September 2019

Company Spotlight

TRACTS.CO

This issue of Energy Technology Musings includes our first Company Spotlight, a recurring feature that will focus on a company that provides a compelling software/technology solution.

For this month’s Company Spotlight, we interviewed Tracts, Co-Founder and CEO, Ashley Gilmore, about how they are addressing the inefficiencies of verifying and managing mineral rights ownership. Tracts provides a software solution that streamlines the title data verification process and provides a user-friendly title management database. For more information on Tracts, please see: https://tracts.co/

Background: The Company was founded by Ashley Gilmore and David Dewey, who have a long-standing relationship working together on several software-related ventures. The idea for Tracts came to them while Ashley was in law school interning at a law firm that specialized in drafting title opinions for oil and gas companies. His task for the summer was to double-check a stack of complex calculations associated with verifying title. Done the conventional manual way, this task would have taken him several weeks to finish. Instead Ashley and David developed a computation algorithm that decreased the time required from weeks to hours.

Value Proposition: Tracts’ software solution creates a 50-80% cost savings for its users by significantly reducing the time required to calculate and verify mineral rights ownership, as well as eliminating redundant processes. The conventional method of calculating and verifying title is to have a landman go to the courthouse and take notes of the key elements from numerous documents on legal pads and note cards. This information is then translated into a flowchart, entered into a spreadsheet or calculator, and submitted to a title lawyer for verification. The lawyer will then verify the calculations by redoing the process in its entirety, a very time consuming process with significant risk of human error.

When mineral buyers and E&P operators utilize Tracts to calculate and verify title, key elements from the relevant documents can be entered into its software via a user-friendly form. As these elements are inputted, the software automatically creates a flowchart and calculates mineral ownership percentages. Furthermore, customers can share this information in real time with their attorneys or any other advisors. These time and cost savings have resulted in rapid customer adoption and have also enabled select customers to run blanket title calculations across entire basins, which would have been an impossible task if done the conventional way.

Impediments to Industry Adoption: When we asked Ashley about the biggest obstacles that Tracts is facing as it continues to move along the industry adoption curve, he mentioned three primary challenges:

1. A general disbelief in the industry that Tracts solves the inefficiencies of title verification (i.e. “we already bought software that was supposed to do this”).
   Mitigating Factor: Educating the customer and offering pilot tests to prove the product works as advertised (90% of pilots convert to customers).

2. Hesitance to trust a computation engine because it is viewed as a “black box” that is difficult to be held accountable.
   Mitigating Factor: Tracts’ flowchart display enables the user to immediately understand the steps and logic the software is walking through.

3. Resistance to change. The conventional method of verifying title involves key constituents who are paid based on their time (i.e. landmen and lawyers). Since Tracts can accomplish their tasks in a fraction of the time, it’s easy to see why those constituents are reluctant to change.
   Mitigating Factor: Tracts’ growing Land Solutions Group and Implementation Specialists, which consists of experienced landmen and title lawyers, have been critical in transitioning its customers to the platform without disrupting their current operations.

Closing Thoughts: By combining a powerful proprietary algorithm with ease of use and transparency, Tracts has been able to create a paradigm shift in how mineral buyers and E&P operators approach the title verification process. With plans to enhance its offering to create incremental cost and time savings for the customer, as well as making mineral rights transactions more efficient, we look forward to seeing where the Tracts team takes the company next.