“Oil & Gas organizations are fighting for greater cost and operational efficiency and see a necessity for people, process, and technology to converge to do just that” from the 2016 BPOG community research report. Over 50 Oil & Gas customer organizations collaborated with The Eventful Group to identify the most critical areas of focus in 2016. An important issue of focus will be data visibility for agility. There’s a need for accurate reports that deliver actionable intelligence for quick decision-making capabilities. Strong and trustworthy data visibility allows leaders to make real-time decisions, driving efficiency.
It’s impossible to make effective changes or improve processes without the ability to see your well’s economic well-being and production activity. Timing is also critical in accessing the data. Without viewing current information, you’ll never have the opportunity to make cost effective improvements. Easy access and accurate data will allow you to stay on budget and achieve business initiatives.
Imagine being able to instantly drill down to all of the expenses for your wells and view each invoice without having to request accounting for information and not receive it in time for your decision-making. This type of data visibility allows you to audit each expenditure to ensure accurate billing.
Production Technologist at a Leading E&P company in the Permian Basin gains access to previously hard-to-get invoices, and implements a new process that reduces expenses. If each user at our customer company used Seven Lakes’ analytics solutions in the same way, the company would save at least 1 million dollars per year!
Here’s what he had to say:
“After we were looking at some of the invoices through our LOE solution, I decided to take a broader look and I probed into an invoice that had been approved that week, it was $437.14. It got charged to us by mistake and we had it reversed. It was easy to find this discrepancy because we were looking at invoices by the approver name. I caught somebody’s name that I didn’t recognize and sure enough it was an innocent mistake, they have a Clark well and we have a Clark well. They billed it, we paid for it, but we had them reverse it. 437 bucks…shoot! We’ll take that all day long! So, that got our juices flowing and we plan to scrutinize and police the invoices on a regular basis now because those kind of mistakes can happen all day long. There are a lot of invoices processed every day, so there’s a lot of opportunity for error. It was just too easy to find, so now I’m going to probe more.”
Imagine the entire organization viewing the same data and working together to decrease costs. This type of collaboration results in the capability to improve production and make a positive impact on cost, revenue, and overall profitability of underlying assets.
A Surface Land Manager at an E&P company in the East Texas/North Louisiana region taps into Seven Lakes solutions daily, discovers a sizeable expense and significantly decreases cost.
The company purchased some oil assets that included a midstream gas gathering system. These assets included 3 gas wells that were technically outside of the major part of the purchased oil area. The economics on the gas gathering system at current gas prices were upside down since the cost to transport the gas was $5-$6/mcfe while the revenues were a mere $2-$3/mcfe minus a 25% royalty payment. They were losing an astronomical amount of money because of these great expenses.
Marketing/Accounting knew that wells were losing money but they chalked it up as cost of doing business and didn’t realize that there were ways to decrease the costs. You just don’t know what you cannot see. Without a way to view the expenses, Land Operations had no idea how much these wells were costing the company. One of the wells was costing $100K per month while the others were $30K/month! At $100/barrel, the phenomenon was camouflaged with profits from the oil produced, but with lower oil prices, they could no longer afford to spend more on getting rid of the gas.
By using the an LOE analysis tool to view the expenses they were able to look for solutions from the land side. They worked with the regulatory team and railroad commission to make operations more flexible and minimize costs. Since November 2015, they have saved hundreds of thousands of dollars and will save anywhere from $2-4 million per year.
He shines more light on why he did what he did.
“During this downturn, we want to make sure that we are operating economically on a well to well basis. We attribute the cost savings to just having this detailed view on our dashboard. From my perspective in the field, we have saved hundreds of thousands of dollars. So, it’s been a great tool for what it’s been used for.”
Strong and trustworthy data visibility allows leaders to make real-time decisions, driving efficiency. By utilizing technology and focusing on collaboration, the company views the same reports, improves operations in the field, and reduces the cost of compliance. With wells being the heart of the organization, operations must ensure that processes are strong and in optimal health to ensure maximum productivity. A well’s bloodline is the data that it generates. The way that this data is collected, analyzed and acted upon ensures a resilient well that produces at maximum capacity at the lowest possible cost.
To learn more, visit www.sevenlakes.com.