Just Because Everyone Uses the Same Plant Accounting Doesn’t Make It Right
As a Certified Public Accountant with 28 years of accounting experience, I’ve seen a lot and learned much on my journey in the energy business. That journey began at Yates Petroleum and Agave Energy Company (a Yates subsidiary) where I held accounting and management positions for more than a decade. My experience also extends to information technology and auditing of various industries.
Ever heard the proverb “no one ever got fired for choosing IBM?” IBM in this cautionary story means a status quo solution, the safe choice, not necessarily the right choice. But you pick it because it is safe, there’s a legacy there that brings with it comfort in knowing that at least it will still be around in ten years even if it’s not perfect.
It’s the same way for many pieces of software in the oil and gas business. Companies tend to pick an accounting solution or ERP on the grounds that it must be right if almost everyone uses it. And these solutions have been around, and I mean really around for decades, so that makes them even safer choices, right?
Sometimes you only have one option. For a long time at Agave, that’s what I thought. We picked the status quo plant accounting solution because, truth-be-told, it was our only choice… at that time. But when a superior solution presents itself, that’s when you need to ask yourself whether sticking with a legacy solution is worth it.
We struggled continuously with the status quo plant accounting solution at Agave for three full years. Every service provider is different, and we were no exception. No one ever told Mr. Yates that we could not settle our month because a plant was down, or a when compressor failed. We built optionality into our DNA, creating a backup to each chain and link in our value chain and a backup to the backups. The problem is that the legacy solution could never be correctly configured to our business needs and we never once settled our month correctly with the software. Not in THREE YEARS, and even after spending big for the pleasure.
The problem with the status quo plant accounting provider is threefold: 1) their software is old and brittle, not flexible enough to adapt, 2) settling the month always required heavy lifting and workarounds, and 3) they saw us as a small fish, not worth their full attention even though Yates was the single largest federal leaseholder in the US – bigger than ExxonMobil. Their loss.
Just because everyone uses the same plant accounting solution doesn’t make it right. And we were poised to find the alternative to the legacy provider that would prove to be a game-changer. Challenging the status quo and giving others a chance is the second lesson. Stay tuned for more of my quick life lessons in this blog series and visit www.wenergysoftware.com for more information on replacing your legacy solutions.
|Kevin Throneberry, Kevin Throneberry is a Certified Public Accountant with 30 years of accounting and information technology experience including auditing of various industries and 13 years accounting and management with a midstream oil and gas company. Co-leader of Section 355 Tax-Free Spin of the company reducing tax liability by 150 million dollars. He recently secured one of the top three multiples for mid-stream sales and mergers. Kevin has extensive knowledge and skillset in W Energy Software mid-stream products, TIPS Gas Processing, QCM Contract Management, PGAS Gas Measurement, and IBM Cognos.