Brian Lidsky, Managing Director of PLS Inc. recently stated at a SPE Meeting in Fort Worth that there has been $20.8 Billon in acquisition and divestiture deals just in the first quarter of 2018! The oil and gas industry is picking up. Properties and leases are changing hands at a quickening pace. Many of Contek’s clients have asked about what they should first tackle when taking over operatorship of existing producing properties.
Stay in Regulatory Compliance: In addition to changing the operator’s name with the state’s oil and gas commission and changing signs, don’t forget you also need to update the air permits, SPCC plans, SARA Title III and other filings. Make sure basic OSHA required safety items such as safety warning signs, handrails, stairs and ladders are all in good shape. Check the regulatory permits to make sure that you are following all requirements. For Federal leases, you will need to work with the BLM to make sure that all ownership changes have been completed.
Identify and Correct High-Risk Problems: The new operator will want to make sure that there are no “accidents waiting to happen.” These could put your company in jeopardy if a major environmental spill or accident were to happen. Each property should undergo a safety and environmental review to identify potential problems. Topics to include would be the condition of field equipment, corrosion, presence and functionality of safety devices, berms, tanks, flares, rotating equipment (VRUs, compressors) and well casing. Items found should be risk ranked, so that corrective actions can be prioritized.
Set up Safety, Environmental, and Operations and Emergency Response Programs: Basic safety and environmental expectations, standard operating procedures and emergency action plans need to be set up so that employees, contractors and visitors know what is expected to stay safe.
Provide Safety, Environmental and Operations Training for Newly Acquired Employees: Providing safety, environmental and operations training is a great way to start to change the culture and make the new employees feel part of your company. Additionally, ensure your Company’s full safety, environmental and operating expectations are communicated to all.
The above items should be viewed as the basic tasks needed to bring a newly acquired lease into your company or divested lease out of your inventory. Additionally, you will want to learn more about the properties by conducting a field inventory of equipment items, cleaning up stained soil and, perhaps a deeper look at risk if H2S is present.
Contek can help with all of your consulting needs when buying and selling leases. Contek’s personnel have inspected over 20,000 well locations in the United States. Contek is a leader in helping companies transition newly acquired properties into and out of their portfolio.
To learn more about how Contek can help you with A&D issues, contact Mark Hansen at 469-513-1231 before you acquire or divest a property.