Raiders of the Lost AFE Better Capital Management with an integrated AFE solution. Jeff Clement, P.Eng. Product Manager AFE Navigator and esi.

Transcription

1 Raiders of the Lost AFE Better Capital Management with an integrated AFE solution Jeff Clement, P.Eng. Product Manager AFE Navigator and esi.execute

2 Why do we care about AFEs? Authorization For Expenditures Ensure our capital expenditures are sufficiently approved before spending Great tool for communicating with internal and external (partners) stakeholders Natural reporting point for budget vs. actuals Volume! Many companies push through hundreds of AFEs per month Many hands on each AFE Tracking AFEs can be cumbersome! Efficiency gains on AFEs can make a real difference

3 Overview 1. What are some common problems we see today? 2. How can those problems be alleviated with an integrated AFE & Capital Management solution? 3. Buy vs. Build vs. BPM?

4 Who is this guy? Product Manager for AFE Navigator and esi.execute at 3esi-Enersight AFE Navigator is the most popular Oil and Gas AFE management solution on the market Jeff Clement, P.Eng. Working on AFE Navigator for just over 15 years

5 Where the are my AFEs?!! File Folders? Network Shares? ? AFE Coordinator??!!

6 There are your AFEs! Not in your ERP system! AFE System is a centralized store of all AFE and AFE data One common place to look for the latest version of your AFEs

7 Better Visibility

8 Better Visibility Users see the data they need to see: Operational (Tasks) What do I need to approve Informational What does AFE budget vs. actual look like in my area? Customizable Dashboards - make it your own Integrate AFE data directly into corporate reporting and dashboard solutions APIs Open Schemas No hunting for AFEs!

9 Keep Track of the Important Dates Response Required Dates Especially contractually obligated ones! $$$ Project Milestones

10 Mobile Access Approve AFEs Waiting at the airport Between meetings Stuck in a commute* Multitasking while sitting in a talk about AFE software Business Trip Avoid cost of delegations when travelling for work Avoid AFEs stuck waiting for your return Monitor the status of your AFEs wherever you are Roaming the office Free-ranging out of the office * Assuming you are the passenger!

11 One system for your AFEs Single source of truth Single source for reporting Everyone can find the latest information Everyone can see the AFE from anywhere No digging for information

12 Is your AFE process running efficiently? Lost AFEs? Slow Approvals? Manual Steps? Incorrect Information? Suboptimal Workflow?

13 Spend Less Time Managing AFEs Tracking down AFEs Collecting Signatures Data Validation Updating Dependent Systems Building Reports Supplement Alerts Data Aggregation Notifications to JV Preparing Partner Packages

14 Spend Less Time Managing AFEs Tracking down AFEs Collecting Signatures Data Validation Updating Dependent Systems Building Reports Supplement Alerts Data Aggregation Notifications to JV Preparing Partner Packages

15 Fine-tune the Process

16 Optimization You can t optimize a process without metrics Ability to capture and report on timing information about workflow steps is critical Optimize through: Adjusting workflow (removing steps) Parallelization Additional notifications or escalations Flexibility of in workflow and notification is key

17 Integration AFE systems naturally tie to: Accounting Systems Well File Document Management Systems Corporate Reporting Avoid duplicate data entry Avoid entry mistakes Avoid inconsistent data between systems Flexible integration tooling is important for building the right integration for your workflow.

18 Efficiency Automating the workflow is a huge gain You can t optimize what you can t measure Flexible workflow tools enable optimization Integration to avoid duplicating work Scalability of your process

19 Are capital controls being followed? Spending Before Approval? The Right Approvers? Sufficient Approval Authority? Audit Trail?

20 Are capital controls being followed? AFE System should assign approvers based on rules Approvers by $, AFE Type, Area, Business Unit, Consistency and elimination of guesswork and shortcuts Supports Regulatory Requirements (SOX) Audit the system instead of all your AFEs

21 Audit History Detailed history of changes to AFE information What did the approvers approve? Detailed audit history of changes to system configuration and business rules Are changes to the system being properly administered? Trust the system but be able to inspect it at any point and verify behaviour

22 Supporting Capital Controls Consistent Enforcement of Rules Supports Regulatory Compliance Activities Audit History for AFEs & Business Rules

23 Are AFE owners accountable for spending? Visibility into Spending? Overspends? Supplements? Improve Estimating?

24 Monitor Budget vs. Actuals vs. Field Estimates Consolidate AFE spend information in one system Give AFE stakeholders visibility into spending (actuals / field estimates) Without requiring access to other systems (accounting, etc.) Identify overspends sooner Issue supplements sooner Identify patterns and improve estimates over time

25 Accruals Field estimates and actuals in one place Accruals! For many, this is a manual process in Excel Allowing the AFE / Capital Management solution to do this: saves time makes the process reproducible

26 Spending & Accountability Budget vs. Field Estimates vs. Actuals Better Visibility into Spending Identify Overspends Sooner Raise Supplements Earlier Accruals

27 Can you accurately forecast your projects? AFEs driven by Budget Monthly Forecasting / Reforecasting Budget vs. Forecast vs. Actuals? AFE actuals inform Forecast?

28 Forecasting Capital Projects Should be Regularly Forecasting & Reforecasting Capital Projects AFEs are an integral part of this process AFEs should be linked to the appropriate project budget AFEs should inform your forecasts

29 A Capital Management Workflow Field Development Planning Activity Scheduling Network Optimization Economics Uncertainty Analysis Scenario Analysis

30 A Capital Management Workflow Field Development Planning Activity Scheduling Network Optimization Economics $100m Short Term Budget Budget Forecast Actuals Uncertainty Analysis Scenario Analysis

31 A Capital Management Workflow Field Development Planning Activity Scheduling Network Optimization Economics Short Term Budget $100m $90m Budget Forecast Actuals Uncertainty Analysis Scenario Analysis

32 AFE Info AFE Actuals A Capital Management Workflow Field Development Planning Activity Scheduling Network Optimization Economics Short Term Budget $100m $90m Budget Forecast Actuals Raise AFEs Approvals & Notifications Uncertainty Analysis Scenario Analysis Accounting

33 AFE Info AFE Actuals A Capital Management Workflow Field Development Planning Activity Scheduling Network Optimization Economics Short Term Budget $100m $90m $110m Budget Forecast Actuals Raise AFEs Approvals & Notifications Uncertainty Analysis Scenario Analysis Accounting

34 AFE Info AFE Actuals A Capital Management Workflow Field Development Planning Activity Scheduling Network Optimization Economics Short Term Budget $100m $90m $110m Budget Forecast Actuals Raise AFEs Approvals & Notifications Uncertainty Analysis Scenario Analysis Accounting

35 Forecasting Done Wrong Total Project Budget: $1.1M Starting Forecast JAN 2017 FEB 2017 MAR 2017 APRIL 2017 MAY 2017 JUNE 2017 JULY 2017 $500,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 + Actuals Not = JAN 2017 FEB 2017 $700,000 $200,000 New Blended Forecast JAN 2017 FEB 2017 MAR 2017 APRIL 2017 MAY 2017 JUNE 2017 JULY 2017 $700,000 $200,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 Total: $1.4M

36 Blended Forecast and Actuals Total Project Budget: $1.1M Starting Forecast JAN 2017 FEB 2017 MAR 2017 APRIL 2017 MAY 2017 JUNE 2017 JULY 2017 $500,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 + Actuals JAN 2017 FEB 2017 $700,000 $200,000 = New Blended Forecast JAN 2017 FEB 2017 MAR 2017 APRIL 2017 $700,000 $200,000 $100,000 $100,000 $100,000 Total: $1.1M

37 Forecasting & True Capital Management Budget Capital For All Capital Projects Raise AFEs tied to the Budget Forecast Capital Projects Regularly Blend AFE Actuals and Forecast Understand Your Cash-flow Requirements!

38 Will your AFE solution grow as you do? Homegrown? Off-the-shelf? Configurable Off-the-shelf? Customizations? BPM?

39 Off-the-shelf vs. Homegrown vs. Customized Off-the-shelf Cost Features Upgrades Off-the-shelf Homegrown Customized OTS Cheapest Simple Implementations Compromise Change business to match software Simple Software improves over time Huge up-front development fee Exactly what you want! (time and budget permitting) Developers move on & knowledge lost over time Solution stagnates Software licensing fee + moderate implementation fee. Almost what you want Some compromises Customizations locked to old versions Expensive to move customizations forward

40 A better way ~ Flexible / Configurable Software Emphasis on Configuration not Customization Customization means you have code unique to your environment. Configuration means you are using vendor tested code common to all. Start with a recommended workflow Tweak workflow to model your business requirements without custom development Vendor takes on majority of testing burden for new releases Maintain flexibility when you business changes! Lowest overall cost of ownership

41 Does what you want? Kinda Yes! The Workflow Software Continuum The Pitch Customized Homegrown Off-the-shelf $ $$$ Implementation Cost

42 Does what you want? Kinda Yes! The Workflow Software Continuum Implementation Configurable OTS Customized Homegrown Off-the-shelf $ $$$ Implementation Cost

43 Does what you want? Kinda Yes! The Workflow Software Continuum 5 Years Later Configurable OTS Customized Homegrown Off-the-shelf $ $$$ Implementation Cost

44 A Future-Friendly Solution Favor Configuration over Customization Take Advantage of Technology Shifts Ensure Software Can Evolve With Your Business Maintain Your Agility

45 Summary Where the are my AFEs?!! Single source of truth for AFEs and AFE information No lost AFEs Is your AFE process running efficiently? Faster AFE creation to approval times Less hands-on time for AFEs Are capital controls being followed? Automatically enforce capital controls Audit the system and not each AFE Are AFE owners accountable for spending? Visibility into spending builds accountability Identify overspends sooner! Can you accurately forecast your projects? Monthly reforecasting of projects Properly blending actuals and forecast Will your AFE solution grow as you do? Configuration over Customization Minimize total cost of ownership

46 AFE Navigator - Testimonials The move to AFE Navigator led to a redesigned and much improved AFE process Manager of Technical Systems SM Energy The response to AFE Navigator has been very positive. Since implementing it last year, we ve seen fewer errors caused by manual use and are very happy with its ease of use. The peace of mind I get from being able to trace where an AFE is at is immeasurable. Jane Baker, Joint Interest Analyst SemCAMS ULC After examining our AFE situation and the pain it was causing, I knew it was time for an upgrade. With my prior experience with AFE Navigator, I knew it was the best option available, and once implemented, the improvement was dramatic. Our process is now much more transparent, we re able to plan better, and things are getting approved faster than before. Mitch Huitema, VP Finance Novus Energy Inc.