Solving M&A Data Integration with a Digital Oilfield Gathering System

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Like oil, data have become a valuable commodity in the digital economy. In fact, the Economist declared that data are now the most valuable resource in the world, surpassing oil. While the calculus may be complex with WTI approaching a seven-year high and with global inventory nearing a 20-year low, data aren't just valuable but mission critical to the health and profitability of an oil and gas company.

Seeing data as a valuable commodity isn’t new to the industry. An oil and gas company's production volumes, well files and completions data are relied on daily to manage operations, prepare regulatory reporting and book revenue. Most operators are also heavily invested in hundreds or even thousands of non-operated working interests, wells operated by others (OBO). With so much partner data to analyze, producers agreed to reciprocal data sharing beginning in the early 90s to ensure compliance with joint operating agreements (JOA), lessor and statutory reporting obligations.

Challenges and risks

In the digital oil field, success depends on a producer's ability to consume both structured data, like production data shared in a spreadsheet, and unstructured data and documents. These well files include drilling, completions, workover reports, well logs, directional surveys and authorization for expenditures, among many other document types. While production systems of record have been digital for decades, operator and OBO datasets are disconnected from each other, stranded behind corporate firewalls.

As a result, even though the source data sit in a database, partners resort to manually exporting snapshots of monthly volumes to share with each other. Operators that want to put their OBO data to work must first aggregate many different production data sources, normalize and load into their own systems of record and internal analytical tools, which is a time consuming endeavor.

OBO data consumption is never-ending. There is the day-to-day need of energy professionals to ingest and analyze a steady stream of partner information, which is often emailed or left on an FTP server. Multiple partners mean that each operator receives OBO data from multiple sources in widely varying data and report formats.

Producers face even larger scale data onboarding challenges from mergers, acquisitions, divestitures and data trades. It can be like drinking from a firehose as operators attempt to transform boxes of paper into data or convert hard drives of PDFs into meaningful insights.

Mergers are especially problematic. Both producers must simultaneously maintain effective oversight of assets under separate management and integrate drilling, completions and production data for uniform analysis and regulatory reporting. However, data silos and a persistent paper data problem introduce many risks as newly merged operators combine and rationalize production databases as well as scan, classify and load myriad well files. Integrating M&A data while maintaining uninterrupted operations can take months or longer, a process that is akin to changing a flat tire while driving down the road.

Data sharing network

Born out of the need for producers to comply with JOAs, PDS Energy began laying down a digital gathering system to move OBO data between partners. Its Well Data Exchange is a reciprocal data sharing network that is used by more than 90% of Fortune 500 energy companies to meet standard partner sharing obligations and manage substantial basinwide data sharing arrangements.

At a time when operators are looking to enhance their OBO dataset more than ever, share data, and easily divest or bring on assets, the Well Data Exchange helps producers by connecting stranded OBO production and well data securely over the cloud. Like a digital gathering system, the technology flows data from each operator's internal databases and brings multiple OBO data sources together to a single distribution point where daily production and well reports can be consumed in near-real time.

Well Data Exchange participants can access most of their OBO production volumes in as little as four days compared to traditional data sharing methods that take up to 120 days. As a result, producers gain more timely insight into their operations, which improves revenue forecasts and accruals.

Case study

PDS Energy's digital gathering system is especially valuable for maintaining business continuity in the context of a merger. In January 2021, Devon Energy and WPX Energy completed their merger, bringing an extensive portfolio of assets in the Permian and Williston under Devon Energy's management. Devon Energy needed to continue sharing production data and well documents with its partners while integrating datasets from the merger and ensuring uninterrupted data delivery to WPX Energy's partners.

In addition to the challenge of sharing well information at scale with each company's partners, the newly merged companies utilized different well databases. Devon Energy wanted to consolidate and automate its owner data distribution for both companies while enabling it to manage even more wells without adding additional resources.

Because both WPX Energy and Devon Energy were participants in the Well Data Exchange, Devon Energy was able to leverage partner distribution lists and entitlements (wells that each partner has permission to view) to facilitate merger data integration. PDS Energy also worked closely with both companies during the merger to rapidly migrate and map WPX Energy data from its commercial well database into a different solution at Devon Energy.

The PDS Energy-operated Well Data Exchange enabled Devon Energy to provide seamless and uninterrupted data sharing for its partners while enabling it to rapidly onboard WPX Energy data and make it instantly available for analysis and reporting by Devon Energy's employees, ensuring business continuity during a large-scale merger. By automating well data and production sharing and providing secure self-service access to its partners, Devon Energy is able to ensure delivery of well information at any scale. Using the Well Data Exchange, the company receives 250 well documents per day on average spanning 25 different report types, including daily partner drilling, completions and workovers.

Conclusion

If data are just as valuable as oil, then best-in-class oil and gas companies are defined by how efficiently they extract and move hydrocarbons as well as how efficiently they extract and move well data. To succeed, organizations must master the flow of OBO data through collaborative technologies as the digital oil field expands and as operators become more intertwined through their non-operated working interests.