The importance of using industry-specific software for reserves management

By Craig Burden & Doug MacDonald, aclaro softworks inc.

Reserves 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, in order to give the clearest picture of a company's reserves. And yet, the methods used are not always representative of industry best practice, the easiest, or the most secure.

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 to these usual methods, such as a lack of security, losing track of current versions, and having to update calculations manually when there are changes to the requirements of external reporting. Because reserves management isn't always used throughout the year, the regular pain points are forgotten until reporting season comes around.

These pain points can be eased by using oil and gas-specific commercial reserves management software. Effective reserves management allows for efficiency, accuracy, auditability, and accountability.

Reserves management software 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 for reserves management.

Oil and gas-specific reserves management software is also 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 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.

Some of the things that reserves management software can bring to your process, that the usual solutions might not, are 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 certain 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.

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.

Small companies should also consider specialized software earlier on, keeping growth potential in mind. Many reserves managers who started out when their companies were small found it more difficult to make the move to industry-specific software later on. 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.

The best way to ensure a successful transition is to partner with a trusted provider that knows your needs and can present you with the right solutions. Some key things to look for from your reserves management software provider are:

  • the expertise to support you during the transition process
  • the ability to configure your system to bring an effective balance of familiarity and function
  • the experience and knowledge to help find ways to improve your reserves management processes
  • the ability to help you leverage your reserves data not just for annual reporting, but for company and bank valuations, along with business planning
Many reserves managers are tied to their usual methods of reserves management, whether it is through Excel, legacy systems, company-specific solutions, or any sort of combination of the above. Switching to a commercial reserves management tool lets you focus on what you need to do. When reserves management is no longer the cumbersome task that it may have been for your company, you can reduce your cycle times and increase the frequency of your reporting, in addition to gaining a clearer picture of your reserves for when you do business planning.

A version of this article was also shared with the attendees of REU Houston 2016.

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