eCommerce giants like Amazon, wheretens of thousands and even millions of records must be rapidly accessed, searched, and relevantresults presented. Like shopping on Amazon, navigating to answers about acreage should be asintuitive and simple for users as picking an area of interest, then fi ltering on tracts, assignments,and Pugh Clauses that match business criteria. One of the most important traits that will defi ne energy companies and the land departmentgoing forward is how teams get answers from land data. By pivoting away from only answeringone-off questions, energy professionals can begin augmenting their knowledge with a moredynamic situation where digital systems are trained to continuously analyze the risks that are apriority to land teams and the organization as a whole. Instead of asking single questions aboutacreage (where answers may have limited, short term value) oil & gas teams need a persistentline of inquiry that constantly looks for new answers about certain royalties, leases held byproduction, and other contractual obligations. As a result, land teams can monitor their acreageby exception, and participate only when action is needed.TECHNOLOGY FOCUS W Energy’s upstream SaaS ERP is relied on by oil & gas companies large andsmall to advance digital transformation, providing a backbone for a datadriven culture with solutions for land, accounting, production, and regu-latory. Through our ThoughtTrace partnership and integration, clients benefitfrom holistic document understanding that leverages AI to contextualize thecomplex legal language of leases, enabling land teams to consume, analyze,and search vast volumes of data from within the W Energy land manage-mentdashboard. © 2023 W Energy | WEnergySoftware.com Page 5 Equipped with the right technology, teams can rapidly REVENUE mine drilling obligations for termination clauses around payment, and generate actionable insights in GENERATING ASSET seconds instead of weeks. The pervasive approach of reviewing one lease at a time even with multiple OPTIMIZATION analysts is no longer viable given the scale and complexity that most oil & gas businesses face, which STRATEGIESputs land departments in a constant state of reacting. However, by proactively managing leases with CONFIDENTLY MEETING ROYALTY technology that contextualizes land information and makes it instantly available for analysis, organizations OBLIGATIONS can place rigs with greater precision, stop reacting, and Ownership split from inheritance, bolt-on acquisitions, achieve sustainable, lean planning. lease renegotiations, cost-free provisions - these are just a few of the complexities that make understanding royalty obligations a daily challenge. To accurately pay interest owners, operators must carefully track a TECHNOLOGY FOCUS large number of royalty provisions that pass on certain production costs - such as dehydration, compression, Featuring next-generation land management and marketing - underscoring the need to decipher technology, ThoughtTrace integration, and an legal language and pay owners based on specifi c intuitive user interface purpose built for land provisions and market conditions. Faced with an workfl ows, W Energy keeps key royalty and overwhelming burden to analyze leaseholds, some drilling obligations organized and enables users operators choose to simply overpay interest owners in to rapidly access active leases and assets, order to avoid risks. average net revenue interest (NRI) and working interest, net acres, and lease operating expenses Indeed, oil & gas businesses of all sizes face a daily (LOE). Accelerate acquisition data onboarding challenge to keep pace with royalty provisions. However, with leading import tools that verify data quality, technology has turned the tide, enabling entire fi ling plus select, filter, and export asset data to sup- rooms to be searched with ease, provisions classifi ed, port divestitures and maximize deal value. and answers delivered at the speed of business. With a current and intimate understanding of royalty language and other conditions, land teams gain valuable capabilities to directly raise revenue and improve profitability. ACCELERATING ACQUISITIONS AND MINING INVENTORY FOR THE BEST DIVESTITURES Oil & gas teams struggle daily with the large volumes of WELLSITES well and land fi les that accompany acquisitions and Given the shift in Wall Street sentiment toward divestitures. This data pervasively takes the form of returning shareholder value via better free cash fl ow vs. boxes fi lled with documents at worst and thumb drives reinvesting for double digit production growth, oil & gas full of PDFs at best. Pre-acquisition or post, land teams companies must have a more nuanced and strategic must make rapid sense to assess deal quality and risks. approach to drilling - starting with drilling obligations. Organizations must have a clear line of sight at all timesFaced with leaseholds with thousands of documents, into drilling inventory and the time constraints to make most oil & gas teams resort to sampling to acquire prime the most out of rig placement; enabling land teams to acreage ahead of competitors. Instead, the right sift constantly shifting obligations for the leases that technology enables oil & gas teams to search an have an in pay penalty in order to avoid losing acreage in advance of the drill bit. © 2023 W Energy | WEnergySoftware.com Page 6 entire acquisition data package and rapidly answer questions that impact deal value. In an acquisition scenario, this capability gives the buyer an asymmetric advantage in pre-acquisition due diligence by not only moving fast but acting on all of the information available. For divestitures, being able to instantly mine land records for reliable answers will make deals more marketable by giving the buyer clearer justifi cation into asset price and bolstering confidence in what is being represented. SUSTAINABLE COST CONTAINMENT STRATEGIES GROWING THE BOTTOM LINE WITHOUT GROWING G&A Adding production and increasing revenue without scaling a workforce is about empowerment. Organizations must increase the productivity of everyone in the land department by leveraging technology, leading to more output and enabling the entire organization to grow the top line without adding G&A costs. Artificial intelligence (AI) and machine learning (ML) e r present extraordinary modern technologies that are transforming the oil & gas business. However, teams do not need to become an expert to benefi t from AI and ML. As organizations consider AI, partner with an expert in the fi eld then identify an area in the land department that creates immediate business value. Teams who focus fi rst on royalties can achieve the early AI success needed to gain long term traction from the technology. AI and natural language processing are especially valuable for analyzing lease packets by enabling rapid identifi cation of affi liate and cost-free language - for example, enabling an analyst to capture information at a speed and accuracy hitherto unattainable. Furthermore, rather than replacing analysts, AI amplifi es productivity to new levels and enables oil & gas businesses to hit higher targets without adding head count. ELIMINATING MULTIPLE VERSIONS OF THE TRUTH The information landscape of a typical oil & gas business is often characterized by scattered and poorly integrated software and the associated © 2023 W Energy | WEnergySoftware.com Page 7 databases, including land management, accounting, division order, production operations, and tax and regulatory. With so many point solutions and sources of data, teams struggle to access, integrate, and incorporate data into critical oil & gas workfl ows. This “sprawl” of digital systems carries a high cost - both in terms of technology and G&A costs. On average, an oil & gas company with 1,500 wells overspends $1M annually on software licenses and pays 10 full time employees to support its software ecosystem, manually move data between systems, and troubleshoot daily issues. Organizations can attempt to mitigate information sprawl by integrating multiple software applications from different vendors. However, without a common data format and with varying support for moving dataENERGY TRANSITION: between legacy software systems, such integrations are brittle, expensive to maintain, and fail to keep pace OPPORTUNITIES with the evolving needs of an oil & gas business. The other integration approach brings related workfl ows FOR THE LAND and data together in a unifi ed system of record where applications share a common and consistent data-set. As DEPARTMENT a result, land and lease administration are inherently integrated with division order, revenue accounting, and disbursement, while enabling organizations to grow operations with a lean team. REDEPLOYING LAND SKILLSETS Just like producing hydrocarbons, renewable energy projects need access to large tracts of land. Wind turbines and solar power generation facilities are TECHNOLOGY FOCUS sprawling, requiring renewable energy companies to scout out and lease acreage. Beyond surface rights, W Energy provides the only unifi ed geothermal power generation also requires subsurface upstream SaaS ERP that brings land rights to drill deep wells that produce steam. management, division order, revenue accounting, production operations, and From hydrocarbons to renewables, there is a set of core disbursement seamlessly together on the competencies no matter what energy companies focus cloud, helping organizations of all sizes on, including land acquisition and lease administration, contain technology and G&A costs. Analyze executing major projects (onshore and offshore), thousands of leases with our ThoughtTrace logistics, and the transmission of a commodity. Because integration and automatically import into renewable projects generate royalty streams too, oil & W Energy’s land management module for gas and renewable energy share a similar need to cut faster, better decision making or exportchecks to interest owners in wind, solar, and geothermal data using powerful W Energy views and facilities and manage owner relations. Just as in oil & gas, take to data science and other apps in best-in-class operators are great at these and the same your digital ecosystem. is true for renewables. © 2023 W Energy | WEnergySoftware.com Page 8UPSKILLING INTO NEW CONTRACTUAL TERRITORYKEY TAKEAWAYS As energy companies expand into renewables, teams will need to address new challenges with new skillsets.FOR LAND LEADERS Organizations will need to understand different risks � DIGITAL MINDSET - To succeed in the digital oilfi with suppliers, contractors, and customers. Land eld, organizations must create a digital fi rst management will continue to play a crucial role in culture that attracts the new generation of renewable energy, but emerging challenges will include energy professionals while embracing fi nancial optionality, managing agreements to buy technologies that enable land teams to process kilowatt hours, and the options to buy a certain amountand instantly search vast volumes of leases. of production.� ASSET OPTIMIZATION - Leveraging the right tech- How renewable projects are fi nanced is very different nologies, land teams can immediately increase than oil & gas and the contracts are very complex. f ree cash fl ow by mining drilling obligations for In renewables and power markets, understanding the best wellsites to drill, understanding royalty implications and obligations in these areas is absolutely obligations and accelerating acquisitions with a critical. Again, choice of technology will enable teams to complete view of opportunities and asset value. rapidly consume contractual information no matter where they are in the energy mix. As a result, � COST CONTAINMENT - Organizations can hit high- organizations of any size can seamlessly analyze er targets and achieve more with the resources contracts to accelerate internal audits and understand they already have by incorporating artifi cial intelli- risk across the enterprise, from the fossil fuel side of the gence to amplify land productivity and leveraging house to geothermal, solar, and wind power generation. a unifi ed application platform for landmanagement, division order, revenue accounting,production op-erations, and disbursement. TECHNOLOGY FOCUS � FUTURE SKILLSETS - As land teams take on newchallenges in the energy transition, corecompetencies will remain crucial to wind, solar, and W Energy’s land management andgeother-mal projects while complexities of the new accounting solutions are leveraged byenergy mix will require teams to upskill to tackle leading renewable royalty owners tocontractu-al and optionality challenges. manage assets at scale. Featuring pow- erful lease administration, GIS, and con- tract management technology, W Energy supports the full energy mix with a robust SaaS ERP platform and flexible solutions to match even the most complex contractual and optionality requirements. © 2023 W Energy | WEnergySoftware.com Page 9 DISCOVER THE POWER OF W ENERGY'S SAAS ERP Partner with W Energy to modernize your land department with our category leading upstream SaaS ERP, setting your team up for growth, increased cash fl ow, and low cost operations. Plus, leverage ThoughtTrace, the leader in AI-powered document understanding, to analyze entire fi ling rooms of leases and seamlessly integrate with W Energy using a state-of-the-art API. Everything your team needs to solve the toughest land management challenges of today and tomorrow. ABOUT W ENERGY W Energy, headquartered in Tulsa, Oklahoma, revolutionizes the oil and gas industry with its leading cloud- based energy platform. Made for upstream and midstream companies, our platform combines advanced software with deep industry knowledge, offering solutions spanning Field Service Management, Production, Accounting, Land, and Transportation. Countless energy professionals turn to W Energy to help their businesses adapt and grow. As the energy industry evolves, so does W Energy, continuously refining our platform to empower today’s needs and tomorrow’s advancements. Visit us at www.wenergysoftware.com to see how we’re shaping the future of energy operations.