Part 3: Mine Your Data to Optimize Revenue and Expenses
This blog series was intended to give the C Suite and other senior leadership a quick start guide to boost short term cash flow and set your organization up for the longer-term benefits of intelligent production operations. So far, the 3 Point Blueprint to Immediately Boost Operator Cash Flow has underscored the vital importance of your field production teams and why starting a conversation today and investing in them is crucial for finding the low hanging fruit that will increase production and cash flow.
In addition to optimizing production, accurately booking reserves & accruing for inbound revenue (volume) & expenses is also key to uplift your margins. Your operated and non-operated data holds the key to optimize both revenue and costs, the topic of today, and the last point in the blueprint.
Create the Right Data Management Culture
Within every oil & gas company exists the vast potential to improve cash flow leveraging existing information about assets and production, yet it is all too often trapped in data silos or the data is simply underutilized. To unlock this revenue-generating potential, take the time to automate processes and empower the right resources with data management and QC tasks.
- Automate production workflows – Wherever possible, automate your manual production tasks across your organization to free up time for those techs and staff to find, validate & analyze your data. Don’t assume that it’s already been done, because often those tasked with automating workflows have job security concerns that interfere with that automation. Demonstrate that automation frees them up to analyze vs input the data.
- Free up production engineers – Do a quick engineering process review & find out if your production engineers are doing true engineering, rather than preparing AFEs, county courthouse visits, endless slide decks for leadership, etc. If so, free them up to do what they love & give them the production data to do it. They will find the best opportunities if they have the time & the data.
- Find your data analysts – In every organization, there are several (although often quiet) data junkies who feed on data analysis projects. Get them engaged to find the best production cash flow projects across your operations. There are hundreds of them waiting to be discovered and analyzed, but just waiting on someone to have the time to research.
- Validate the data – Spend a little time empowering your IT, field operations, and production accounting teams to identify where opportunities exist to clean the data. Very often, over time, teams build data correction into their daily routine, rather than validating it at the source. Cash flow generating data analysis depends on the quality of your data and the simple yet effective processes that validate it and keep it clean.
- Remember your reservoir engineers – Every volume and process improvement that improves the data makes your reservoir forecasts better. And better forecasts mean more accurate cash flow & financial projections. It pays to invest time & energy into automating & validating this data.
By engaging your teams (engineers, analysts, IT, and newly identified data analysts) your organization will be more prepared than ever to quickly compile a list of the best opportunities to immediately boost cash flow for minimal capex/LOE.
Leverage Your Non-Op Data!
One of the most under-utilized opportunities for cash flow in the organization is non-operated production & drilling data. Daily or even monthly non-op data can be utilized to improve critical visibility into your cash flow, reservoir forecasts, and accruals. However, this vital data is often poorly circulated among partners with many operators prioritizing well data management for their operating assets over wells they only have a working interest in.
Your non-op data is critical in many ways that can boost or optimize cash flow, including reconciling revenue paid vs production volumes, improving reservoir production forecasts for non-operated wells, and improving revenue accruals for non-operated wells. Timely access to non-op data is also critical to identify risks associated with shut-ins or curtailed production.
Exercise your rights to your non-op data by working directly with your partners to obtain the data you need or participate in free or low-cost reciprocal data sharing/trading networks (such as PDS, etc.) to deliver non-op data right into your well database.
Looking to the Future: Intelligent Operations
When it comes to intelligent production operations, there are many opportunities to maximize production using new and existing technologies, data science, and curated data. However, in every case, the production data process is more critical than the technologies. That is because even the best technology that runs on poorly validated or curated data yields wrong conclusions and poor well results. Start with the basic foundation for accelerating the flow and validation of production data sources, laid out above, and your Intelligent Production Operations projects will have a much better chance at success.
That wraps up this series on how senior leaders can take immediate action to boost cash flow for their organization. If you missed it, be sure to read the introduction to the 3-point blueprint, which delves into my 30-year journey in the oil & gas business, my experiences building intelligent production operations, and lessons learned. If you have any questions, please reach out to me or the W Energy Software team.
|Kevin Decker, President PEAKE, LLC. Kevin Decker has nearly 30 years of experience with independent E&Ps, building and leading teams in the space where finance, field technology, and operations services converge. His extensive experience includes optimizing field production processes, developing best-in-class M&A integration processes with 135 acquisitions in 10 years, and optimizing drilling efficiency and base production by applying data science and analytics to operations support center challenges. Kevin is President of Peake, LLC, an energy, technology, and management consulting firm. He spent the bulk of his career at Chesapeake Energy where he held various senior management positions, including Director of Intelligent Production Operations, Director of Integrated Field Operations, and Director of Operations Data Services. Kevin earned a B.S. in Accounting from Oklahoma State University and is a Certified Public Accountant.