A comprehensive business software solution helps integrate operations after a big merger.

As one of the largest gas producers in the United States and a leader in the Rocky Mountain region, Tulsa, Okla.-based Williams' exploration and production group boasted a portfolio of 3.2 Tcf in reserves and 595 MMcf/d in production volumes at year-end 2001.
The company employs the latest technology, such as 3-D seismic processing interpretation capabilities, coupled with advances in drilling and completion processes to exploit developmental opportunities and explore for new reserves around existing assets.
Like most large energy companies, Williams is focused on growth through development activities, exploration opportunities for new reserves and strategic mergers and acquisitions. To achieve its goals, Williams requires accurate and timely information and must have the ability to execute its strategy efficiently while managing the complex business processes of today's oil and gas industry. Following the recent implementation of integrated financial and operational business management systems, Williams has achieved impressive business automation and greatly improved its exploration and production group's internal processes.
"One of the frequent issues of large oil and gas producers is that we must place more emphasis on the underlying technology than small to midtier companies," said Bryan Guderian, vice president of Williams E&P. "The combination of legacy and vendor-supplied systems that we used prior to installing our new system was problematic and did not provide the degree of integration, field support and management information required to effectively manage Williams' growing E&P business. The Williams objective entailed full divisionwide business process re-engineering coupled with a comprehensive set of tools capable of supporting our business."
To accomplish this objective, Williams E&P turned to Paradigm Technologies, a Petroleum Place company in Denver, Colo., that develops business software solutions for the oil and gas industry. Williams purchased Paradigm's Excalibur Energy Management Solution, an integrated financial and operational software package comprising systems grouped according to business function, including cost accounting, revenue, division order and land software. The system was installed across the exploration and production group in late 2001. "Williams' expectations were to achieve full business automation and at least an 80% business fit for our contractual and regulatory environment," Guderian said.
Real results achieved
Williams E&P achieved a significant improvement in the timeliness of data for royalty, tax and other financial reporting, as well as more timely and accurate reporting of operational results (Figure 1). "We have the ability to produce real-time lease operating statements with a level and accuracy of detail which has enabled our operations groups to further drill down into underutilized producing assets, thus reducing costs and maximizing revenues. Additionally, the new suite of tools has enabled us to capture additional tax incentives and other royalty payment synergies we didn't have access to previously, and it gives us a continuous view of profitability," Guderian said.
"We have reduced man-hour usage for data management, which enables us to apply more time to financial analysis of results while providing better support for field operations through the distribution of accurate, timely lease operating statements and other financial and operational reports. The business streamlining initiative coupled with Excalibur's functionality has enabled Williams to reduce accounting manpower requirements for a couple of recent acquisitions. This efficiency has allowed E&P to invest more resources analyzing business results that were previously involved with managing data and pinpointing issues quickly, allowing us to maximize revenues while managing expenses more closely. Williams' increasing business complexity has become much easier to manage under the new suite of tools," he added.
"The economic impact of the Excalibur system will be more clearly defined as time goes by, but efficiencies have already improved dramatically. Processing time for revenue distribution has been reduced from a 12-hour cycle to 1 hour. System maintenance has been reduced by more than 50%. In addition, significant synergies are being realized internally as a result of systemic integration."
Well level profitability, gas balancing, and contract level revenue and cost analyses are available for all assets, from creation of the oil and gas lease to the plugging of a producing well. Williams also has seen a significant decline in counter-party issues surrounding payments and billings, more timely resolution of audit and US Minerals Management Service issues and more efficient use of analytical data between operations and accounting functions.
Quick and easy
"Our old system took years to implement, and Excalibur was live in a matter of 5 months," Guderian said. "This is in contrast to the market's perception of what it takes to implement new systems. We were seeking a business solution as opposed to a systems solution and felt that Excalibur best fit the requirements. The product has redefined the Williams E&P organization and the way we operate, and we are convinced this solution will complement our rapid growth in the exploration and production sector. It has already been proven invaluable for mergers and acquisitions, as evidenced by Williams' merger with Barrett Resources, since Barrett was using Excalibur as well."
In third quarter of 2001, Williams acquired Barrett Resources Corp. Williams viewed the merger as beneficial because it delivered long-lived reserves and long-term capital opportunities, while Barrett viewed it as beneficial because it enabled them to merge with a company with good capital funding and downstream capabilities. Barrett's assets fit perfectly with Williams E&P core competencies, which are developing tight-sands basin-centered reserves and coalbed methane.
"Barrett Resources Corp. was a long-time Excalibur user," said Guderian, "so the implementation at Williams made the consolidation of our respective environments and processes more focused, allowing us to capture more efficiencies and process effectiveness than otherwise afforded by an unrelated user tool.
"When Williams originally contacted Paradigm about its cost accounting systems, we specifically wanted an Oracle database product," said Guderian. "None of the available solutions proved to be appropriate, so Williams reviewed the merit of Paradigm's UniData-based Excalibur application and was very enthusiastic about its capabilities. As a result of the success on the cost side project, Paradigm was able to move forward with the revenue and land system implementations."
There is more to implementing new systems than simply underlying technology. Factors to consider along with the technology are an effective, responsive vendor that provides proven reliable and functionally rich software. Excalibur's fully integrated accounting, operations and land systems eliminate the linkage required when using components from multiple vendors - a cause of many problems.
"Paradigm was exclusive to system implementation at Williams E&P," said Guderian. "We are quite satisfied with the efficient implementation and operational performance of the product and are convinced this solution will complement our continued rapid growth in the exploration and production sector."

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