A barrel of light crude cost $18.44, the #1 hit song of the month was Mony Mony by Billy Idol, and Ronald Reagan was president of the United States. It was November of 1987 – and Microsoft had just released its flagship spreadsheet software for Windows. Over thirty years later, Excel remains a dominant solution across the oil & gas business for managing way more than the spreadsheet was ever intended for, including the tracking and analysis of large oil & gas investment portfolios. While the software has added many new features over the years, the basic concept of manipulating data in columns and rows never evolved. This begs the question – should you trust the management of your oil & gas assets to a 30-year-old piece of software? It’s time to toss those spreadsheets and upgrade to the right mineral software.
The Absence of Anything Better
About ten years ago, Microsoft CEO Steve Ballmer gave a keynote at an oil & gas conference and answered questions from a room full of energy professionals. Taking the opportunity to voice his opinion about Excel, an engineer matter-of-factly explained that the popular spreadsheet product was less than adequate for his needs. The real news there was that the engineer apparently relied on spreadsheets to do his job, so his complaint was kind of like blaming a cat for not being a dog. It’s a matter of picking the right tool for the job at hand – and spreadsheet software was never intended to perform the complex and industry-specific tasks relevant to oil & gas professionals.
When it comes to mineral management software, oil & gas investors have had very limited choices for tools. The management of a portfolio of non-op oil & gas assets requires rigorous revenue and cost accounting as well as specialized reporting and analysis. Accounting packages are a partial solution, but do not support key workflows – such as audit and data analysis – or the high level of collaboration required among non-op management teams. In the absence of anything better, Excel has become the de facto mineral software standard for tracking wells, running ad-hoc reports, and sharing data across teams.
Spreadsheets pose several hazards for mineral managers, not least of which is the lack of critical analysis and data visualization capabilities. Management of oil & gas investments entails the tracking of thousands of data points that must be audited or revised as check stubs arrive, creating a massive ongoing data management challenge that Excel was never intended to tackle.
Given that spreadsheet files are often distributed via e-mail to team members or shared on a network drive, oil & gas investors must also contend with multiple versions of the truth and data quality issues. For example, consider a mineral fund with its headquarters in Midland and a field office in Tulsa managing the fund’s SCOOP/STACK portfolio. Staff in Oklahoma maintain multiple spreadsheets for hundreds of assets in the region, often copying files back and forth with several team members updating data as revenue statements and new acquisitions stream in. Because of the lack of version control and data standards, staff at the corporate office struggle to identify trusted sources of critical business data. E-mailing portfolio inventory data or leaving files on a shared drive where anyone with access to the network can read and edit them also creates a serious security threat and risk of data loss.
Perils of Custom Mineral Software Solutions
Data stored in a spreadsheet is non-relational. Other than the structure provided by columns and rows, it is difficult or impractical to associate data in one spreadsheet with data in another spreadsheet, significantly limiting the ability to query across tables of information. Relational databases, however, store data in a way that makes it possible to query an entire database. Where it might take several formulas, filters, pivot tables, and duct tape to run a report in Excel, a single line of SQL (structured query language) is far more powerful if data is stored in a relational database. For example:
select portfolio.well_name well, (portfolio.interest_decimal * production.cumulative_oil) revenue from portfolio, production, commodity where portfolio.well_id=production.well_id and production.production_date=commodity.commodity_date and production.production_date=’03-05-2018’
This would return a list of wells and revenue based on the interest owned for a specific date, handy for verifying production.
Your non-op asset inventory and other related datasets, like income and expenses, production reported to the state, commodity prices, and acquisition costs per acre, clearly belong in purpose-built mineral software with a database rather than a spreadsheet. Centralized data management, version control, and the ability to perform powerful queries are just a few benefits.
A close cousin of Excel, Microsoft Access is a popular choice for non-ops who want the benefits of managing their business information in a database. In addition to storing data, Access also lets users connect to other databases to provide a single point of access to multiple datasets. But there’s a big tradeoff. Out of the box, Access and other database tools don’t provide any functionality, reports, or analytics. Custom solutions must be built by a developer, putting the oil & gas company in the software development business. Such solutions take time and money to build and at the end of the day, an oil & gas investor is left with a brittle piece of software, requiring expensive ongoing maintenance to fix, upgrade and support the system.
Anatomy of the Solution
Considering the many shortcomings of spreadsheets and custom solutions, non-op asset owners should look for an accounting, reporting, and analysis solution that meets the following requirements:
- Centralized Data Management – Store non-op asset data in a relational database to improve version control and data quality.
- Fit for Purpose – Provide users with critical analysis, data visualization, accounting, and reporting to drive critical business workflows.
- Collaborative – Enable geographically dispersed mineral management teams to work together and make group decisions.
- Secure – Protect asset data by restricting who can read and modify data through role-based permissions.
Cloud-based mineral software provides additional benefits, including lowering IT costs by eliminating the need for specialized hardware or server software. Moreover, Software-as-a-Service (SaaS), a cloud subscription model, enables non-ops to rent instead of buy, providing a high level of cost-efficiency while receiving regular software enhancements and new features without the steep cost of custom development.
Designed from the ground up to meet the unique needs of oil & gas investment management, MineralSoft delivers a complete mineral software platform that includes secure database management, cloud-based collaboration for teams, accounting and audit, and critical analysis features. Plus, exclusive data integrations with Drillinginfo and Oildex provide seamless access to well and prospect data – including permits, rig activity, and production volumes – as well as check stub and JIB data. And because MineralSoft is SaaS, users benefit from a low-cost subscription model, providing access to a rich set of product features while ensuring that regular updates and new features flow to all users of the platform.