“Use the budgeting process to drive alignment across your organization. While it is easy to look at budgeting purely as a financial exercise, the most important part of the process is using the financial plan as a way to represent the organization’s goals and priorities and to use the planning process to drive alignment across the company on these issues.” –Chip Hazard, General Partner at Flybridge Capital Partners. This is a powerful concept in today’s commodity market. It’s critical for E&P companies to maintain discipline and do exactly what they budgeted for. This can only be achieved when the entire organization has access to their accounting data.
Is your accounting system good at transaction, but not reporting?
Is Operations able to get reports from the accounting system on their own without having to rely on someone else to pull the data for them?
Is your entire organization viewing the same real-time data to make effective and efficient cost saving decisions?
If you’re not able to answer yes to the questions above, it’s time to reassess your budgeting processes. Empower your organization so they can access data quickly. Give them a system where they are able to look at their specific AFEs and costs, easily and instantly.
Willson Beebe, a Financial Analyst at Concho Resources, shared his experience about turning individuals into informed, aligned and capable decision makers on a recent webinar.
“Most of my job for the past 5 or 6 years was actually pulling data. I had very little time left for financial analysis or analysis of any type. During the first couple of performance reviews with my boss, he noted, ‘Willson does a great job of pulling data, but needs to spend more time analyzing data.’ This was a huge concern. Now that Concho has a more advanced solution to perform AFE analytics, most of my job includes showing people how to pull their data. That’s the really neat part for me. I have given the ability for hundreds of people to get their own data, do their own research analysis, which is way more efficient than having one person do it for hundreds of people. It is very user friendly, and was very quickly adopted by multiple users across the business – land guys, drilling guys, completion guys, field guys, office engineers, management, financial analysts. It’s great to have one place to go where anyone can look at their actual spend, field estimates, and budget for 1 or 100 AFEs all in one place.”
Willson recognized an inefficient process that hindered departments across the organization. They weren’t able to see detailed capital expenditures in a timely manner. Understanding the importance of a reliable accounting process, he enabled the entire workforce to view real time data in any modifiable view that’s pertinent to their role. He also redefined expenditure review by giving users access to start at the top of expenses and drill down to the actual invoice. All users are now able to make smarter business decisions that impact the bottom line. “They are able to answer their own questions about actual vs. budget and if their field estimate is trending higher than I expected it to. Being able to hone in on each well and its expenses quickly is a very powerful concept in the today’s commodity market. The more eyes you can put on your AFE expenditures, the more your organization will take action to optimize your CapEx and stay on budget to achieve company goals.