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December 03, 2014
Delivering on production forecasts—the most important piece of shareholder value?
By: Dean Forrester

Oil and gas companies are increasingly being held more accountable for providing accurate and timely production forecasts. Consistently missing target forecasts can adversely impact companies—whether it is operational value lost on inability to capitalize on production opportunities, or capital losses that come with weakening shareholder confidence. Missed production opportunities can be easier to overcome; damaged shareholder confidence has a more devastating and long-lasting impact.

Many contributors are required to provide timely data for the company’s forecast calculation, which in most cases is a collection of integrated spreadsheets. These contributions can include reservoir and well potentials, production actuals, gathering/transportation capacities and constraints and commercial expectations. Throw in a rapid-fire drilling schedule in an unconventional program, and the forecasting process can be a very daunting task, with one missing or incorrect variable having a large impact on the results.

An accurate production forecast requires a structured, proven and consistent workflow methodology that is repeatable month-to-month and which solicits specific and on-time input from required sources. This methodology should also provide for the validation and approval of forecasting results, as well as stipulate a single results repository. Couple these requirements with well-designed analytical reports and dashboards, and oil and gas companies can quickly move away from spreadsheet-generated forecasts and the inherent risks associated with this unstructured process. The result: Energy companies can better meet production forecasts and thus deliver shareholder value.

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