If you work in the oil and gas industry, the only thing you can be certain of is uncertainty. From fluctuating prices to unknown reserve volumes, to geologic fuzziness – working within the bounds of the unknown is par for the course. In 2024 now more than ever, this rings true. Gone are the days of unlimited capital from a variety of sources. Gone are the days of Tier 1 acreage with vast amounts of open acreage. While prices remain steady, cost of services have dramatically risen, making every dollar a battle for allocation.

How do we make a plan to move forward?

Some of the questions you may be asking yourself, or within your businesses are:

• How do you prepare for volatility in your business? It first starts by understanding your business at the most granular levels.
• What are the key levers that move your business?
• What inputs have the greatest influence on your assets??
• Are we prepared for a drop in oil/gas prices?
• What regulations most affect us?
• How confident are we in our Estimated Ultimate Recovery (EUR) projections?

But these are only a handful of the many questions that need to be asked in order to truly understand what drives your business.

Some things are in your control, some things are not. If we could accurately predict the price of oil or gas, trust me, I wouldn’t be writing out this blog! Prices certainly affect your business, both positively when prices are up, and negatively when prices are down. While hedging is a common strategy that many larger firms undertake, most energy companies don’t hedge all their volumes. This means that even the most hedged firms generally have a portion of their production unhedged, making it subject to all the underlying factors that move prices both up and down.

Oil prices are not the only volatile factor within our industry. Projected well volumes, gas takeaway capacity, service costs and availability all change over time and expecting them not to change does your stakeholders a disservice. Being able to model out these different scenarios to better prepare prior to a “black swan event” is what management should be doing monthly. Adjusting actuals to compare to forecasts, tweaking inputs to set different assumptions about the state of your assets and discussing how to future proof your assets to withstand these changes is one of the main jobs of management. That’s why it’s called “management” in the first place!

This is precisely why W Energy has invested so much time and resources into building a unified platform – they understand that data silos cause friction between different business units and can be the difference between playing offense vs defense. Their latest innovative offering, DataView, gives you the ability to leverage your own data by making an easy-to-use replica of your database, normalizing your data into an easy to consume format, which can be linked up to your favorite business intelligence tool so you that can do actual business intelligence the way you need it to be done. Out are the days of canned reports that show you 80% of what you need but anything deeper ends up in an ever-growing Excel spreadsheet. In are the days of actionable reporting tools that actually allow you to easily analyze and make decisions about your business. A single, unified platform also drives efficiency between departments, because everyone is working within the same system. Land, Accounting and Operations all now can seamlessly communicate with each other without the dreaded – “Hey, can you send me that spreadsheet to compare?” I am getting heartburn just thinking about that question!

If you haven’t checked out DataView from W Energy, read about how to Unlock your Data Analytics with DataView. Or if you’re ready to talk to a team member about a tailored software demonstration, Request a Demo!

Guest Author: Michael Tanner, Managing Director, Sandstone Group

Michael earned undergraduate and graduate degrees at Colorado School of Mines. He began his career in Reservoir Engineering, later transitioning to working in FP&A for an Oil and Gas Operator. He now is the Managing Director of Sandstone Group, which works to integrate Business Operations, Sales, and Marketing in the Energy and Real Estate Industries. His experience includes A&D, M&A, corporate strategy, risk research and analysis, hedging and budgeting, along with experience leading IT Teams. He is also the co-publisher of Energy News Beat, and co-host of the Energy News Beat Daily Standup.