Back-to-Back Rapid Acquisition Integration Projects

THE OPPORTUNITY

In May 2021, Magnum Forge was in the middle of leading a W Energy Software ERP implementation when our client announced an acquisition of properties in their core area of the Permian Basin. The acquisition involved 112 operated wells, 90 non-operated wells, and 1,313 leases (1,984 total agreements). As part of the purchase sale agreement, our client agreed to take over daily operations of the wells in 45 days, which meant that we had to have the seller’s data loaded and verified in our client’s field data gathering (FDG), production accounting, and well lifecycle data management solutions in this short timeframe. The remaining accounting and land data had to be loaded and verified on a 90-day transition services agreement (TSA) timeline. As we were closing out this acquisition, our client announced another in September 2021 while the W Energy ERP project continued towards a 2022 go-live. This acquisition was also in the Permian and involved 183 operated wells, 131 non-operated wells, and 391 leases (1,676 total agreements). This time, the operations takeover was in a scant 28 days and the TSA period was 75 days.

Magnum Forge was asked to help our clients meet these aggressive timelines based on our track record of delivering on aggressive project timelines and our ability to coordinate the acquisition activity with the W Energy ERP implementation. In addition, our operations client lead for the integrations said that they had done several acquisitions during his tenure without outside assistance, and he wanted Magnum Forge to make these “more thorough and organized.”

THE PROJECT

A key first step in any acquisition project is assessing the seller’s systems to make sure all the data required by our client is held somewhere. Once the systems are identified, we need to get a first cut of that data as quickly as possible. In this case, the FDG, production accounting, and well lifecycle data were of critical concern to meet the short timeframe for taking over field operations. Based on the operations handover timing and the length of the TSA’s, we made an early decision to load all the data into our client’s legacy systems, since the W Energy ERP software would not be live yet when our client was required to take over operations, accounting, and land functions. This involved loading data and testing it in 13 legacy systems in use by our client.

Magnum Forge provided resources to load FDG, production accounting, and land data and to manage the entire project, including managing the efforts of seven other service providers and multiple users on our client’s side. Magnum’s project manager laid out strict milestones for acquiring and assessing the seller data, transforming it to work in our client’s systems, having users validate it and identify issues, and preparing to take on the management of the new properties in our client’s systems. This provided our client with a single point of contact for the acquisitions when issues or questions arose. Magnum Forge documented all decisions and published them for the entire acquisition team to see, which was “worth every penny by itself,” according to one of our clients.

The tight timelines for operations handover (45 days for the first acquisition and 28 days for the second) were made more difficult due to difficulties in getting the data from the sellers. The first acquisition’s data was received with only 36 days to stand up the properties in the FDG, production accounting, and well life cycle systems. For the second acquisition, there were only 13 days after the receipt of data from the seller to stand up the properties in the operations systems. These delays also trimmed the amount of time available for the two TSA periods (90 days and 75 days, respectively for the two acquisitions) to get the accounting and land systems ready to conduct accounting and land processes for the new properties. Magnum was ready for the challenge, working the hours needed to get the data we owned into the systems and tested, and pushing the other service providers to march to the same timelines for systems they owned.

THE OUTCOME

Magnum Forge hit all the milestones required for work we owned and managed the client personnel and other service providers to do the same. For both acquisition, operations control moved to our client on time and with few issues – a remarkable accomplishment considering the complexity of data and processes and the tight timeframes. Accounting and land integrations went equally well and on a less frantic timeframe but still within the 90 and 75-day transition services agreement requirements, helping our client avoid additional TSA charges.

A key factor in the two acquisitions was coordinating the data loads for the two sets of new properties with the data conversion and testing schedule of the ERP implementation project such that the acquisition timelines were met and the new data could be validated and tested in the new ERP prior to go-live. Magnum Forge was able to coordinate dependencies between the two acquisition projects and the W Energy implementation project to get data from both acquisitions into a test data load for user validation and testing prior to the final move to W Energy. This allowed our client to see the data from the acquired properties and test the new properties along with their legacy properties.

Debriefing sessions from both acquisition projects garnered praise from our clients for our dedication and leadership. We are ready for the next acquisition!

Business Process Improvement and ERP Integration Project

THE OPPORTUNITY

In November 2011, a Texas wildcatter and shale pioneer founded an independent energy company engaged in the acquisition, exploration, development, and production of onshore properties in the United States. Beginning in February 2012, the client purchased two independent energy companies engaged in similar development projects with very few overlapping properties. Both were supported by OGsys, an oil and gas accounting software.

Magnum Forge was selected to provide expertise and resources to combine the two sets of OGsys data, review, and rationalize the business processes in the two acquired companies and selected to resolve conflicting uses of OGsys between them. These issues included corporate accounting, revenue accounting, joint-interest billing, division order, accounts payable, accounts receivable, and other OGsys modules. In addition, Magnum Forge had to ensure that interfaces to and from the resulting single instance of OGsys with the client’s lease administration, field-data gathering, gas marketing, and data-warehouse solutions were working concurrent with the merging of the two OGsys systems.

THE PROJECT

To implement and integrate the merged companies into a single ERP, Magnum Forge brought its expertise with upstream ERP solutions and broad project-management experience to work with the client’s key stakeholders, as well as with various software vendors involved in the project. Magnum Forge started by reviewing processes and rationalizing differences between the two acquired companies, as well as getting approval from the client’s key leaders on the decisions. Magnum Forge then began to rationalize data discrepancies between the companies prior to beginning the actual merge of the data itself. Arriving at a consolidated “chart of accounts” was a key task for the project, as the two existing charts had some major differences in accounting treatment and granularity of accounts. Magnum Forge minimized the effort required by the client personnel by leading much of the data cleansing and configuration necessary to migrate the data into the combined system. As part of the implementation of the combined system, Magnum Forge identified business processes and software efficiencies and, together with the client stakeholders, revised the processes to take advantage of the system’s functionality. The cutover to the combined system presented an additional challenge, as the data loads were too slow to be done over one weekend, and having the system down for nearly a week was not an option for the client’s accounting team. Magnum Forge proposed and managed a four-part cutover that followed the month-end close of accounting over four weekends to accomplish the merge without taking the system down during weekdays. Additionally, Magnum Forge’s holistic approach to the solution ensured the functionality of the lease administration, data warehouse, field-data gathering, and gas-marketing software. Magnum Forge also provided training using the company’s existing data to help the client’s personnel quickly acclimate to the new environment.

THE OUTCOME

Magnum Forge brought industry-specific insight and project-management expertise to help the client start its new company with a single approach to accounting across all business functions, rather than an undesired hybrid from the two purchased companies. Magnum Forge’s proven practices (from its extensive experience in the upstream oil and gas sector) allowed the client to complete the project on an aggressive schedule, despite reworking many major accounting processes. In a collaborative effort with the client’s internal personnel and its software vendor, Magnum Forge significantly improved the accounting team’s operational efficiency and delivered a common, integrated platform that supports the client’s core business goals. As follow-up to this work, Magnum Forge was invited to participate in a number of other smaller projects to improve the client’s system and accounting landscape.

E&P Acquisition Integration Project

THE OPPORTUNITY

Magnum Forge client is a privately held company focused on the acquisition of onshore oil and gas assets in the United States and Canada, and it targets assets where opportunities exist to add value through low-risk development, operational enhancements, and the application of proprietary technical knowhow. The client installed Enertia software to handle its ERP needs but could not fully utilize the software after the closing of two recent acquisitions. Financial data associated with the acquisitions needed to be cleansed and assimilated before it could be integrated into the client’s accounting- and financial reporting system. This was a formidable, labor-intensive task for a staff lacking the training and expertise specific to the Enertia software platform. To make matters worse, the management was unsure whether the software provider could integrate the newly acquired production data in a timely manner to produce the needed regulatory reports. In addition, the client’s production group was understaffed, so it was critical for them to find a team that understood production accounting within the oil industry, that had deep functional expertise within their software, and that required very little oversight to complete the project.

THE PROJECT

With more than twenty-five years of combined experience in integration projects involving Enertia, Magnum Forge was hired to bring a series of asset purchases online, which involved many wells that would require considerable assistance from Enertia. Our integration team worked with the client to secure delivery-system schematics from each of the previous owners. These schematics needed to be analyzed and converted into Enertia within eight weeks of the project’s start date. Magnum Forge worked with existing production team members, as well as newly acquired production resources from the new assets, to review the setup of the new delivery systems and the allocated results. With little input from the client, Magnum Forge manually built all master data and delivery systems, and the data was validated against records from the state-regulatory website. Within sixty days of the project’s beginning, the client produced state-regulatory reports using Enertia. With the help of Magnum Forge, our client more efficiently utilized the Enertia software, taking advantage of additional functionality that had not been incorporated.

THE OUTCOME

Magnum Forge understands that integration-acquired properties require speed and unique knowledge of clients’ systems and properties. By properly reviewing the gathering systems with key resources in sellers’ organizations, then loading and testing the gathering systems in clients’ ERP solutions, Magnum Forge gets clients up and running to meet their deadlines for allocating volumes, driving revenue distribution, and filing state-regulatory reports. Such quick action helps clients avoid time-consuming efforts of running initial allocations and revenue manually, allowing the client to make the most of its existing ERP solution. Along the way, Magnum Forge also provided critical training to the client on how it could better position its resources to handle its next acquisition without assistance.

Rightsizing Your ERP Solution for Cost Efficiency and Real-time Reporting

November 2013 Editor’s Choice
Excerpts from:
ERP Helps Integrate Well Development
By Kari Johnson

The desire for improved efficiency and incremental value is driving key changes to company’s information technology architecture. Central to implementing that desire is using enterprise resource planning (ERP) software to integrate all digital operating solutions.

PENN VIRGINIA

Gary Bailey, vice president of IT at Penn Virginia Corp., an oil and gas exploration and production company, is excited about the potential for business intelligence. “That really is the next frontier for our business, from a technology perspective,” he says.

Companies are hungry for graphical reporting of real-time key performance metrics, Bailey says. “For example, cost tracking in the drilling process is paramount; you have to have up-to-the-minute information in order to control your costs.”

On the strategic side, when forecasting for business change such as property sales or acquisitions, key information at one’s fingertips helps in making solid high-value business decisions, he adds.

Similarly, Bailey insists access to production volumetric information is essential. “Businesses live and die by what they produce on a daily basis,” he says, pointing out that flexibility in delivery and access is key. “Our users should be able to use any device any time to get data, and, if desired, they should be able to request simple e-mail reports sent at the frequency they need,” he insists.

“We would like to have a dashboard view of our key performance data–whether in Enertia or ancillary systems such as gas marketing or reserve calculation software,” Bailey says. “For us, out-of-the-box reporting for the oil and gas industry needs to present very targeted results that executives can truly use.”

Make that information accessible on any mobile device and there is real leverage, he adds. For the moment though, all of this is gravy for Penn Virginia, Bailey says. First, the company needs to complete its migration from SAP to Enertia.

Penn Virginia has gone through a major transformation since 2010, selling off its midstream and natural resource land management business. “We have become a very focused exploration and production company,” describes Bailey.

Bailey predicts the result will be much greater efficiency in a much simpler computing environment. Penn Virginia selected Enertia in April 2013, and plans to complete the implementation by the end of the year. “Switching to a smaller footprint focused exclusively on oil and gas meant saving literally millions of dollars,” says Bailey.

For Penn Virginia, the focus is on getting the basics right so that people have the information they need to do their jobs. The company is implementing the full suite of capabilities from the ERP suite, and also is connecting to other systems as needed.

Bailey says most Penn Virginia employees will use the ERP system at some point. “We will be using the workflow approval process, which involves a lot of people,” he says.

Penn Virginia will use all best practices out of the ERP box, Bailey predicts. The company is in the midst of configuring the system for those processes and converting data as it exists in its current SAP and land systems. It is using a combination of Enertia implementation resources and consulting services from Houston-based Magnum Forge.*

Bailey says he is looking forward to the cutover to the new application solution at the end of the year and then moving on to building business intelligence.

“It’s a very competitive industry,” he observes. “Those of us who can provide information for tactical and strategic decision making will be ahead.”

THE OPPORTUNITY

Penn Virginia Corporation (PVA), now an E&P company, was formerly part of a conglomerate that included coal and pipeline operations. As a part of the breakup, each spinoff company kept a version of SAP, which was the conglomerate’s ERP solution. PVA realized that the SAP solution was costing them more than their mid-sized peers were paying to support an ERP solution and that the solution they were on, despite industry modifications, was not built for E&P companies. Gary Bailey, PVA’s Vice President of IT, was able to put together a business case to move to a less expensive, yet more functional, ERP solution. Once the Enertia ERP system was chosen by PVA, Bailey asked Magnum Forge to lead the implementation project based on several colleagues’ prior experience working with Magnum Forge.

THE PROJECT

Most ERP projects are challenging, but Penn Virginia’s project presented an unusual set of difficulties. PVA’s mature integrated environment meant that all interfaces between SAP and other systems had to be replaced and tested concurrently with the ERP software going live. Interfaces with PVA’s field data gathering system, reserves system, eInvoicing solution, and other systems had to be remapped, recoded, and tested using Enertia data in place of SAP data. A second challenge presented by the project was the comparative complexity of the SAP solution and data that would need to be mapped into Enertia. Few companies have moved from SAP to Enertia, so the data mapping effort started from scratch. Lastly was PVA’s reliance on business intelligence (BI) in its current environment using SAP. PVA had developed a suite of BI tools that management relied on heavily for daily and monthly reporting. Switching the ERP from SAP to Enertia would require a thorough mapping of existing reports to Enertia canned reports, as well as decisions on what reports to replace by using Enertia custom reports versus mapping Enertia’s data into the existing BI toolset.

Magnum Forge brought experts experienced with Enertia and other upstream ERP systems to help Penn Virginia navigate the project. Magnum focused on creating data validation routines and working with PVA data owners to validate data each time it was converted into Enertia to ensure accuracy and consistency in the conversion process. Magnum also focused on the key requirements identified during the software selection and made sure there were testing scenarios for each combination of requirements so any gaps in functionality that were missed in the software selection process could be addressed. In addition, Magnum Forge led testing of the Enertia solution with PVA users to ensure that the system worked to their specifications and to help users get accustomed to the new software. Magnum helped PVA take advantage of some of Enertia’s E&P-specific functionality that did not exist in the SAP solution, realizing improvements in severance tax reporting and payments, revenue accruals, and revenue distribution. Enertia’s existing reports and custom reports built for PVA enabled them to go live without maintaining the BI solution, relying instead on data directly from Enertia, unless other systems’ data needed to be integrated with Enertia data.

THE OUTCOME

PVA went live on Enertia and their existing related systems and has started down the road to recover the costs of implementing new software and ultimately get a return on their investment for the project. Since the Enertia package handles lease administration, PVA was able to eliminate a major software package and the associated maintenance in exchange for a single ERP that handles all accounting and land functions. Given the complexity of ERP projects, there were a number of data conversion issues and trailing custom reports that Magnum Forge stayed on to help organize and resolve, working with the software vendor and Penn Virginia.

ERP Upgrade Spanning Business Processes Across the Operations

THE OPPORTUNITY

Following a recent relocation of a company’s headquarters from Texas to Oklahoma, this client was faced with a major software challenge. The version of its ERP software was no longer supported, and an upgrade was necessary to sustain the anticipated growth of the company and to avoid the cost of self-maintenance. Despite the relocation, none of the users in Texas chose to relocate to Oklahoma. Those in Oklahoma did not feel that they had received sufficient training on the full suite of business processes that needed to be addressed during an upgrade project, and they found attempting an upgrade alone uncomfortable. Magnum Forge was tasked with creating a project plan, scoping the business processes to be tested, creating step-by-step test scripts, and managing the upgrade—all alongside the client’s personnel. In addition, the client saw the opportunity to use Magnum Forge to reinforce the users’ proficiency with the ERP software, as part of the upgrade, and to identify areas where the client was not making full use of the ERP’s functionality.

With more than twenty-five years of combined experience using Enertia software and having completed multiple installations of Enertia software and upgrades for upstream oil and gas companies, Magnum Forge was an obvious choice for this four-month undertaking.

THE PROJECT

Major software upgrades may significantly disrupt normal work activities because system users are asked to test the full functionality of the software before upgrading. To minimize the effort required by the client’s personnel, Magnum Forge 1) used existing sets of business processes to quickly narrow the scope of the testing to the business processes and scenarios that the client actually performed on the software; 2) customized existing test scripts for the client’s personnel to use to test and document test results; 3) tracked and documented the resolution of testing issues; 4) created and delivered training to end-users on the differences between the current and new Enertia version; 5) worked with the client to identify changes to business processes or use of the ERP to significantly improve the efficiency and accuracy of business processes run on the ERP; and 6) archived all project documentation for future audit purposes.

THE OUTCOME

The project exceeded the client’s expectations by meeting the upgrade date, providing rigorous documented testing, and coming in slightly under budget—even while tackling several process and functionality improvements that were not in the project’s original scope. The client has asked Magnum Forge to continue providing its services to make additional use of the ERP capabilities, to achieve even greater efficiency.

By delivering the upgrade on time and within budget, Magnum Forge allowed the client to focus on running its business at a time when depressed oil prices made cost savings a key requirement. In addition, Magnum Forge’s work helped this client use its ERP more efficiently, allowing it to get more out of its software investment with fewer staff hours each month.

E&P eInvoicing Selection and Implementation

THE OPPORTUNITY

One of Magnum Forge’s clients has grown through a series of acquisitions: it now processes nearly 30,000 invoices a month. Senior managers in the accounting department were disappointed that each acquisition resulted in a commensurate increase in AP staff, who were needed to manually process invoices; thus, they looked for a way to cap or slow AP processing costs while growth continued. Due to these concerns, a brief review of eInvoicing functionality was undertaken. The review easily showed the potential hard-dollar benefits in moving to an eInvoicing tool: namely, improved capture of discounts offered by vendors, better enforcement of catalog pricing, reduced G&A costs in accounting, and reduced costs in drilling new wells. Because of these main benefits, the accounting and operations departments ultimately sponsored an eInvoicing project.

THE PROJECT

The first order of business sought to choose an excellent eInvoicing software vendor. The client chose Magnum Forge to run the selection because we thoroughly understand the eInvoicing market and the client’s Enertia ERP solution. Magnum Forge worked with the project sponsors to narrow the list of vendors down to three who would do product demos, and the final decision would be based on software functionality, the vendor’s track record (based on reference checks done with companies not offered by the vendors), cost, and the overlap of the vendor’s supplier network with the client’s existing vendor base. The client eventually chose ADP’s (now acquired by Oildex) OpenInvoice solution.

Once the solution was found, Magnum Forge, along with the client and ADP, created a project plan to address software-configuration decisions, key interfaces into and out of the client’s Enertia ERP system, and the daunting task of training hundreds of AP invoice coders and approvers across six states in three weeks. In addition, the existing AP staff had to be trained to manage the incoming batches of approved invoices, perform quality checks, and move the batches through Enertia’s transaction-processing steps.

The client made key IT personnel available for the project to get a jump-start on managing the new software and interfaces then in production, and Magnum Forge worked with these personnel and ADP’s resources to set up the solution for the entire company at one time. The client chose to have ADP handle any invoices that its vendors continued to submit on paper by entering them into the OpenInvoice software themselves, so the client itself stopped receiving paper invoices once the new solution was live. As the project neared the “go live” date, Magnum Forge worked with the client’s internal audit team to demonstrate compliance with segregation of duty requirements and to ensure that key testing documentation was archived for future audits.

THE OUTCOME

The company noticed the first benefits when attrition in the AP staff did not require backfilling because the AP staff could handle a much larger number of invoices per month using the new software and processes. In the end, the client was on target to reach industry averages of 60 percent reduction in invoicing costs, a 90 percent reduction in invoice-processing times, and nearly 60 percent of additional savings through early payment discounts.

The client achieved benefits by moving from manual to electronic handling of receipts and invoices. The key to overcoming the cost hurdle in making this change is identifying the best software fit for a company and running a well-planned implementation procedure. With more than twenty-five years of combined experience automating solutions, optimizing workflow, and streamlining the AP process for oil and gas companies, Magnum Forge was an obvious choice to this client, in regard to uncovering added values across its financial operations: we essentially eliminated the client’s inefficient, manual, paper-based approach, and we simplified key financial processes.

Application Exploitation to Improve on Processing Revenue Distribution

THE CHALLENGE

The client’s Revenue Accounting department was performing month-end revenue distribution processing via manual efforts. These manual efforts included several spreadsheets used to derive the allocated revenue for their operated properties by manually maintaining formulas and keying in by hand data values such as monthly production volumes and marketing prices. Once the spreadsheets were fully validated, the revenue team would then transfer this information to the ERP system via upload templates and then would begin the revenue distribution. With looming staff layoffs and an already short turnaround time for processing the revenue distribution each month, the maintenance of the spreadsheets added unnecessary time to the month-end close and introduced inaccuracy issues.

THE OPPORTUNITY

With years of service assisting clients in getting the best out of ERP software, Magnum Forge engaged the client to begin a project to seek out functionality within the client’s software system to handle the revenue distribution processing in an automated fashion. The client was eager to work with Magnum Forge, adopt new business standards, and “stop doing things the way they had always been done.” Ultimately, for the client, who acknowledged that they had been lagging a bit behind peer and industry best practices, this project was an opportunity to exploit existing functionality in their ERP system.

THE PROJECT

Magnum Forge began the project with an initial assessment to ensure that all revenue processing scenarios could be automated through the untapped functionality of the ERP system. After the successful validation of the scenario testing, the project entered the implementation phase. During this phase, Magnum Forge worked directly with the functional departments of Revenue Accounting, Production Accounting, Division Order, Marketing, Internal Auditing, and IT to ensure that user acceptance testing was thorough and that end users were adequately trained on the new processes. To aid in the change management aspect of the project, Magnum Forge created detailed desk procedure documentation that outlined the new roles and responsibilities and was to be used by each group as a reference during month-end processing.

THE OUTCOME

The project ended with the client successfully processing revenue distribution in a more automated manner in line with auditing standards through the exploitation of existing functionality of their ERP system. Additionally, Magnum Forge helped the client realize industry best practices for revenue deck ownership setup and maintenance. Currently, Magnum Forge is assisting the same client with automating their state royalty reporting, which would deliver additional business process efficiencies. Having in-depth knowledge of upstream software systems has allowed Magnum Forge to assist clients in discovering untapped functionality to improve day-to-day and month-end processes.

ERP Software Exploitation to Improve Business Processes and Build Upon Existing, but Unused, Functionality

THE CHALLENGE

A mid-sized E&P company approached Magnum Forge after being on their ERP system for several years. They had implemented the system in a rush to meet their initial public offering schedule. They felt like the system was not as flexible as they had hoped, and that key functionality was missing. Magnum Forge ran a brief assessment project, which found that most of their issues were related to inappropriate configuration choices, lack of training, and poor data conversion done during the original implementation. In addition, there was functionality that was licensed but not set up during the implementation.

Magnum Forge’s experience with the client’s ERP system made short work of identifying these issues. In addition to the issues the client had identified, Magnum Forge came to the assessment with a list of common issues our clients have when using the ERP system they had purchased. For each issue, Magnum Forge described the impact of the issue, the estimated cost to address it, and the number of hours needed from the client’s business and IT representatives to resolve. Our client then added the expected time savings per month they would achieve by resolving each issue and ranked the issues in priority order.

THE PROJECT

With a high-graded list in-hand, our client had a roadmap for getting the most from their ERP system and asked Magnum Forge to lead a project to address most of the issues, leaving the lowest priority issues to be addressed later or not at all. Some of the issues were so easy to correct that Magnum Forge assisted the client in correcting them during the assessment to get immediate results. Magnum Forge then created a comprehensive plan to clean up the data and configuration, redesign business processes, and retrain users.

The remaining issues were bundled into a single project that ran several months with two Magnum Forge consultants working with the client to resolve the issues. As the project developed, the client asked Magnum Forge to create desk procedure documentation across the company to assist with onboarding new employees. During the project, as more people came to understand the role of Magnum Forge, users approached the Magnum Forge resources for support, to get quick feedback on issues they were experiencing.

THE OUTCOME

The project exceeded our clients’ expectations by streamlining existing business processes while implementing new, more efficient business processes and exploiting unused functionality in the software. Most importantly, the project helped change the mindset of the employees. Instead of simply accepting unsatisfactory business processes, they began proactively thinking about how to improve the way they were working and approaching the IT department on their own. The project sponsor was pleased that the users were taking responsibility for business processes and engaging IT directly, now that they understood the configuration options and alternate ways to use data fields. After pausing the project for the fourth quarter and year-end close, Magnum Forge resumed work on the next set of improvements to help them make the most of their software investment.

ABOUT US

Magnum Forge has a recognized team of professionals focused on supporting upstream oil and gas organizations with asset acquisitions. We use best practices from our vast experience to help each client succeed. Let us introduce our services now so that when it’s time to make a change, you know who to call on for help.

Improving Revenue Distribution Process by Optimizing Existing Software Functionality

THE CHALLENGE

Our client’s Revenue Accounting Department was performing month-end revenue distribution for their operated properties by manually allocating volumes to wells and keying in prices. This manual effort was being done in spreadsheets, which required time-consuming validation, and the spreadsheet data was then being uploaded to their ERP system to begin the revenue distribution process. They found themselves consistently under pressure to meet their monthly close schedule, and fluctuating oil prices created pressure to reduce staff despite this struggle to meet deadlines. The spreadsheets also introduced inaccuracies that were inevitable, given the manual effort.

THE OPPORTUNITY

With years of service assisting clients in getting the best out of their ERP software, Magnum Forge engaged the client to begin a project to leverage existing functionality in the client’s ERP system to automate the revenue distribution process and generate revenue transaction detail from data in the ERP system instead of manufacturing it outside the system and uploading it. The client was eager to work with Magnum Forge, adopt new business processes, and “stop doing things the way they had always been done.” Like many companies, they found it difficult to step back and assess their position and identify opportunities for valuable improvements without some help from an experienced guide.

THE PROJECT

Magnum Forge began the project with an initial assessment to ensure that all revenue processing scenarios could be automated through the untapped functionality of the ERP system. After the successful validation of the scenario testing, the project entered the implementation phase. During this phase, Magnum Forge worked directly with the functional departments of Revenue Accounting, Production Accounting, Division Order, Marketing, and IT to ensure that user acceptance testing was thorough and that end users were adequately trained on the new processes. To aid in the change management aspect of the project, Magnum Forge created detailed desk procedure documentation that outlined the new roles and responsibilities and was used by each department as a reference during month-end processing.

THE OUTCOME

The result was a more streamlined revenue processing cycle with fewer manual control points and errors that would require time-consuming prior period adjustments. In addition, Magnum Forge helped the client move toward industry best practices for revenue deck setup and maintenance. After the conclusion of this project, Magnum Forge assisted the client with automating their state royalty reporting, which will deliver additional business process efficiencies. Having in-depth knowledge of upstream software systems has allowed Magnum Forge to help clients to discover untapped functionality to improve day-to-day and month-end processes.