Companies that hope to thrive (or just survive) in the new reality of low energy prices need to adopt a culture of cost control based on new ways of thinking as well as new tracking tools and technologies.
One major area of vulnerability for most organizations is the potential for project costs to overrun because of poor AFE cost management, estimates, and reporting. Did you know that only 19% of oil & gas projects finish on budget, and most mega-projects exceed their budget by 59% of the original estimate? Now, obviously there are any number of things that can go wrong on a project that are outside the estimator/project manager’s control, but there are still a number of ways to improve estimating and cost management before costs start to overrun.
If this isn’t something you’ve already started to address, you’re behind the curve. Advances in big data & analytics make it easier (and cheaper) than ever before to identify, manage, and wrangle project costs before they become a major problem for you and your team.
The Entrance Big Data & Analytics team just released an eBook, “Taking the Guesswork Out of AFE Reporting” that covers 7 of the biggest AFE cost management vulnerabilities in your organization’s current AFE management process, and provides 4 examples of dashboard-driven AFE cost management systems that have been successfully implemented by others in the industry:
EXECUTIVE DASHBOARDS
Failure to control supplemental spending will eat into your ROI, and hurt your company’s ability to attract future capital. Scrutinize every dollar to demonstrate the highest possible operating efficiency.
Page 27 in the eBook demonstrates how to save yourself time with high-level dashboards that highlight how current and historical spend by AFE, Region, and Field are tracking against their plans.
FIELD SUPERVISOR DASHBOARDS
When you are responsible for the cost and performance of your regional assets, it is essential that you have the data you need to monitor and correct the performance of the AFE managers in your fields.
When you turn to page 32 in the eBook you’ll find a sample dashboard with a field’s-eye-view that will provide useful insight to alleviate many of your most common challenges.
AFE MANAGER DASHBOARDS
Creating estimates and managing AFEs is a complicated process. With so many moving pieces and costs to track for each well, creating an accurate cost estimate can require as much engineering as the well itself.
Flip to page 38 of the eBook to see how to get a snapshot view of the current performance of your entire AFE portfolio, and use diagnostic tools to estimate costs in near real time.
FINANCE/ACCOUNTING DASHBOARDS
It can be an all-consuming process to track down all the different spreadsheets and reports you need to manage AFE funding risk and ensure that projects meet their internal rate of return estimates.
Page 45 of the eBook will show you how to build a highly intuitive visual tool to ensure that AFE accounting is current and accurate and identify which AFEs present the highest risk.
