Archive Monthly Archives: March 2016

How to still be successful in today’s era of oil abundance

Depositphotos_7115950_original.jpgSince the decline in oil and natural gas prices since 2014, there’s been a massive shift among independent operators in the U.S. to find their footing amid crude price declines and worldwide political triggers in changing the global pricing. Thanks to the hydraulic fracturing technology that has opened up the doors to more-easily accessible shale oil, we’ve entered into an era of oil abundance.

Ernst and Young has come out with an interesting report explaining how operators can move with the market to protect themselves from the financial bottoming-out so many independent operators are currently going through. We have no affiliation or ties to Ernst and Young, but I  found the article interesting to see as a whole how the independent operators (our entire client base) is handling the rocky oil and gas climate today.

The article offers three ideas for sustainability despite low commodity prices: operational excellence, aligned capital structure and building the right portfolio.

Operational Excellence

Low oil and gas prices affect everyone in the industry — no matter what mix of oil and gas commodities you handle, how much financial strength you have or what part of the United States you’re in. By focusing on your operation to make it as agile as possible, you take a look at your office processes, systems and personnel to streamline how fast you can make decisions and on how much is actually needed to make your organization function without continuing to sink funds.

Aligned Capital Structure

To adapt to shifting investor expectations, Ernst and Young suggests managing how your cash flows and cover debt payments right now. To move forward into the future, operators will need to step away from mega-projects with high operational risks involved, and focus on projects that require less capital and shorter payback periods to allow your company to move forward.

Building the Right Portfolio

In today’s climate, many operators are selling off assets in a larger scale to stay afloat as prolonged low pricing continues to plague the industry. As more and more assets continue to enter the market, companies who can identify and close on assets that will help them not only grow in the future, but also give them equity to help ease concern over market uncertainty are the ones that will come ahead when the prices begin to rise once again.

Read the full article and it’s analysis.


Source: SherWare Blog

How Adding Optional Modules to Software Will Save You Money

A variety of processes are managed by oil and gas operators that require more management than just the normal distribution of revenue and expenses. These processes are sometimes complex enough that a whole new software program is used to manage all that is involved with it.

Many of these tasks like Delay Rental Payments, Authorization for Expenditure (AFE), Free House Gas, and State Reporting requirements are needed for many operators. Since these processes are so common among operators many distribution programs include optional modules that accommodate the management needed for each.

This allows you to handle multiple tasks within one software program instead of having to purchase a completely separate program to manage just this one aspect of your operation. A simple add-on is typically all that is needed and is much cheaper then purchasing a complete software program that was wholly designed for a specific process.

Smaller companies will often just handle the few situations that they need to manage with spreadsheets. This sometimes seems cheaper, however these are less professional looking and can be timely to use and update as your company grows. Mistakes are often made with spreadsheets and these can quickly become costly in terms of both money and public image.

The time spent managing your spreadsheets should also be considered since the labor will affect your bottom line and sometimes you just don’t have the extra time to complete certain tasks. When mistakes, public image, labor, and peace of mind are all factored in, it quickly becomes obvious that the cost of an add-on module is a huge savings over the assumed free spreadsheet processes that we often encounter.

A simple add-on module allows for better historical records, a more professional look, and any costs are typically recouped in only a few months.

Some of the optional modules SherWare offers clients include:

AFEs

Land Management/Delay Rental Payments

House Gas

Payroll

Direct Deposit

Online Reporting

Offsite Backup

MICR Check Printing

Document Manager

Advanced Reporting (build your own reports)

Cloud Version of the Software

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Source: SherWare Blog

Hidden Software Costs and How to Avoid Them

The initial price of the software is typically pretty clear. However, people are often surprised Hidden_Software_Blog_graphic.pngwhen they run into various charges down the road. When picking a software program it is important to ask about any future costs that may be involved. Here are two charges that are the most irritating to run into after you purchase and how to not be surprised by them.

Software Updates/Upgrades

Many software companies sell the software wholly for a stand-alone price. buyer will then need to re-purchase every few years or purchase any major upgrades that are released. These updates are necessary so that the software will continue to work with all other new technology that is released each year. When not expected, these charges can be surprising and discouraging.

The best way to avoid this is to purchase a software program that offers a yearly maintenance or support contract that includes all updates. These contracts are generally cheaper than re-purchasing the software every few years. This allows you to more easily see what the ongoing costs are going to be and budget accordingly.

Expired Support Contracts

The oil & gas industry is always changing and updates are regularly needed for newer operating systems, 1099s, regulation changes, and various other reasons. To save money, some clients will try to skip out of a year of support. The intention is to save the money this year and then just renew later only if it is needed, or to simply skip out of paying support for a few years. This typically doesn’t work very well as most software companies require that you purchase past updates as well.

When a support contract is used for updates, then a fee is typically charged to be reinstated to support. The result is that the savings weren’t very much and typically not worth the hassle. Software is typically only supported for a set number of years and if you skip out on support for the duration of that period, then you may find yourself in a spot where you have to re-purchase the software because support is no longer available for your version.

To avoid the costs associated with re-establishing a support contract it is best to simply maintain your relationship with the software provider by staying current on support. This is typically the cheapest way to maintain long term use of a software program.

 

What other hidden software costs have you run into?


Source: SherWare Blog

Hidden Software Costs and How to Avoid Them

The initial price of the software is typically pretty clear. However, people are often surprised Hidden_Software_Blog_graphic.pngwhen they run into various charges down the road. When picking a software program it is important to ask about any future costs that may be involved. Here are two charges that are the most irritating to run into after you purchase and how to not be surprised by them.

Software Updates/Upgrades

Many software companies sell the software wholly for a stand-alone price. buyer will then need to re-purchase every few years or purchase any major upgrades that are released. These updates are necessary so that the software will continue to work with all other new technology that is released each year. When not expected, these charges can be surprising and discouraging.

The best way to avoid this is to purchase a software program that offers a yearly maintenance or support contract that includes all updates. These contracts are generally cheaper than re-purchasing the software every few years. This allows you to more easily see what the ongoing costs are going to be and budget accordingly.

Expired Support Contracts

The oil & gas industry is always changing and updates are regularly needed for newer operating systems, 1099s, regulation changes, and various other reasons. To save money, some clients will try to skip out of a year of support. The intention is to save the money this year and then just renew later only if it is needed, or to simply skip out of paying support for a few years. This typically doesn’t work very well as most software companies require that you purchase past updates as well.

When a support contract is used for updates, then a fee is typically charged to be reinstated to support. The result is that the savings weren’t very much and typically not worth the hassle. Software is typically only supported for a set number of years and if you skip out on support for the duration of that period, then you may find yourself in a spot where you have to re-purchase the software because support is no longer available for your version.

To avoid the costs associated with re-establishing a support contract it is best to simply maintain your relationship with the software provider by staying current on support. This is typically the cheapest way to maintain long term use of a software program.

 

What other hidden software costs have you run into?