Industry Success Stories
Oil & Gas Exploration and ProductionSpeed and agility drive your success. Having solid Accounting & Finance, Risk & Compliance, and Business & Technology capabilities backing up operations can help assure value is realized and sustained.
Assessing IT capabilities and investments at an E&P company
A private oil and gas exploration and production company had weathered the recent downturn but was faced with its IT service providers proposing a number of spending initiatives. The CFO desired an independent perspective on its IT strategy and a detailed review of the proposed spending. The company came to Aventine Hill Services for help.
We provided two CIO Advisors to perform a high-level assessment; recommend IT strategies that fit this company's business model and scale; and recommend which proposals from the IT vendors best fit with the company's requirements and budget.
- One CIO Advisor had deep experience in IT infrastructure. The Advisor assessed the current services provided by the company's IT managed services provider (MSP) and the server and network capacity; plus reviewed proposals from the MSP for investing in new server hardware and improved backup and recovery capabilities.
- The second CIO Advisor had deep experience in operations and accounting applications plus reporting and Business Intelligence (BI) strategies. The Advisor interviewed key users to understand how the business operated and what applications were used to support key business requirements, plus reviewed reporting and BI options to evaluate whether a vendor proposal for a custom data warehouse was an optimal path forward.
Given the size of this company, the initial information gathering and interviews were conducted over just two days. Recommendations were drafted and a collaborative workshop was conducted with company leaders to align on a holistic strategy and tactical next steps.
The IT Infrastructure portion of the workshop focused on:
- Providing observations on the current IT MSP's capabilities and current backup and recovery procedures.
- Aligning the business leaders on disaster recovery requirements for business critical applications.
- Discussing security, disaster recovery, network, and reliability risks and potential mitigations.
- Recommending which project proposals and investments proposed by the IT MSP were the optimal fit.
The Application Portfolio portion of the workshop focused on:
- Aligning on a one page diagram that described how the business critical applications supported the company and how key information flowed from one system to another.
- Providing observations on which systems were best suited to "cloud" strategies and which were appropriate for on-premise.
- Discussing two potential roadmaps for reporting and BI, one proposed by a vendor for a custom data warehouse and one based on exploiting existing systems already in place.
- Providing general advice on issues and contract terms that are important in cloud and software-as-a-service (SaaS) contracts.
Subsequent to the workshop, one of the CIO Advisors was a participant in a meeting between the CFO and the IT MSP owner. The options the IT MSP was recommending were discussed in detail and the CFO decided how best to proceed.
Thanks to Aventine Hill's CIO Advisory team providing independent advice, the CFO of this company was able to confidently make some urgent decisions related to investments in new hardware and improved disaster recovery capabilities, while also aligning with the larger management team on near term priorities and a strategy for prioritizing the use of cloud services versus on-premise solutions. Potential higher cost investments in custom development were deferred and replaced with a less risky and less costly tactical roadmap based on optimizing the use of existing applications. For a company still managing expenses closely, the CFO was able to realize practical benefits without having to authorize large spending with IT vendors.
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Improving upstream accounting timing and accuracy
Private equity owners and management of an oil & gas company that leases working interests were experiencing delays and inconsistencies in its accounting. They came to Aventine Hill Partners for help.
We provided a CFO Advisory Partner who was an expert in the upstream oil and gas industry to step in as part-time Interim CFO with a focus on assessing the current problems and recommending corrective actions and improvements. The CFO consultant reviewed current processes for receiving Lease Operating Expense (LOE) statements from EnergyLink (formerly JIBLink), receiving production data and remittances from the operators, and loading these to the accounting system. Next, the procedures for preparing financial statements and Lease Operation Statements (LOS) were reviewed. There were both timing problems with receiving data and challenges with loading data into and extracting data from the accounting system.
- Master data gaps in the accounting system were identified and corrections made to allow for a more accurate posting of financial transactions.
- An Excel model used to prepare the financial statements was reviewed and updated to better integrate with the accounting system, allowing for more accurate and efficient reporting.
With a better structured accounting system, options for improving and adapting to timing challenges with the operators were evaluated. The trade-offs between accruing for certain data or waiting for actuals were reviewed and a path forward chosen.
An audit was in progress during the assessment and our CFO Advisor took a hands-on role in reviewing draft financial statements prepared by the Controller and preparing adjustments to correct for impacts from prior accounting process and system challenges. For other adjustments, a detailed action plan was provided that the Controller could execute.
Last, the CFO Advisor provided recommendations for improving the accounting organization. Options were presented for adding different types of roles to rebalance workload and ensure the proper expertise would be in place on an ongoing basis. Areas where training would improve the existing team's capabilities were also recommended.
By bringing in a part-time Interim CFO, the private equity owners and company management quickly and cost effectively regained an understanding of the financial results of the company. Improvements in processes and systems were made and a revised accounting organization defined that will result in the proper in-house expertise to sustain the improvements.
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Leading joint venture accounting for E&P
An exploration and production company participated in multiple joint ventures along side its wholly owned operations. They desired help in overseeing the financial aspects of their joint ventures without requiring a full-time senior-level employee to oversee joint venture accounting. They turned to Aventine Hill Partners for assistance.
We provided a CFO Advisor with deep experience in E&P companies and joint venture accounting to supplement the CFO and Controller for the company. Our Advisor took on accounting and finance oversight for the JVs assuring that policies, processes, and reporting were in place to meet the needs of company management and financial reporting for the publicly-traded parent.
Existing company staff performed the transaction processing. Our CFO Advisor performed monthly detailed analysis of results and oversaw the generation of financial statements.
This company was able to utilize the strong leadership and expertise that their size and complexity required on a part-time basis, achieving a more flexible and cost effective solution. Learn more about our CFO Advisory services.
Consulting on accounting and finance issues
Exploration & Production | Aventine Hill Partners
When a publicly traded exploration and production company found itself facing a variety of complex accounting issues and new financial reporting requirements, including IFRS reporting, Aventine Hill Partners was prepared to meet the challenge though with accounting and finance consulting.
The first issue we approached was the improper allocation of overhead. Our consultant reviewed the accounting processes and methodology the company was using and streamlined the allocations resulting in a more accurate and useful view of costs all the legal entities.
Next, the company found they were having difficulty forecasting revenue and depletion. After reviewing the existing process, our consultant identified where inaccuracies were being generated and implemented improvements that solved the problems.
Intercompany accounting for this company was complicated due to the number of entities involved. The existing accounting processes were becoming cumbersome and leading to incorrect entries being made. Our consultant reviewed the intercompany accounting process and made revisions, which saved time and increased accuracy.
The company was also having challenges with its CAPEX accrual predictions. Using prior experience working with similar issues, our consultant implemented a new methodology tailored to this company that improved the process and results.
When the company was required to provide financial reports based on IFRS accounting standards, our consultant led the conversion from Full Cost Accounting to Successful Efforts Accounting to make IFRS reporting possible.
With the improvements implemented by Aventine Hill Partners, this exploration & production company could more efficiently and confidently account for its growing, complex business structure as well as prepare for future challenges. Learn more about our Accounting and Finance capabilities.
Project and Interim Solutions
Helping companies meet reporting deadlines
Oil & Gas – Exploration & Production
Accurate reporting is critical for almost any company, however it can present a particular challenge for exploration & production companies due to the numerous types of reports that have to be prepared for internal, external, and regulatory purposes. After identifying several significant reporting issues and being pressed with external reporting deadlines, a publicly traded E&P company turned to Aventine Hill Partners for help.
Using our experienced financial reporting consultants, we first helped this company meet all pending reporting deadlines. This included gathering information and generating SEC Filings such as the 10-K, 10-Q, and 8-K including all necessary disclosures. We assisted in generating financial statements for existing joint ventures and creating accurate reserve reports. Once necessary reporting requirements were met, we implemented improved processes for generating both internal and external reports including a redesign of how cash flows were reported.
As a result of our efforts, this E&P company not only met its SEC reporting requirements, it was also left with sustainable processes to ensure those reporting requirements would continue to be met in the future. Learn more about our SEC, Financial, and Management Reporting services.