Do you dread updating monthly performance forecasts? Often, the effort required to gather and coordinate data from Field Estimates, Accounting, Economics, and AFE systems is painstaking and keeps you from working on more valuable activities.
Hello
The good news is, modern technology provides you with digital tools and the right petroleum resources that are readily available through next-gen software, so you’re never held back by these concerns ever again. This equips E&P professionals, like yourself, to succeed all year-round, in every job position, and in each stage of the performance-tracking process.
In this blog, we’ll identify the 4 Stages of Performance Tracking and discuss some of the common issues that arise. We’ll also discuss the top solutions your company should employ to better understand changes to production and cost forecasts now and into the future.
Stage #1: Comparison Point – the Data Snapshot that Represents Budget Commitments
General Overview: From a performance management perspective, you need to have a starting point to refer back to in order to measure and understand change. Typically, this is the approved plan or Budget Commitment that you and your team signed off on at the beginning of the budget cycle. The plan contains all the cash flow expectations, but most importantly, the timing for capital spending and production start date and rate.
Common Issues at this stage: For performance tracking, efficient updates and comparisons start with fundamental organization. A structured and efficient data management strategy is needed to:
- Store and secure all of the input and economic results data.
- Allow users to continue working on updates without overwriting approved data.
- Be able to access the snapshot regularly to easily facilitate comparison to updates for analysis.
Stage #2: Consolidating Economic Forecasts, AFE Estimates and Actual Spend from Accounting, Then Updating the Capital Forecast
General Overview: Effective Performance Management brings data together from the Economic Forecast, AFE System, and Accounting Actuals in one place to make forecasting the remaining capital much more efficient.
The engineers responsible for spending capital have a better handle on project control with a clear picture of what has happened along with remaining capital commitments. Financial analysts can then make better decisions with access to up-to-date project forecasts.
Common Issues at this stage: The data required for updates comes from multiple sources, which often leaves your company’s engineer with no choice but to use spreadsheets to collate the information required to assess performance and forecast remaining capital requirements.
This process is disjointed and takes time away from other valuable activities the engineer is responsible for. Well-managed performance-tracking makes it easier for the project engineer to complete the work and can reduce cycle time so that financial models can be updated much faster than using legacy software.
Stage #3: Updating Production Forecasts and Type Curves
General Overview: Another important aspect of performance tracking is monitoring the new production that is generated by Capital Projects.
In other words, what did I get for the capital that was spent? Does the production rate of the well meet forecast expectations and will I generate the cash flow (and returns on capital) that was predicted?
Production is monitored closely over the first few months after it starts and the forecast is updated to reflect actual performance. The type curve might also be updated if your well performance deviates from what was predicted.
Common Issues at this stage: Integration to systems containing daily field and monthly actual-production data helps to ensure that efficient forecast updates can take place.
What becomes more difficult is ensuring that information from newly drilled wells can be used first to update type curves and then, update the forecasts of future wells that are dependent on that type curve.
Stage #4: Understand Variance to Plan
General Overview: With complex projects, it’s sometimes difficult to pinpoint what causes variance compared to plan so that you can quickly react and keep things on track.
You need to identify what variables are important, quickly calculate the difference between the current project update and what was expected, then use that knowledge to adjust your future course-of-action. You have to share this information so that finance can adjust if required, and senior leaders know exactly what’s happening in the organization.
Common Issues at this stage: It can be difficult to easily generate information around variance if you don’t use a system that allows you to quickly reconcile between two economic assessments. The dataset needs to be granular enough so that you can drill into it to pinpoint specific deviations at the well level.
Visualizing the data with reports and graphs helps you quickly understand the situation and decide if mitigating action is required. Additionally, efficiently sharing the right data with BI tools can be difficult if your system doesn’t allow you to separate and normalize the right information.
Drive Company Performance with Modern Oil & Gas Software
With all of that said, you’re probably curious about the impact modern software can have on the performance tracking process and how you can drive success despite these common issues. The truth is, modern software is the only solution that addresses all of these problems with efficient solutions that enable your entire team to experience success.
Here are just a few of the benefits of employing next-gen software:
- Modern software can manage data at any stage of life, including resource inventory point.
- Users can easily access all of the different project plans and stay informed on current performance.
- You gain access to all data, including information from the field, accounting, production, and AFE systems.
- Rather than stitching together data from multiple databases or from a collection of applications claiming to be integrated, a unified system can easily produce up-to-date information.
Getting Started with Performance Tracking
If you’re ready to realize all of these results and more, MOSAIC is the ideal solution to consolidate and simplify data that will make your engineering, planning, and reserves forecasting processes more effective. Producing accurate and timely forecasts and executing efficiently on them will allow you to experience optimal performance and support your business' success.
See for yourself why successful companies are replacing their legacy systems with MOSAIC when you request a free demo today.
