Big Data Insights for Non-op Oil & Gas Investments

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Royalty and non-operated working interest owners are flooded every month with a massive amount of data related to their oil & gas investments. In a business that still relies heavily on paper, this vital data all too often arrives in a printed statement that can contain anywhere from a dozen to hundreds of pages of information. Mineral and non-op managers are hard pressed to simply manage the large volume of revenue data and extract valuable insights about their investments, such as underpayments or inaccurate expenses. Fundamentally, it’s a big data problem; however, armed with the right technology, today’s oil & gas investors can effectively navigate the flood of check stub data while creating new opportunities for insight and analysis.

Stuck in the Paper Age
According to the Independent Petroleum Association of America (IPAA), there are approximately 9,000 oil & gas producers in the United States. That makes for about 9,000 different ways of accounting for and distributing payments to interest owners. The inbox of a non-op portfolio manager overflows with statements every month from dozens or even hundreds of different payers, with statement format and page count varying widely. At best, investors might receive a PDF attachment by e-mail, which is all too often a scanned image of the paper original.

The valuable data contained in a check stub is unstructured, even in the case of most digital documents. Revenue and expense data cannot be sorted, filtered, or manipulated in meaningful ways. As such, improving data analysis begins with structuring check stub data, normalizing data across payers, and automating the delivery of digital data to non-op interest owners. Enter Oildex and its leading check stub data exchange, which helps investors access revenue and expense data in a customizable digital format that integrates seamlessly with their accounting systems. Importantly, Oildex delivers high quality data from a single source, rather than dozens or hundreds of operators.

The Big Revenue Data Problem
Consider an oil & gas investor who manages a non-operated portfolio of 25,000 wells. This investor receives payments from 1,000 different operators. Assuming that there are 3-10 lines of data for each well, this investor could receive more than 250,000 lines worth of data in a given month across thousands of pages of paper statements.

The Oildex data exchange cures the headache of receiving 1,000 different paper check stubs each month by automatically distributing high quality revenue data to investors in digital files. And because check stub data format can be customized to the specific accounting system of each investor, data is instantly available for analysis, bypassing the error prone manual process of manually formatting and loading check stub data. However, even with high quality check stub data delivered directly into an investors accounting system, the non-op still faces barriers to answering key questions about its portfolio, such as:

  • Which wells were I underpaid on, and by how much?
  • Were up-to-date commodity prices used to calculate revenue?
  • Do post-production costs make sense for each well?
  • Is my ownership decimal accurate for each payment period?
  • Are there producing wells on my property that I have never been paid on?

“Big data” is characterized by 3 V’s: volume, variety, and velocity. When it comes to check stub data, mineral and non-op asset managers consume a large volume of revenue and expense data. The extensive variety of data types involved is also high, with check stubs often containing dozens of coded product and expense categories. Velocity, which refers to the frequency at which data must be processed, is a critical success factor for non-ops who must consume, analyze and leverage data every day. The recurring cycle of monthly reporting and closing deadlines that accompany payout to investors presents an especially difficult challenge, requiring non-ops to quickly onboard large volumes of check stub data within a narrow window of time.

Solving the 3V problem and improving oil & gas data analysis requires addressing how data is stored, organized, and deployed to drive non-op workflows.

Roadmap for Actionable Insights
For decades, operators have benefited from accounting solutions and asset management software that was specifically designed for the challenges of production and operations. Software vendors, however, have largely neglected the needs of the mineral and non-op market, where the accounting and analysis requirements are drastically different from those of a typical E&P. As a result, many oil & gas investors must adapt their processes to oil & gas accounting packages, import check stub data into QuickBooks, or make due with spreadsheets to address complex land management challenges.

Answering the key questions oil & gas investors pose on a daily basis demands a new approach to non-op accounting and asset management. Requirements include the ability to not only integrate check stub data, but other data sources as well, including production volumes reported to the state and detailed land and lease information concerning the portfolio inventory. The solution must accommodate large and complex portfolios, track a diverse range of historical data for each well or property, and automate core workflows, such as profit/loss analysis and production verification.

Cloud computing is especially well suited for managing the 3V’s of non-op big data, and can more easily deal with large volume, a variety of data types, and high velocity of consumption. Software built on the cloud, or SaaS, takes advantage of on-demand storage to integrate and manage the extensive range of data oil & gas investors rely on. What’s more, SaaS solutions, such as MineralSoft’s non-op portfolio management software, are creating new ways for investors to work with big data, surface actionable insights, and hone their competitive edge.

Oildex and MineralSoft Solution
MineralSoft recently partnered with Oildex to provide the only fully integrated mineral management solution in the market. Data from Oildex’s exchange flows seamlessly into MineralSoft’s cloud-based mineral management platform where it is instantly available for analysis and actionable insights. Combined with MineralSoft’s exclusive Drillinginfo integration, including production volumes, permits, and rig activity, oil & gas investors now have unparalleled capabilities to manage large portfolios, spot missing revenue, and identify new opportunities faster and smarter than ever before.