Top 5 Benefits of Integrated Reserves & Resource Management for Energy Companies
Author: Craig Burden & Doug MacDonald, Aucerna
(NOTE: the opinions expressed in the blog do not represent legal or regulatory guidance but are intended for information and to stimulate discussion only.)
Reserves and Resource Management is a key part of oil and gas company operations. What used to be an annual or semi-annual process is now performed several times throughout the year, to give the clearest picture of a company’s reserves. And yet, the methods inherent in the common way of managing reserves are not always representative of industry best practice, the easiest, or the most secure.
Risks to Common Methods
For many managers, Reserves Management may start with an Excel spreadsheet: it’s familiar, easily customizable, and readily available to anyone who may need to see or edit your spreadsheets. However, there are risks and inconveniences to these usual methods:
- Lack of security: Not sure if someone has touched the numbers since you last saw them, or changed a formula in a random cell? Excel does not have the security and different version sections a secure system can provide. A secure system locks down your business logic and workflow, controls who can access what data, and shows the changes made by different users.
- Losing track of current versions: Data management has been a key phrase for at least 20 years in E&P, and yet many companies continue to rely on shared drives and renaming files to manage their changing data. A fully compliant system will be able to store all the data in a single place and allow easy access to any version of the data you’ve stored.
- Manual calculation updates: Market fluctuation, operational conditions in the field, and changes to external reporting requirements call for updates that, when done manually, rob organizations of time and even accuracy.
- Reporting in isolation: When your Reserves Management process is merely a regulatory reporting activity that is not tied to other parts of the business, organizations miss out on understanding the impact of different planning scenarios on the future value of reserves.
Luckily, it’s 2018, and many enlightened operators have found a better way to ease these pain points with an enterprise Corporate Reserves Management Solution.
Effective Reserves Management allows adaptability, efficiency, auditability & accuracy, workflow simplification, and integration:
A Reserves Management solution is built specifically for the needs of E&P companies. This software is designed to manage your reconciliation, approval, and reporting processes. It can be highly configurable and is constantly evolving to serve the changing needs of Reserves Management.
An effective corporate reserves solution is developed to handle the data and workflows required for Reserves Management. Changes are tracked, can be reverted in the event of an error, and can frequently be automatically reconciled without the need for time-consuming manual balancing. It can also be configured to integrate data from different sources, generate internal and external reports, and manage the approvals process along the way.
3. Auditability & Accuracy
Given current market conditions, many lenders and investors are even more concerned about a company’s ability to provide repeatable, auditable, and verifiable reserves numbers. This information may prove difficult to provide and defend without a strong Reserves Management system and rigorous reserves analysis, capture, management, and reporting processes and practices. Enterprise Reserves Management and reporting solutions bring added security, the ability to automate your reserves process, and a full audit trail. A commercially built Reserves Management solution allows you to control access for users, save time and effort where needed via automation where appropriate, and keep the accuracy and accountability throughout the reserves process by capturing all the changes made.
4. Workflow Simplification
Deploying new software also provides opportunities for companies to review their processes and workflows to see if there are opportunities to improve them, such as simplifying them. If a company has different processes for different assets, it is important that they review those processes and see if there’s really a reason for the differences. If the primary reason is “that’s how it’s always been done”, then it might also be a good time to bring the different processes in line with each other (i.e. adopting best practices). Supporting lots of different processes can be accommodated, but it adds complexity to the solution which will potentially make it more difficult to understand, maintain, and verify.
A Reserves Management system should not be a stand-alone application that is dusted off once a year for reporting requirements. It should be interconnected with your business planning and portfolio management tools, to provide insights into your reserves position and changes anytime throughout the year. A tightly integrated system can manage the transfer of data in minutes, compared to manual processes which could take days or weeks.
To gain these benefits, it’s vital you partner with a trusted provider to ensure a successful transition of both technology and processes. They must be able to fully understand your needs, and present you with the right solutions. Some key things to look for from your Reserves Management solution provider are:
- System Expertise: providers should have the ability to configure your system to bring an effective balance of familiarity and function
- Process Improvement Best Practices: they should have the experience and knowledge to help find ways to improve your Reserves Management processes
- Consulting and Technical Support: they should be able to support the team when required throughout the transition process
- Integrated Planning and Reserves: Ideal reservoir management solution is integrated with the planning process, giving you the ability to leverage your reserves data not just for annual reporting, but for company and bank valuations, along with business planning.
Breaking the Mold
Many reserves managers are tied to their usual methods of Reserves Management, whether it is through Excel, legacy systems, company-specific solutions, or any combination of the above.
When your organization requires complete reserves lifecycle management from asset level reserves evaluation to corporate roll-up, reconciliation and reporting, switching to an enterprise solution for corporate reserves tracking and reporting should be considered to stay ahead of the competition. When Reserves and Resource Management is no longer the cumbersome task that it may be for your company, you are guaranteed to reduce your cycle times, increase the frequency of your reporting, and gain a clearer picture of your reserves to incorporate into strategic forecasting and the planning process.
Learn more about how 3esi-Enersight is helping 400+ operators around the world of varying size and complexity make better decisions with integrated strategy, operations, and reserves.