How a 10-Minute A&D Evaluation Can Maximize Your Efficiency

Ryan Mohrman
Ryan Mohrman

The recent downturn in the oil and gas industry has resulted in a lot of investment capital sitting on the sidelines, waiting for signs of a price rebound. Recent gains in the futures market for oil suggest we may start to see increased acquisition and divestiture activity in the second half of 2016.

Regardless of which side of the transaction you’re on, there will be pressure to establish reserves evaluations quickly and confidently in order to act on opportunities as they arise. To alleviate this pressure, A&D work can follow a quick screening process that can cut down the time needed to review an asset that won’t trigger a purchase decision.

The idea behind a 10-Minute A&D evaluation is to increase the amount of engineering you can do in a day, rather than getting bogged down in data mining. If you can maximize the efficiency in your A&D evaluations, your engineers can get away from being accountants and focus on what they do best.

The Challenges of Quick A&D Evaluations

One challenge in doing A&D evaluations in 10 minutes or less is that we have data coming at us from different sources. Whether it’s IHS, DrillingInfo, spreadsheets, databases, etc., all of this data comes from different places, making it more difficult to deal with.

Another challenge is that forecasting wells by hand takes too much time. So if you’re trying to look at multiple acquisition opportunities or multiple data sets, each one of those requires manual forecasting, which starts to get more difficult to manage. How can we make sure that we prevent that from happening?

Being able to run multiple price sensitivities, forecast sensitivities op cost sensitivities or other scenarios is tedious. It’s essentially setting up a new database every time. You run economics and you’re comparing them typically in Excel, which causes us to deviate from one application to another, bringing inefficiencies into the process.

So What Do You Need to Do to Make a 10-Minute A&D Evaluation Useful?

The most basic step is to use software to speed up forecasting. Obviously, it can take time to build the necessary trust to have software handle a lot of your forecasting, which is why you should make your software vendors prove that trust. Run your software several times, and if it doesn’t look like it’s holding up, ask the vendor why. If they can’t defend it, it might be time for a new vendor.

The next thing is to define a workflow. You want to make sure what you’re doing is repeatable, so you can compare apples to apples.

The best solution to the challenges of 10-minute evaluations is to use software to do auto forecasting. I know auto forecasting can be viewed as a bad word in some circles, so maybe you shouldn’t think of it as auto forecasting. Think of it as assisted-forecasting. The software does its part, then you use your expertise to do yours.

Here are some steps you can use in a repeatable work flow to ensure you get value out of a 10-minute A&D evaluation:

  • Bulk best-fit the wells for an initial pass — let the computer run the forecast for your bulk import so you can use your expertise to audit the computer
  • Run economics with multiple price decks or perform a break-even analysis — do this in one program, without the need to export data back and forth between different apps
  • Sort, filter, or bucket data into groups and build corresponding Type Wells — use that information to prepare analog forecasts
  • Work out a quick drilling schedule for the asset
  • Review your economics inline — make sure you can run different scenarios in one program and compare them

Finally, when you do that initial engineering work, if you decide that you need to spend more time looking at the data — to take it to the next level — you want to keep it. You don’t want to do the initial A&D work in one place, then have to go to another program and start over. Your time is too valuable for that.

Is Your Technology Up to the 10-Minute Challenge?

A 10-minute A&D evaluation is not intended to be THE answer. It’s a workflow you can practice to screen projects so that you can be more efficient as an engineer.

So ask yourself, do you have the opportunities to do these things in your application:

  • Assist your forecasting to bulk screen wells?
  • Compare multiple scenarios simultaneously?
  • Move cleanly between screening and full blown economic runs?

If the answer is no, perhaps you need a new application that can.

Author Profile
Senior Reservoir Engineer - 

Ryan Mohrman is a senior reservoir engineer with Energy Navigator in Houston. He specializes in database integration and architecture, engineering workflows such as reserves management, A&D evaluations and basin studies, and reporting and analytics.

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