Cinco Energy Management Group, a leading oil & gas-focused land management firm, celebrates its 30th anniversary this year. In 1990, the current CEO and Founder Randy Nichols established the company as Cinco Land & Exploration Company. Building upon his early career as a company landman for independent E&Ps, Nichols started the company to provide superior quality land and title services to the oil and gas industry. The name “Cinco” was inspired by the five members of the Nichols family and the company’s first project in a Spanish-speaking area of South Texas.
The oil and gas industry is no stranger to market headwinds and unpredictable business cycles. However, the uncertainty of the COVID-19 pandemic and the Russian-Saudi price war have sent crude to record lows and rapidly intensified the financial hardship of many oil and gas companies. The depressed prices and lower demand forecasts have led most US producers to make deep budget cuts and will force others into bankruptcy in potentially greater numbers than what we saw in 2015. That year, 69 companies filed for bankruptcy protection. To add insult to injury for at-risk companies, lay-offs and furloughs will deprive resources allocated day-to-day functions, including maintaining assets and records.
Internal land departments of E&P companies are no strangers to keeping up with the demands of their department. The typical lifecycle of a land department requires experience in a multitude of skills, from specific functions like leasing and due diligence to transient roles that may arise during a special project. Having the right resources and information is critical to success for daily land management. Throughout the six lifecycle stages of a land department are distinct responsibilities needed to produce results.
Events such as market changes, shifting internal strategies, staff turnover, and new acquisitions can impact a company’s operational efficacy and require different resource allocation. No group in an E&P company is more familiar with rapidly changing priorities than the land department. Maintaining the right resources in the land department can be a challenge for companies that must keep up with ebbs and flows of the development cycle and daily land work. Here are three common challenges that we see facing many in-house land departments.
Whether you are a newcomer or well-versed in the oil and gas business, there is never a shortage of learning opportunities. In part one of our glossary, we compiled a list of some of the most popular terms, such as "Affidavit of Production" and "Non-Participating Royalty." In part 2 of our oil and gas glossary of terms, we highlight more commonly used words, along with their definitions.
1. Adverse Possession: Obtaining title to land by taking possession of the land and staying in possession for a certain number of years, as set by law. The adverse possession statutes vary by state, but share requirements that the rightful owner has had notice (actual or constructive), that the possession is open, and notorious (i.e., occupation in a manner that is open and obvious to the public)