How Technology Can Save the Day for E&P Companies

The Current State of Industry Debt
During the decade-long energy boom, U.S. E&P companies worked hard to boost their output substantially which in turn, also increased their debt loads. As the price of oil falls, many E&P companies are finding it difficult to profit on lesser performing wells and maintain their debt obligations. This has left most E&P companies attempting to line up billions of dollars in emergency financing ahead of potential rounds of cuts to their revolving loans.

Banks are expected to begin reining in the size of many E&P companies’ revolving loans in the spring, during their biannual borrowing base redetermination.  E&P companies who are currently the worse off, may be looking at a downsizing of their borrowing base by as much as 10-15% if oil prices remain in the $50-$60/bbl range, according to Reuters.  This could mean $20-$38bn worth of cuts to revolving loans, based on the nearly $260bn in high-yield asset based loans that are outstanding in the industry. It’s still early in the cycle and this makes it difficult for many to determine if extra liquidity is needed however, across all industries, proactive companies are the companies that are able to endure during volatile times.

It is important now more than ever that E&P companies make the exploration and implementation of new technologies such as cloud based resources, automated accounting platforms and online productivity tools, a higher priority. These technologies and solutions have the ability to reduce a company’s’ costs, boost their productivity and significantly maximize their efficiencies.

Automated Accounting Tools to Reduce Costs and Boost Productivity

An automated accounting or ePayables tool is an unrivaled technology platform for companies who are seeking ways to reduce costs and boost their productivity. Traditional paper-based invoice processing is expensive. For an average company in 2014, the average cost to manually process a single invoice was $14.21, according to Ardent Partners. With many E&P companies processing nearly 1,500 invoices per month, the cost associated with paper processing has the potential to severely impact the bottom line. By automating the process, costs can be brought down nearly 70%.

In addition, by streamlining the coding, routing and approving process of supplier invoices, E&P companies can establish digital visibility into their cash flow status. Visibility allows companies to be strategic in their payment process, make better informed financial decisions, and identify the most profitable areas for growth. Automated accounting tools also enable more sophisticated analytics which allow for enhanced insight to better manage business cycles.

Not only is traditional paper-based invoice processing expensive, but it is also vastly inefficient.  Oftentimes manual processes result in payment errors, duplicate payments, and mismatched invoice data, due to the number of steps and individuals it takes to process an invoice. Those errors can further drive up costs and cause delays throughout an organization.  Adopting a streamlined digital process frees up time for busy teams and allows them to focus on higher level tasks that help to develop a company.

Online Business Productivity Tools to Maximize Efficiency

There is a wide range of business productivity tools and apps that E&P companies are able to consider.  Examples include HipChat, a direct messenger communication tool that allows individuals within the organization to connect instantly rather than relying on phones and email and Producteev, which offers powerful task and team management capabilities. Using technology to maximize your business productivity allows a company to realize true business success. Business productivity tools ensure organizations have the capabilities needed to overcome the challenges and issues that arise during strategy execution while boosting efficiency and productivity substantially. Each of these elements is equally vital with E&P companies battling to remain competitive in this volatile marketplace.

Communication based productivity technology tools allow for the automation of processes that provide for faster strategy communication and result in greater project completion rates. With task and team management business productivity tools, companies can more easily communicate business strategy and create measurable goals for their employees that will support overall company objectives. Additionally, these tools allow for greater visibility, enabling employees to see the whole picture and understand more clearly how individual goals fit into the company’s broader business objectives. This creates an engaged workforce which in turn, raises the business productivity of the company.

Moving IT Infrastructure to the Cloud to Modernize & Reduce Costs

Cloud technology is a model for delivering IT services in which resources are retrieved from the internet through web-based tools and applications, rather than a direct connection to a server. This technology has the ability to help E&P companies easily modernize and scale while significantly reducing costs.

Over the past decade, the way E&P companies operate has changed significantly. Despite this change, most production companies still rely on traditional network access from a data center. Enterprise software and applications require servers, bandwidth, networks, data storage, power, and a place to house components. Large E&P companies may have multiple datacenters with several environments for both backup and development work. Adding to this, IT staff and support are also required for maintenance. This can become a significantly complex and costly undertaking.

The oil and gas industry has always required data, high performance computing and collaboration tools and making a switch to a cloud-based data center can decrease the cost of network access substantially. For some E&P companies, it will make sense to explore the crossover to a cloud based IT infrastructure to substantially reduce both complexity and cost.

It’s clear that this will be a challenging year for all professionals and companies within the oil and gas industry.  However, by exploring and implementing smart technologies designed for workplace innovation and modernization, E&P companies can begin to see immediate benefits when it comes to cost savings and increased efficiencies.