We’re taking advantage of the lull in activity as an opportunity to further prepare and enhance our own Oilfield HUB product line, and by extension, our client’s operations to be much better positioned from a cost and resources standpoint…

Some Time For Thought

Cut, cut, cut! That’s what we’re all hearing lately. Cut capital projects, cut operations and cut costs. We get it, but don’t get it at the same time. Sure we too have been impacted by oil prices hitting the tank. Projects have evaporated and clients have left our fold. Who hasn’t experienced the same thing? Nobody!

But we’re still bullish on the future of the industry and our Oilfield HUB product line. Why so? We all know sooner or later prices will recover, activity will pick up and we all will be looking over our shoulders and hope it won’t happen again. But it will. It’s cyclical or just a matter of time. But for today and the foreseeableable future, we’re more interested in preparing for the upturn in activity which will undoubtedly occur, be it this summer, fall, winter or perhaps sometime in 2016.

Here’s how we are preparing, and how we are working with Operators and EPCs in the HUB to position our products and services, and by extension our clients operations to do more with less, as prices recover and activity rebounds. Let’s face it, everyone is cutting costs today, and there’s definitely a direct human toll no one involved in the patch is immune to. We all have colleagues, friends and relatives who are now or will be sitting on the sidelines while commodity prices, inventory and geo-political issues sort themselves out. It’s not a question of if, as compared to the question of when.

We’re taking advantage of the lull in activity as an opportunity to further prepare and enhance our own Oilfield HUB product line, and by extension, our client’s operations to be much better positioned from a cost and resources standpoint when prices and the industry start to turn around. Again, it’s all about investing now in order to capitalize on how to do more with less in the future.

The Money Problem

Many exploration and production companies lack efficiency in the management of field expense processing, which leads to unnecessary and escalating project costs. Products covering upstream field report management currently in the market do not offer assistance in managing the ebb and flow of expense documents, including truck tickets and invoices. They are also way too costly and hence, unattainable for micro-junior, junior and budding intermediate companies due to high annual licensing fees and per diem report fees.

These smaller oil and gas companies resort to spreadsheets and manual log books. All parties involved in the management of a well cannot easily access data in these documents, nor is it easily filtered or tracked by those who are privy to them. Suppliers have no knowledge of what field supervisors are telling their head offices regarding approved vendor expenses incurred on a project. The field supervisor’s daily report is an essential component of the confirmation and approval of service invoices. Hence, any break in the chain of communication between the field, head office and their vendors can lead to double billing, duplicate billing, hiring the same service multiple times, cost overruns and poor time management, all resulting in an unfavorable rise in non-productive time and associated costs.

Regardless of their size, many exploration and production companies are using the same outdated systems and processes for cost tracking.

The Vendor Management Problem

Vendors offer services or products that are crucial in all facets of the lifecycle of a well. With each project typically involving 30+ vendors that the Operator is responsible for keeping track of, field supervisor’s days are constantly diverted inappropriately from essential and critical wellsite operations to reporting on actual operations and coordination of these vendors.

Regardless of their size, many exploration and production companies are using the same outdated systems and processes for cost tracking.

The major issue with these systems is the lack of traceable and auditable connections between the company and vendor in an electronic, real-time manner. This deficiency of accessible and centralized communication forces both parties to manage all information manually through phone calls, emails and their written notes. Consequently, information is lost and vendor invoices are often not reflective of the work that was performed, resulting in companies potentially overpaying for services, supplies and rentals.

The Solution

The lifecycle of a well involves collecting numerous engineering and status-related figures. Our recently released Oilfield HUB – Operations Report Manager (ORM) service provides a full suite of forms to record all events throughout the Construction, Drilling, and Completion phases of each well by the use of fillable forms simply accessed online through a web browser. But this in itself is not the game changer the industry so desperately needs.

Here’s the better way. A direct reporting connection with service companies is established through Oilfield HUB, and its related service plug- ins, both online and via email. Vendors receive an email notification of field supervisor approved expenses and have the ability to reply upon agreement of these expenses, or request a further change all before the invoice is generated. This element of authorization or rebuttal represents a new paradigm in operator-vendor communications. The real game changer!

The Oilfield HUB ORM, and our soon to be introduced Field Cost manager (FCM) service plug-in, are online reporting tools that consolidate all vendor communications and supporting information throughout the complete lifecycle of a well. The HUB is a universal platform that integrates all gathered information from a well and contains it in one, easily linked and accessible location. This is ideal for cost efficiency and communication among vendors, field personnel and head offices. With so many micro-juniors and junior oil and gas companies trying to enter the market, struggling to make ends meet or trying to grow their revenue, this software needs to be offered at a price that targets this market demographic.

It’s not what the market will bear, in our opinion, it’s what’s fair! IT costs are coming down all over the world whether it be hardware or application development. If we want to truly help operators do more with less, we can’t take a serious pound of flesh to do so. We have to be part of the solution at a price point the entire industry can

afford. And that’s the solution we are investing in during this downturn. We’re focusing our resources today on these pain and cost points all operators are experiencing at the end of service or end of well pertaining to the validation, reconciliation, approval and audibility of field expenses.

In manpower terms alone this is costing the industry on both sides of the fence millions of dollars each year. Is there a better way? Hell yes! There isn’t a better time than now to invest in our future, and by extension to position our client base to reap the benefits of this operations paradigm shift. The result? Operators and their vendors will be able to do more with less. Less may be the new reality, or perhaps just turn out to be a 2015 aberration. The game changer will be to do more regardless of where less ends up!

We are looking forward to weathering the storm and tackling this challenge in lock step with our Oilfield HUB clients.

Kevin Turko
CEO
Leadstone Group
403.537.6561

 This article originally appeared in the  

April 2015 issue of Oilfield PULSE