With the perfect storm of the COVID-19 pandemic and the recent collapse in oil prices, the pressure has never been higher for oil companies to cut costs to survive. Though these past few years the industry has seen rapid advances in tech innovation and application in drilling and services, the adoption of new technologies in the back office has lagged due to risk aversion and failure of many finance leaders to understand the benefits of modern technology, specifically true cloud accounting. With the accelerating waves of the retirement of the older generation and the emergence of younger leaders who grew up in the digital age, service companies are beginning to see that full-scale digital transformation has gone from optional to urgent.
An example of this trend can be seen at Silvertip Completions, a Midland-based provider of wireline and pumping solutions to the Permian Basin. When CFO Kyle Kirk joined the company three years ago, he had a vision that challenged traditional thinking about how finance operations should be set up. Having entered the labor force in 2000, he started his career at the same time software first began moving to the cloud.
Kirk and his colleagues began a search for modern, cloud-based software that automates customer-facing processes of sales and operations, and integrates with back-office accounting systems to streamline the order-to-cash cycle, accelerate cash flow and keep administrative expenses low. Having selected FieldFx by LiquidFrameworks for their front-office solution, they turned to AcctTwo to guide them through their implementation of a modern financial application and integrate the two systems for maximum efficiency.
“Most companies, especially oil and gas service companies, are constantly under pressure from both internal customers, such as operations personnel, executives and owners, and external customers to provide more datapoints beyond 10 years ago [as well as] more timely data—gone are the days of invoices or data provided in weeks—and more efficient data without additional costs,” Kirk said.
“No accounting system has an oil and gas-friendly front-end field ticketing and billing system that accommodates the point-in-time, detailed
data collection needed by most companies, especially oil and gas service companies. Service companies are no longer providing simple invoices like we were a decade ago. We are expected to provide data that detail what happened every step of the process and track efficiency metrics, process exceptions and resolutions. Without a front-end system like FieldFX, companies are relegated to tracking data in separate flat-file systems such as Excel or Access. Meaningful reports have to be created by hand, combining the Excel data with accounting system data, which makes reports time-consuming, prone to error and difficult to repeat.”
Power of modern cloud software
LiquidFrameworks’ FieldFx is a mobile field operations management solution that organizes and manages jobs, quotes, field tickets, equipment, contracts and more for sales and operations. Implementing this system has enabled Silvertip to capture real-time data once, at the source and have those data flow through their systems in an automated way. This allows access to data immediately and avoids the need for manual, redundant data entry.
“FieldFX allows us to capture almost every imaginable piece of data recorded at a well site. We have eliminated almost all paper from our field personnel,” Kirk said. “We have also moved from each of our field engineers and supervisors needing laptops to using tablets, cutting our computing cost in about half. We have near-real-time data without an FTE having to manually enter it. We know what happened in the field, both good and bad, almost immediately.”
Transforming the back office
Though things were working well in capturing all the field data, Kirk needed to integrate the FieldFX front end with a modern accounting system on the back end to fully realize the power of an integrated order-to-cash process. Kirk turned to Houston-based AcctTwo, a provider of cloud-based financial management software and managed accounting services. AcctTwo has helped more than 1,000 companies move their accounting systems to the cloud to leverage the value of digital transformation and set the stage for the next wave of technology innovations.
Moving to a modern, cloud-based financial management system like AcctTwo’s Sage Intacct provides the benefits of better process automation and anywhere, anytime access to data.
Cloud software enables the software provider to provide rapid updates across the entire customer base, speeding up the pace of innovation and allowing customers to get access to the latest technology innovations at all times. Moving to the cloud is just the first step of many in the digital transformation journey. AcctTwo uses robotic process automation to automate processes both for their customers as well as for their own internal operations, and it is working with Sage Intacct on their artificial intelligence beta program.
B integrating the front-office sales and operations system with the back-office accounting and billing system, Silvertip is able to generate its customer invoices faster, speeding up the cash collection cycle and reducing billing errors.
“The implementation of FieldFX, coupled with AcctTwo’s integration between FieldFX and Sage Intacct, has been the largest and most successful advancement of our vision to automate manual processes wherever possible,” Kirk said. “The programs have allowed a seamless, efficient flow of data from the field to the accounting system. This implementation has eliminated one FTE during a time when resources are significantly constrained due to low oil prices. Now we are reviewing and evaluating data instead of entering data. Even when we get back close to 100% utilization, we should not have to add any additional FTEs to accommodate field tickets, billing, etc.”
He said the average days to invoice have decreased by about two days. They are currently using the data to develop unit-level costing to better track profitability by unit and activity “as customers love to change products and processes on the fly,” he said.
Kirk added, “FieldFX and Sage Intacct are both simple, effective, yet powerful systems that together have greatly increased our ability to measure our operations, both for ourselves and our customers.”
Digital transformation has yielded big benefits for companies in numerous industries over the past 10 years. Oilfield services companies that embrace these changes like Silvertip Completions will not only be able survive the current and future crises but also thrive.
BlackRock has dropped out of the race to become an investor in Abu Dhabi National Oil Co.'s (ADNOC) natural gas pipeline assets, two sources familiar with the matter said.
Aramco is working with JPMorgan and Goldman Sachs on the deal to tap potential buyers, sources have said.
The deal comes as the world's top oil and gas companies, including ADNOC, scramble to control costs in response to the coronavirus crisis which has hammered oil demand and prices.