P2 helping upstream companies solve their technology problems

EDITOR'S NOTE: P2 Energy Solutions provides technology solutions for exploration, development, and management. Home of such notable solutions as Excalibur, Enterprise Upstream, and Tobin Enterprise Land, the company provides strong capabilities in operational accounting, financial, and land management. With P2's Reserves Management system, geographic asset management system Tobin GIS Studio (TGS), Tobin Map Data products, and well lifecycle management platform Wellcore, P2 delivers the broadest technology offering in the industry. P2 president and CEO Bret Bolin recently took time to talk with Oil & Gas Financial Journal about the company, its customers, and E&P technology five years out.

OGFJ: Can you provide a brief description of your typical customer — domestic or international; small, midsize, or large independent; supermajor or NOC?

BOLIN: I'm not sure we have any typical customers. At P2, we're fortunate to have a broad portfolio of products and services that contribute to our customers' bottom line. Our solutions scale to fit all aspects of the upstream market, fitting the super majors and large independents, as well as the emerging companies that may have just received private equity funding. We are unique in the space because our solutions can scale and be adopted, and create value from all ends of the oil and gas industry in North America and globally. That's one of the strengths of our company. We count 60% of the industry as our customers — more than 650 solution clients under multiyear agreements. Our clients include majors like Chevron and ExxonMobil, internationals like BP and Shell, independents like Anadarko and Energen Resources, Canadian independents like EnCana and PrimeWest Energy Trust, as well as start-ups.

OGFJ: Some oil and gas producers are still using spreadsheets for various functions that would be made more efficient by using software solutions like those of P2. Is cost a consideration for some of these companies, or are they simply reluctant to change the way they're been doing business?

BOLIN: We like to think that spreadsheets are becoming less and less important. That's because spreadsheets, no matter how complex, tend to deliver a view of a single part of the business, not a view of an entire enterprise business. But as more and more CEOs have learned the integrative power and cross-enterprise reporting capabilities of products like Tobin Enterprise Land and Excalibur, spreadsheets have become just a step in the process.

OGFJ: What are the biggest technology issues facing today's oil and gas industry?

BOLIN: Two of the biggest issues we are focused on at P2 are: 1) mobility — access to programs anywhere and anytime, and; 2) cost reduction and monitoring of repetitive expenditures such as those required for drilling shale gas plays. Most often consumers think of mobility as the freedom to send and receive information anywhere at their convenience whether it's from a laptop, phone, or any other portable device. Upstream oil and gas, especially exploration and production, isn't just a five-day-a-week job, it's 24/7/365 and access to the tools and financial programs to facilitate good decision-making is critical to success.

Six months ago we introduced the online version of Excalibur, one of our leading accounting and integrated financial programs. It's a robust tool that enables users to perform any activity they would do in the office, anywhere they want to. In June of this year we are introducing the online version of Tobin All Access, our leading map data service. Tobin All Access gives E&P companies the accurate map data they need, with the flexibility and ease of "just-in-time" delivery.

In the arena of cost reduction we see reporting and control of authorizations-for-expenditure to be critical. In a time when a shale play can be a great decision one day and a poor decision the next — or the next one-hundred days — we are encouraging exploration and production companies to concentrate on consistent field spend for all parts of repetitive processes. Having the systems in place to track and monitor AFE's, and then connect estimates with actuals, reduces overruns, frees up cash, and mitigates risk. We help our clients control what they can because there are so many things beyond their control — like price.

We are also continuing to leverage various reporting and business intelligence solutions to ensure that cross-product reporting capabilities are available on every decision-makers desktop. From CEO to field operator, the right financial, operational, and capital information will enable improved decision-making and bottom-line performance.

OGFJ: How much of your business is in the upstream energy sector?

BOLIN: The majority of our business is upstream because that's where we add the most value. We emphasize upstream because it's in drilling and production that our programs help most to tighten up fiscal accounting. We also believe that upstream is the portion of oil and gas that can benefit the most from convenient input, strict financial procedure and rapid financial reconciliation. We find that the repetitive nature of drilling tends to lull even the best companies into a sense of complacency — if an unmanaged cost incrementally increases on one well, it's rarely noticeable, but if it continues to creep up in 100 subsequent wells and goes undetected, it can significantly impact an E&P company's bottom line. I view it like Edward Lorenz's "Butterfly Effect" — small changes in initial conditions can cause major deviations in future results. Most all of our upstream clients become true believers once we're able to prove what our products and services can do for them.

OGFJ: What does P2 see as the biggest opportunity for upstream companies today?

BOLIN: Our clients tell us their biggest concern is cost management, so we're working to develop solutions that help address that need from an investment, cost efficiency, and flexible pricing standpoint.

The place where E&P companies can improve the most is assessing and improving the way they use technology, infrastructure, processes, data, workflows, and cumulative knowledge, to achieve their business goals.

I believe the biggest opportunity is advanced integration of business disciplines. If top management can't see what's happening across the entire enterprise — each department, each cost center — then, to varying degrees, the entire company is running blind. This type of visibility across all areas of a business enables access to more current, accurate information that leads to better and faster business decisions. Better and faster business decisions usually lead to profit.

We are always looking to leverage our broad set of capabilities to ensure that key client decision-makers, at all levels of the organization, are empowered by information. We have released several reporting and data interrogation toolsets that link together various applications and continue to refine our dashboard and business intelligence capabilities to ensure our clients have immediate access to critical information.

OGFJ: What's the secret to P2's strong performance during the economic crisis over the past 18 months?

BOLIN: It really comes down to people, products, and proficiency. We've become the most comprehensive source of upstream solutions because we offer the broadest range of exploration, development, production, and management solutions available in the energy industry. Our portfolio of capabilities drives client value. We're not just a one-solution company. That means our solutions help companies of all sizes, from private independents to supermajors. On one end of the spectrum, supermajors like ExxonMobil, Marathon, or Oxy need extremely robust systems that can be configured to their unique situations, and we have that. On the other end are the acquisition-based start-ups. One of the benefits of our move to easy online access is speed-to-implementation and scalability up or down as needed. That's a huge benefit for start-ups. So regardless of the size, or the need, we have products that enhance efficiency and our clients' bottom line performance.

Of course there would be no products or services without highly qualified people. We are a solid market leader from the context of the numbers of customers we have in the US, Canada, and internationally, but those numbers wouldn't be possible without a deep team of highly qualified players who innovate together to solve our clients problems. We are always scouting for highly qualified individuals to join our ranks.

Proficiency is the final ingredient of our success. Translated, that means employees who are subject matter experts in the space. That includes knowing the issues our clients face every day, understanding the pressures of their jobs, and problem solving with them to find the best solution. There's that old saying about "walk a mile in my shoes." Well, our experts at P2 have done just that. That makes a world of difference in a close game.

OGFJ: P2 has been in the oil and gas industry for many years with some legacy products dating back 80 years. How does this heritage help with growth?

BOLIN: We are proud of our history, but in the overall scheme of business, our history is just a footnote. Our philosophy is that we have to prove our worth and be accountable to our customer's business every day. There's a reason "solutions" is part of our name.

That said the company is really the result of a series of product acquisitions over the last decade. P2 Energy Solutions came into being with the 2003 merger of Paradigm Technologies, Petroleum Financial Inc., and Novistar — all oil and gas technology providers. Then in 2004 we added Tobin International, and in 2005, Qbyte. Wellcore is our most recent portfolio addition having joined P2 in 2008.

Those core acquisitions provided us with the opportunity to look at the acquisitions through a one-company lens to bring these capabilities together through process integration or technical platform alignment so we can offer a broader set of solutions. Today our company is probably more integrated than it's ever been and that's a credit to our entire organization.

OGFJ: What do you consider your biggest competitive advantage?

BOLIN: We take a market-focused approach to learning the business issues and trends in our space, and we talk to industry insiders so we have the broadest based perspective on where our products are now and where they need to be headed. We have more than 650 solution clients today. Our goal is to increase that to 1,000 by 2012 by continuing to offer leading and flexible solutions that solve our customers business issues now and in the future.

OGFJ: How will your business change in the next five years?

BOLIN: We're looking to expand into new markets. Probably the best example is renewables. We're seeing renewables play a bigger part in the North American energy markets. We've been able to reposition some of our products to align with the business needs of alternative energy providers, specifically in wind and geothermal. We've gotten some market wins recently and some existing client extensions of our products inside some of our client's alternative energy groups, so we're excited about that going forward.

As for exploration and production in oil and gas we see a greater emphasis on managing risk, controlling costs, and evening out the peaks and valleys of price. Our goal is to help our clients get to more predictability. There seems to be signs recently that our economy is beginning to pull out of the recession and globally that will put pressure on demand. We need to recognize that high oil and natural gas prices can create a false sense of security and that it's important to manage the upturns as critically as we're forced to manage the downturns.

"If an unmanaged cost incrementally increases on one well, it's rarely noticeable, but if it continues to creep up in 100 subsequent wells and goes undetected, it can significantly impact an E&P's bottom line. I view it like Edward Lorenz's ‘Butterfly Effect' — small changes in initial conditions can cause
major deviations in future results." — Bret Bolin