Data Miner EquityMetrix Digitizes Energy’s Back Office
In energy exploration, millions, if not billions, of investment dollars are still largely tracked by paper. And paper is easily lost.
A typical well changes hands about five times, according to Tom Agnew, founder and CEO of EquityMetrix in Dallas. “Every time the ownership changes, the records get boxed up and shipped to new company,” Agnew says. “Invariably things get lost, the data gets misclassified; records get lost. And revenue falls through the cracks.”
EquityMetrix uses data mining and forensic accounting tools to unearth paper deeds, contracts, and leases, and then converts the paper into online data that can be searched, sorted, and kept track of more efficiently. Agnew says there are about 10 million oil-and-gas documents outstanding, relating to $300 billion in revenue generated each year. He estimates that energy companies are losing 1 percent of their total revenues because of their inefficient and outmoded paper systems.
The Dallas company developed its software in-house to comb through deeds and leases—which for some wells can span a 15-year period of time—for areas where certain rights have been misplaced or dropped along the way. Its clients include independent oil and gas companies such as Apache, as well as majors like Conoco Phillips.
So far, Agnew says EquityMetrix has recovered funds from each of their clients, collecting as much as $15 million for a single company. EquityMetrix then works on behalf of clients to contact the asset’s previous owner to reconcile the payments. “Sometimes, this does require us to amend certain contracts or filings in the courthouse,” he says. “We collect for them. We don’t get paid until our clients get paid.”
EquityMetrix, which typically gets a small retainer and about 35 percent of the recovered funds, aims to address what Agnew calls the oil patch’s “dirty little secret,” an inefficient paper-based back office setup that wouldn’t have seemed out of place more than 100 years ago.
When the energy industry hit hard times in the 1990s as crude prices plummeted to historic lows, staff such as internal auditors and regulatory affairs specialists, who handled leases, deeds, and other documents, were let go, Agnew says. Domestic oil-and-gas drilling and exploration have ramped back up, but those employees haven’t been brought back.
This means there’s nobody around to do the time-consuming work of monitoring payments or tracking down the cash when a lease-holder on a well doesn’t make a payment. The average underpayment or missed payment takes 30 individual contacts—such as e-mails, personal meetings, or conference calls— … Next Page »
Trending on Xconomy
By posting a comment, you agree to our terms and conditions.