Data Mining: Unlocking the Intelligence in Your Data Marlon B. Williams, CPA, ACDA Partner, IT Advisory Services Weaver Brian J. Thomas, CISA, CISSP Partner-in-Charge, IT Advisory Services Weaver 0 Today s Agenda Big Data What is it? Data Mining at a Glance Why the Oil & Gas Industry Needs Data Mining Know Your Tools Next Steps & Final Thought Questions & Answers 1 BIG DATA What is it? 1
What is Big Data Data is produced from all parts of a company Wikipedia says: A collection of data sets so large that it becomes difficult to process using traditional data processing applications. Marlon says: So much data that it freezes Microsoft Excel. 3 What is Big Data A company generates multiple sources of data It s not uncommon for each data source to have 50,000+ lines 4 What is Big Data Having large amounts of raw data does not necessarily translate to effective decisionmaking Interpretation is key, and this is where data mining shines 5 2
Data Mining at a Glance Start with large amounts of disparate, raw data from different sources Vendor Data LOS Reports JIB Reports Process and interpret the data using: Software ACL Scripts and formulas Industry statistics Artificial intelligence Database management Accounting knowledge Output is usable data: Reveals correlations and patterns to support decision making 6 Data Mining at a Glance Manual Sampling See only part of the picture Eyeball large reports Make decision based on small parts of the data Constrained by time Automated See the full picture Leverage all of the data Combine data from all parts of the company Better data in less time Analytics that are customized to your processes 7 8-9% average profit margins High risks per project Geographically dispersed operations Multiple service providers and subcontractors Joint interest billings An abundance of disparate data: AFE Cost by well Production by well 8 3
Production Side Are you leveraging production statistics to produce most efficiently? Are you being charged correctly by your vendors? Are you paying invoices twice? What about fraud? Would you know if kickbacks were happening? Supplier Side Are you getting paid in a timely manner? Are you billing completely and accurately to contract terms and capturing all services? Are you overpaying your employees and contractors? Do you know who your most profitable customers are? 9 JIB Reporting: Sample Cost Questions Well Costs Do costs to production vary from expectations? Vendor Costs Do vendors charge for the same price for similar services? Have new vendors been properly vetted? Production trend analysis by various drivers: cost to barrel, MCF by well, region, location, project, etc. Looking at trends within production against geologists reports; pinpoint nonproductive elements 10 JIB Reporting: Sample Cost Questions Transportation Costs Analyze trends within the costs to better explain truck tickets Is it cost effective to develop your own disposal well? Production Costs Volume vs. sales are there discrepancies that may point to a significant shrinkage problem that needs to be investigated? Timing of production can we maximize efficiencies? Should we convert from electric compressors to natural gas? 11 4
Outliers Reveal Patterns 12 Excel vs. Other Tools Excel is good to a point Maxes out, freezes up One changed formula has domino effect Data mining tools Made for very large data sets Sophisticated data analysis Custom queries that are repeatable and reliable Know Your Tools 13 Trucking Expense 14 5
Next Steps Know your data If you don t know your data, you will not develop a successful program Key points to consider in designing a successful program: Develop a plan Identify the risks Determine your stakeholders Determine the tool and who will implement the tool 15 Final thought: Mining your company s data can unlock key information to reduce risks and improve your bottom line 16 Disclaimer of Liability Weaver provides the information in this presentation for general guidance only, and it does not constitute the provision of legal, tax, financial accounting or investment advice, or professional consulting of any kind. The information included herein should not be used as a substitute for consultation with professional tax, financial accounting, legal or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax information is not intended to be used and cannot be used by any taxpayer for the purpose of avoiding accuracy related penalties that may be imposed on the taxpayer. The information is provided "as is" with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose. 17 6
Questions & Answers Marlon B. Williams, CPA, ACDA Partner, IT Advisory Services Weaver Direct: 972.448.6919 Marlon.Williams@Weaver.com Brian Thomas, CISA, CISSP Partner-in-Charge, IT Advisory Services Weaver Direct: 832.320.3280 Brian.Thomas@Weaver.com 18 7