Dear WAPL Members,
The AAPL Board of Directors held its latest quarterly board meeting on March 12, 2017 at the Fess Parker Resort in Santa Barbara, California. Below is a summary of the more pertinent items discussed and/or voted on by the Board of Directors:
AAPL STAFF REPORT
AAPL currently has 28 people on staff and 7 vacant positions, being a Government Affairs Analyst, Certification Coordinator, Senior Accountant, Personify Database Administrator, Electronic Media Administrator, Business Development Manager, and Publications/Marketing Manager.
A functional study was conducted and determined that 7 staff work exclusively on NAPE functions and an additional 7 staff spend between 25% and 75% of their time working on NAPE functions. A recommendation to move the 7 FTE staff under NAPE operational budgets will be forthcoming in the budget discussions.
AAPL membership, as of 2-20-17, was 15,576, up from 14,691 in November, 2016. This level represents exceeds the budget projections of 15,000 for FY 2016-17. Of the current members, 13,354 hold active, voting member status. The certification status of eligible members is 2,889 CPL; 50 CPL/ESA; 2,255 RPL; 421 RL; and 30 Retired CPL.
The 2017 AAPL Membership Directory has been mailed and you should have received it in January.
A new compensation survey was sent out to members in the 1Q of 2017. This is the first compensation survey since 2010. The results will be published in Aug/Sep issue of Landman. There were approximately 2,600 respondents.
Summer NAPE gross income (all partners) was $743,687, with AAPL receiving its proportionate share of $375,562 and the management fee of $141,351. Costs were reduced by 42% from last year, or $566,558.64. Summer NAPE was attended by 2,780 persons (vs. 4,384 prior year) and 184 exhibitors (vs. 268 prior year). The business conference had 229 attendees.
Despite deep cuts in expenses with NAPE Denver, the exhibit continued its decline in attendance, exhibitors, and sponsors. The NAPE Operating Committee has voted to cancel all regional NAPE events, including NAPE Denver, effective immediately and until further notice. The action was due to low attendance and increased costs during the commodity downturn.
Internal research from the 2016 NAPE Denver indicates that NAPE Summit drew 22% more attendees from Colorado than the regional Denver show itself. There were also 56% more Rockies prospects shown in Houston than at the Denver show.
Attendee Registration for NAPE Summit totaled 11,231 with 10,700 actually in attendance with 655 exhibitors. Both numbers represent significant increases from the budgeted predictions of 8,500 attendees and 600 exhibitors. A positive effect on the budget is anticipated once the revenue distribution occurs.
The AIPN (Association of International Petroleum Negotiators) and the AAPL OCS (Outer Continental Shelf) Advisory Board held their respective annual winter workshop and annual meeting during the week of NAPE. The NAPE Charities Fund has changed to NAPE Expo Charities Fund, a public charity.
Significant upgrades to the George R. Brown Convention Center have been completed, which had a positive impact on the overall NAPE experience.
ANNUAL MEETING – 2017, SEATTLE, WA
AAPL will hold held its 2017 Annual Meeting in Seattle in June. Given the negative fiscal impact of the 2016 Annual Meeting due to low attendance, AAPL has renegotiated its hotel contract to limit our exposure, reducing the guarantee from 750 members attending to 300 members. Registration for the Seattle Annual Meeting is now open. There will also be some programmatic changes, potentially to the education schedule and the evening events. Our own Taylor Hess now serves on the Annual Meeting Committee.
The 2017-18 AAPL Officer Election will be conducted with online ballots.
The new AAPL Contract Center has opened where the new 2015 JOA can be accessed, modified, negotiated and saved. Forms-on-a-Disk will no longer sell the AAPL JOA format, though your current applications for the 1982 and 1989 versions will still be available. The Contract Center is working to add additional documents to its library, including Master Land Service Agreement and a Participation Agreement. Subscriptions for 2017 total 103, generating $28,160 in revenue and $15,759 in expenses.
The Personify On-line Certification is being tested with a March, 2017 soft launch with a full launch and marketing to occur in the April/May window. All applications will continue to be reviewed by the Certification Committee.
The AAPL mobile app is now available to download and includes details for all education and member services. It can be downloaded from your phone’s app center.
AAPL is co-sponsoring 3 events in 2017 with RMMLF and AAPL members will be entitled to a discount rate. The events include O&G Agreements: Surface Use in the 21st Century, held May 17-18 in Westminster, Colorado; AAPL/RMMLF Joint Institute on the 2015 JOA, held December 5-6 in Denver, Colorado; and a third event to be confirmed later.
If you are in need of CEUs, please check the AAPL website for recorded previously-held seminars that should be eligible for credit, at a cost as low as $10/credit.
The Education Task Force is actively developing a 1-day seminar on Held by Production and another 1-day seminar on Due Diligence.
As of 2-20-2017, AAPL has held 30 seminars, which were physically attended by 1,089 people and another 310 via webinar. FY 2016 education income totaled $302,081 with $179,315 in expenses.
The budget process for FY17-18 is winding down with an operational budget approved later in the meeting. Revenues are anticipated to continue to decrease, while operating expenses appear to flat line or even increase. AAPL, as an organization, maintains a solid reserve position and should be able to withstand the downturn. The focus remains on how to hold or reduce expenses, increase revenues and maintain member services. I anticipate there will be more future discussion regarding a strategic approach to budgeting, reserve spending and organizational goals.
As compared to December 31, 2015, total assets have decreased from $30,736,492 to $30,069,402, representing a decrease of $667,090 or 2.17%. AAPL has reduced total liabilities in the same time frame from $2,926,302 to $1,448,113, a reduction of $1,478,189 or 50.51%. This reduction in liability is primarily due to additional debt service of $1,000,000 on the building note payable, with a current balance of $0, and a $244,401 decrease in unearned 3- and 5-year member dues.
As compared to December 31, 2015, revenues (exclusive of investment revenues) have decreased 20.03% from $2,151,256 to $1,720,342. The decrease is due in large part to reduced NAPE distributions and management fees due to lower attendance at Summer NAPE. Expenses have decreased to a greater amount by 21.66% from $4,033,918 to $3,160,165. The expense reduction is due primarily to decreased publication costs (Landman 2), cost control on educational seminars, board of director meetings and general and administrative expenses.
Investments decreased by $131,230 (0.55%) over the same period, with a balance of $23,877,276, as of December 31, 2016. The decrease is due to the transfers to the operational budgets in FY16 of $2,430,000, which were partially offset by realized and unrealized gains in the investment account of $2,298,770.
FY16-17 CAPITAL BUDGET
The Board approved an additional $25,000 to the FY16-17 Capital Budget, bringing the total Capital Budget to $180,000. The additional amounts include $10,000 to enhance Personify Landman Qualifier, used in the certification process, and $15,000 to develop Field Landman Seminars.
FY17-18 OPERATING BUDGET
The Board of Directors has adopted the operating budget for FY17-18. This budget foresees an increase in revenue of $427,145, including $319,000 from dues increases and $93,000 in rent from NAPE. Operating expenditures are decreased by approximately $604,000. A significant portion of the decrease stems from assigning 7 staff members under the NAPE operational funds and away from AAPL expenses.
The Operating Budget will move $92,000 to the FY17-18 Capital Budget. These funds are allocated $80,000 for the development of new educational seminars (including Negotiations, Petroleum Economics – Structuring a Deal, and Fundamentals of Field Land Practices) and $12,000 to repair and update the bathrooms outside the Education Conference Center.
ANNUAL MEMBER DUES
The Board unanimously voted to increase the annual membership dues from $100/year to $125/year, beginning July 1, 2017. Members will still have the option of multiple year memberships with 3-year dues increasing to $250 (from $200) and 5-year dues increasing to $500 (from $400). The increase will generate an additional $319,000 in the coming fiscal year’s operating budget and a factor in the ability to balance the budget. When taking inflation into account, the increased dues are actually lower than the $100/year when it was instituted.
Under Roger Soape’s Administration, AAPL waived the $100 fee for recertification due to the commodity downturn. The Board has rescinded the waiver and will again require a $100 fee for recertification, which is equivalent with the fee charged for initial certification.
The Sub-Nominating Committee presented its recommended slate of officers for 2017-18 to the ExCom, which unanimously approved the nominations, as did the Board of Directors. The slate of AAPL officers (ExCom) for FY17-18 are as follows:
David Miller, President
Mike Curry, 1st Vice President
Lindsey Miles, 2nd Vice President
Nick Hess, 3rd Vice President
Hamel Reinmiller, Secretary
Glen Mauldin, Treasurer
Pam Feist, Immediate Past President
Please offer your congratulations to our own Nick Hess, as he should transition to the new position at the Annual Meeting in Seattle. Of note, the slate includes three from Region VI (WAPL is part of this region), including Lindsey Miles and Hamel Reinmiller.
ANNUAL MEETING 2018
The Annual Meeting for 2018 will take place in Denver, Colorado.
ANNUAL MEETING 2019
David Miller, 1st VP, presented the Board with two options for the 2019 Annual Meeting, being Boston and Pittsburg. The Board selected the City of Pittsburg for its 2019 Annual Meeting.
JOINT OPERATING AGREEMENT FORM 810-2015
AAPL has released the new JOA form in the Contract Center. No new sales of 1982- and 1989- AAPL Form 810 will be offered through Forms-on-a-Disk as in the past. AAPL will also be offering a bank of forms (Oil and Gas Leases, Farmout Agreements, etc.) through its website and will be getting away from Forms-On-A-Disk.
FIELD LANDMAN SEMINARS
The revised Field Landman Survival Guide is available either online at www.landman.org or at the Field Landman Seminars.
AAPL is accepting article submissions for the upcoming issues of Landman.
The federal and state departments of labor continue to seek out and audit companies and individuals regarding their independent contractor status. Pennsylvania seems to be under attack by the National Labor Relations Board for the misclassification of employees. The Department of Labor’s stance is that workers are considered employees unless proven otherwise. IF YOU CONSIDER YOURSELF AN INDEPENDENT CONTRACTOR, OR YOU HAVE INDEPENDENT CONTRACTORS PERFORM LANDWORK FOR YOU, I STRONGLY ADVISE YOU TO CHECK OUT AAPL’S INDEPENDENT CONTRACTOR TOOLKIT, available on AAPL’s website (www.landman.org). This toolkit contains important information and resources on how you should position yourself or your company in order to help you prepare if you face an audit, and a guide to Kansas tax and independent contractor regulations.
AAPL’s purpose is to serve its membership through continuing education, providing resources for you and/or your business, and a vast network of oil and gas industry professionals. If you are not already a member of AAPL, please consider joining. The benefits of membership in this good and strong organization are well worth the price of membership.
If you would like more details about anything discussed herein, or about AAPL in general, please don’t hesitate to contact me.
Michael A. Pisciotte, CPL
AAPL Director – Region VI