American Oil and Gas Reporter - May 2016 - 38

SpecialReport: Acquisitions & Divestitures

A&

D

Software Speeds Property Evaluations
By Ryan Mohrman

nomic potential of acquisition opportunities
under various scenarios. The most favorable properties then can be selected to
conduct full-scale engineering evaluations
using the same datasets running in the
same software.
One of the primary challenges in conducting quick-look A&D evaluations is
that datasets often come from different
sources and in different formats, which
makes them more difficult to deal with.
Software must be able to integrate all
data types, whether in the form of spreadsheets or databases, and whether they
come from a vendor such as IHS or
DrillingInfo, or a public source.

HOUSTON-Time is money and information is the currency of trade in the
oil and gas industry. Data, and the technologies used to extract intelligence from
data, are at the center of every decision
point in upstream workflows-whether
making "drill/no drill" determinations on
development prospects, or figuring out
whether to pull the trigger on a property
acquisition.
Today's business environment is expected to create more opportunities for
operators to acquire producing assets,
but that same environment also is in-

FINDING THE BEST-FIT ASSETS
Software systems that integrate advanced decline and material balance
forecasting create unprecedented
speed and accuracy opportunities
in appraising properties.

Ryan Mohrman
Sr. Reservoir Engineer
Energy Navigator
creasing demands on reserves-evaluation
engineering as managers find it more difficult to feel confident about assets that
are hovering near the break-even price at
prevailing commodity price levels.
To alleviate this pressure, oil and gas
companies are turning to software systems
that integrate advanced engineering tools
such as decline and material balance forecasting with comprehensive economic
analyses and risk management functionalities.
The result is unprecedented speed and
accuracy in appraising properties. In fact,
some of the latest-generation software
includes "quick-look" capabilities that
enable engineers to complete cursory
evaluations in as little as 10 minutes.
The idea is to give companies the means
to rapidly screen data to assess the eco38 THE AMERICAN OIL & GAS REPORTER

The solution is an open database structure, and built-in automated workflows
and analytical tools that increase the
amount of engineering that can be done
in a short time while eliminating time
spent on data mining. The concept is
simple: If analysts can maximize efficiency
in A&D evaluations, they can focus on
being engineers rather than accountants
or data managers.
Auto-Forecasting Algorithms
Another potential roadblock to quicklook assessments is that forecasting wells
by hand simply takes too much time. If a
company is trying to evaluate multiple
properties using multiple datasets, manual
forecasting can become nearly impossible
to manage, especially when running sensitivities using different prices, production

forecasts, operating costs or other variables.
It essentially requires setting up a new
database every time another sensitivity
is run.
Moreover, after calculating the economics, results typically are exported to
Excel® spreadsheets for comparison. That
causes engineering workflows to deviate
from one application to another, introducing inefficiencies into the process.
To make quick-look A&D evaluations
useful and accurate, engineers must be
able to use software capabilities to speed
forecasting, specifically auto-forecasting
(or assisted forecasting) algorithms. Rather
than manually forecasting large numbers
of wells, the engineer can use assisted
forecasting to eliminate tedious and timeconsuming forecasting work, such as generating best-fit (exponential, hyperbolic
or harmonic) declines, modeling multisegment declines, and forecasting highwater-cut wells or portraying rate acceleration. The software is not a substitute
for the engineer's expertise; the software
does its part and the engineer does his
part in auditing the results.
The next step is to define a workflow
for the analysis. From an engineering
perspective, it is critical to make sure
workflows are repeatable because that is
the only way to compare apples to apples
in evaluating the results. Specific steps
engineers can use in a repeatable workflow
to ensure they get value out of a quicklook A&D evaluation include:
* Bulk "best-fitting" the well data
for an initial pass, with the software running the forecast for the bulk imports
and the engineer using his expertise to
audit the computed results;
* Running economics with multiple
price decks or performing a break-even
analysis;
* Sorting, filtering or bucketing data
into groups and building corresponding
type wells, and then using that information
to analog forecast wells with short production histories;
* Working out a quick drilling schedule for the asset; and
* Reviewing the economics in-line,
making sure different scenarios can be
run and compared.
All these workflows are completed
seamlessly within the same application,
and it allows the user to move cleanly
American Oil and Gas Reporter - May 2016

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