POSTED BY Bernard Wehbe | POSTED IN Blog, Digital Transformation, E/CTRM, Optimization

Nominating Lease Volumes for Maximum Profitability

Permian basin lease crude optimization

As you probably know all too well, each of your station nominations tends to be based on the lease-station combinations that you calculated when you first acquired the lease. Every month, you add new lease volume and subtract relinquished leases.

However, as new information becomes available, reassessing each of your leases every month can be a near-impossible task, especially if you’re using Excel or other manual systems to evaluate potential profit from each station. This is because you likely have thousands of lease-station combinations within your network to consider—far too many possibilities for anyone to be able to manually calculate the optimal solution for an entire portfolio.

As a result, you’re probably asking yourself these questions:

  • How can I optimize my nominating process?
  • How can I improve the accuracy of my nomination volumes?
  • How can I maximize my profit margin?

By using a systems-based approach with capSpire’s Lease Crude Optimization (LCO) module, the nomination process becomes easier, faster, more accurate, and more profitable. LCO standardizes the nomination process, which ensures that each of your leases is given the same high-quality analysis each month. And at the click of a button, LCO automatically performs all calculations for each of your leases to not only enhance the accuracy of nomination volumes but also to help you assess which lease-station pairings can make you the most money.

Here’s how it works:

Step 1: LCO derives a forecast of next month’s lease volume by analyzing recent crude pickup tickets, which can be manually uploaded or integrated into the LCO platform. This forecast uses a proven algorithm to estimate a daily average lease volume based on lease production characteristics over the preceding 90 to 180 days.

Step 2: Based on the daily forecast and your network of stations, quality constraints, volume limitations, and pipelines, LCO deploys a linear optimization solver, which creates an optimal monthly nomination schedule for each lease.

Sample list of leases and optimal nominating schedules (as described in step 2)

Step 3: The LCO dashboards provide users with a complete list of optimal lease-to-station pairs to send to truck dispatch. You can also see the difference in profit margin between the optimal and default stations to gauge the added value of LCO.

Sample list of lease-to-station pairs for assessing profitability (as described in step 3)

LCO improves the nominations process and can benefit your company in the following ways:

  • Minimizes guesswork from the nominations process
  • Develops nomination volumes based on hard data
  • Presents data in a way that is easy to consume and use for decision-making
  • Saves time compared to performing manual calculations
  • Reduces the risk for overestimating or underestimating capacity to protect your bottom line
  • Maintains the balance of your network by using a systems-wide perspective instead of an individual-lease perspective
  • Provides visibility into your network at a granular level for enhanced analysis
  • Lets users see which lease-station combinations are most profitable
  • Enables running multiple scenarios to assess the profit implications of the introduction of new stations, pipelines, leases, and logistics providers into your network
  • Optimizes total loaded miles across your network
  • Enables a faster, more informed reaction to changes

This last point brings us to our next challenge with nomination volumes: Once you have nominated correctly, how do you assess your actual performance on a day-to-day basis and make adjustments to get back on track with your estimates? How can you adapt quickly to network fluctuations and maintain optimal profit margins? Stay tuned for the next phase of our discussion.

For more information about LCO, please email us at


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