Efficient ONRR Reporting Solution Implemented by Opportune with Alteryx-Based Tool

The Challenge:

An independent oil and gas operator managing approximately 6000 wells with oil and gas leases on federal lands. In its ONRR reports for the fiscal years of 2016-2020, there were errors in reporting production volumes, sales prices, and allowable deductions due to utilizing incorrect gathering and processing rates. As a result, there were significant reporting errors, which prompted governmental escalation and an audit.

Consequences of Incorrect Reporting:

• ONRR Audit: The primary consequence of incorrect reporting is the government's revenue loss. In this case, for 2019/2020, the government was deprived of substantial royalties that should have been collected due to the operator using transportation and processing rates that were higher than what was allowed. This caused the client to under pay the amount of royalty owed to the ONRR. On the flip side, for 2016-2018, the operator used processing rates that were lower than what was allowed and overpaid the ONRR. The client was eligible for a refund for the ONRR from this period.
• Legal Consequences: Incorrect ONRR reporting can have legal ramifications. In this case, the government triggered an ONRR audit against the operator for underpayment of royalties. This can lead to costly fees and time spent tracking down the errors in reporting production volumes, sales prices, and allowable deductions. It can also result in delayed permitting, which is crucial for long lead time development. 

The Solution:

Opportune was engaged to help address the ONRR-related challenges. By capitalizing on our proprietary Alteryx-based tools, Opportune successfully created models to review and analyze 4.5 years' worth of previously submitted ONRR data, along with production and sales volumes for more than 6000 wells. This enabled Opportune to execute comprehensive, precise, and consistent calculations to correct discrepancies in ONRR data concerning volumes, values, and processing/gathering rates.

Our approach followed the data from monthly ONRR spreadsheets from prior filings, correcting the ONRR processing/gathering rates, monthly sales and production workbooks, and cross-referencing lease and agreement details to recalculate the new figures for sales volume, sales value, ONRR royalties, transportation costs, and processing values for restatement. Additionally, the Opportune tool creates a SOX-acceptable audit trail, making it valuable in a project like this where accuracy and proving results are important.

In conclusion, the operator recovered $2.3 million for the period spanning 2016–2018 from the ONRR, and the outstanding liability for the years 2019–2020 of $1.56 million. This project was a resounding success, as Opportune supported the entire process, and the ONRR agreed.