"As the spreadsheet count goes up, you must simplify, reducing and losing levels of detail in the basic information that you really would like to keep. The new solution lets us maintain a high level of detail and still retain a good overall view."
Jon Arve Synnes,
Business & financial analyst, Spring Energy.
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Spring Energy
SMOOTH ANALYSES!
With a Business Intelligence solution developed by Affecto, the young and fast growing oil company Spring Energy leverages a dynamic prognosis- and budgeting model for managing its shares in petroleum licenses on the Norwegian continental shelf. A central database makes evaluating many alternatives simpler and more efficient, and reduces uncertainty in decision-making.
- We are a relatively young company, established in 2008, but from the outset we focused on building a team, now 29 strong, of highly qualified professionals with solid experience from the Norwegian shelf, says Jon Arve Synnes, business & financial analyst in Spring Energy. Today, Spring Energy manages a portfolio of 26 search licenses and one filed in production in the Norwegian shelf. To date, we have taken part in six exploration wells, of which four have discovered oil. From May 2011 through 2012, we will be involved in eight wells, and also take part in seismic exploration on some of the other licenses.
- The finance crisis became our ”window of opportunity”, says Jon Arve Synnes. Spring Energy was fully financed in August 2008, before the finance crunch struck in September the same year. That opened many attractive investment opportunities on the Norwegian continental shelf.
Profitability in petroleum licenses depends a number of factors, such as currency, oil price, probability of making commercial oil or gas discoveries, tax position, and not least production. In order to be able to simulate and evaluate alternative investments efficiently, as well as continuously monitor liquidity needs more effectively, the company has invested in a Business Intelligence solution from Affecto.
Whereas the first few licenses could be managed by way of relatively simple Excel spreadsheets, a growing portfolio demanded more advanced tools. – As the spreadsheet count goes up, you must simplify, reducing and losing levels of detail in the basic information that you really would like to keep. The new solution lets us maintain a high level of detail and still retain a good overall view, says Jon Arve Synnes.
Common data and method
- The solution we have developed for Spring Energy simplifies analyses and makes them more reliable because variables such as currency, oil prices and cost profiles can be input centrally into one common database, says manager Eivind Martinsen in Affecto, who has managed the development project. – Central data input ensures that users extract the same data every time, which ensures a correct basis for making decisions. It makes it both simple and fast to run even quite complicated simulations and scenarios, and to compare several licenses to each other.
The Affecto Business Intelligence solution is based on SAP Business Planning and Consolidation (BPC) and is used both as a prognostication tool and in order to achieve more efficient and correct reports. Users can extract reports with always updated numbers, and it is also possible look back in time to see how decisions have been made and which factors influenced the outcome.
Compared to traditional spreadsheets, the BI solution eliminates duplication and version issues. Spring Energy’s solution ensures that the user is always working with the correct version and data.
Entering all data into a database through the same input form, Spring Energy also ensures data quality and reduces possible error sources. The solution also enables common calculation rules for estimates after the basic data has been input into the system. This simplifies running simulations and scenarios spanning a greater timeframe. Affecto’s solution also increases security, thanks to traceability of data input, access control, information availability, and confidentiality.
Development for tax simulations
When starting production on just one license may require investment of a billion NOK, and an oil rig invokes operating costs in the millions every day, good analyses have great influence on finance planning and liquidity prognostication.
- Reliable tax forecasting is also important in order to project the cash flow of Spring Energy, says Jon Arve Synnes. Being able to continuously simulating the tax effects of decisions is crucial for us. Affecto’s solution enables us to always maintain basic prognoses and keep track of Spring Energy’s commitments.
- We depend on flexible budgets, because the conditions change all the time, says Jon Arve Synnes. – For instance, what are the consequences of making a discovery in one license, simultaneously selling shares in another license, and buying up a third? How do we lay the oil rig puzzle, will we drill this year or the next?