Managing Your International

Assets with Enterprise Upstream TIMOTHY AKARUE| SAHARA UPSTREAM

FRANCISCO CORTES| ENERGY SOLUTIONS INTERNATIONAL (ESI)

BRENT THOMAS| ENERGY SOLUTIONS INTERNATIONAL (ESI)

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Agenda

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5 Sahara Upstream | EU Solutions

Introductions| Timothy, Francisco and Brent

Sahara Upstream| The Sahara Group

International vs North American E&P| How do international assets differ

Enterprise Upstream (EU) International Solution| Operations, PSA, etc.

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Introductions TIMOTHY, FRANCISCO AND BRENT

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Introductions

• Timothy Akarue

– Systems & Project Manager

– Sahara Upstream – A Sahara Group Company

• Francisco Cortes

– Director of Financial Solutions

– Energy Solutions International (ESI)

• Brent Thomas

– Director of Operation and Allocation Solutions

– Energy Solutions International (ESI)

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Sahara Upstream A SAHARA GROUP COMPANY

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Diversified in the energy sector with businesses

that span the entire energy value chain…

• Commodities Trading,

• Upstream O&G,

• Aviation Supply,

• Downstream (petrol stations),

• Power Generation & Distribution,

• Infrastructure Service Provisioning,

• Storage,

• Logistics

• Shipping

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Sahara Upstream is the

exploration and production (E&P)

arm of the Sahara Group. Its

affiliates include;

• Sahara Energy Field (SEFL),

• Enageed Resources,

• Sahara Energy Exploration and

Production

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Sahara Upstream has a firm

foundation in selected West African

basin assets either as operator or

partner:

• OPL 274 Western onshore Niger

Delta (100%)

• OPL 284 Offshore Deep Water (45%)

OPL 286 Offshore Deep Water (26%)

• OML 40 Onshore W Niger Delta

(51%)

• SWCTP Offshore Shallow Water (90%)

• CI-500 Offshore Shallow Water (35%)

• CI-502 Offshore Deep Water (20%)

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Why chose Oracle/P2/ESI? • Sahara Group is Oracle Solutions shop.

– Leverage on Oracle in-house

knowledge

– Resides in the same database as EBS

– Built on Oracle Applications Framework

– Uses the EBS security model

– Shares menus and navigation

– Allows forms personalization

• P2 Enterprise Upstream Solution

– Follows Oracle Standards

– Fully Integrated with Oracle

• ESI as Implementer

– Reputation in the MENA Market Place

– Industry and Solutions Expertise

Sahara Upstream Business Requirements

• Integration

• Within solution modules

• Overall company

• Reduce manual processes

• Managing joint ventures accounting

• Produce billing statements

• Reporting

• Single Source

• Robust and Flexible

• Napims (Government) reporting

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International vs North American E&P HOW DO INTERNATIONAL ASSETS DIFFER

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Unique Business and International Observations

• Operations and Production

– Reserves vs. Production

– What information is important?

• Financial

– Production Sharing Contracts

• Annual Work Program Budget approved by government

• Expenditure controls on budget

• Entitlement changes based on PSC calculations

– Governing Reporting Requirements

• Specific to country: government or royal family

– Joint Venture

• Cash call requirements

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Reserves vs Production: Who gets it done?

Top Eight Oil Reserves (MMBBL)

1. Venezuela 297,170

2. Saudi Arabia 269,913

3. Canada 175,200

4. Iran 157,300

5. Iraq 140,300

6. Kuwait 104,000

7. UAE 97,800

8. Russia 80,000

Top Eight Oil Producers (BBL/Day)

1. Russia 10,900,000

2. Saudi Arabia 9,900,000

3. United States 8,453,000

4. Iran 4,231,000

5. China 4,073,000

6. Canada 3,592,000

7. Iraq 3,400,000

8. UAE 3,087,000

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Reserves vs Production: Who gets it done?

Top Eight Oil Reserves (MMBBL)

1. Venezuela 297,170

2. Saudi Arabia 269,913

3. Canada 175,200

4. Iran 157,300

5. Iraq 140,300

6. Kuwait 104,000

7. UAE 97,800

8. Russia 80,000

Top Eight Oil Producers (BBL/Day)

1. Russia 10,900,000

2. Saudi Arabia 9,900,000

3. United States 8,453,000

4. Iran 4,231,000

5. China 4,073,000

6. Canada 3,592,000

7. Iraq 3,400,000

8. UAE 3,087,000

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Reserves vs Production: Who gets it done?

Top Eight Oil Reserves (MMBBL)

1. Venezuela 297,170

2. Saudi Arabia 269,913

3. Canada 175,200

4. Iran 157,300

5. Iraq 140,300

6. Kuwait 104,000

7. UAE 97,800

8. Russia 80,000

Top Eight Oil Producers (BBL/Day)

1. Russia 10,900,000

2. Saudi Arabia 9,900,000

3. United States 8,453,000

4. Iran 4,231,000

5. China 4,073,000

6. Canada 3,592,000

7. Iraq 3,400,000

8. UAE 3,087,000

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Reserves vs Production: Who gets it done?

Top Eight Oil Reserves (MMBBL)

1. Venezuela 297,170

2. Saudi Arabia 269,913

3. Canada 175,200

4. Iran 157,300

5. Iraq 140,300

6. Kuwait 104,000

7. UAE 97,800

8. Russia 80,000

Top Eight Oil Producers (BBL/Day)

1. Russia 10,900,000

2. Saudi Arabia 9,900,000

3. United States 8,453,000

4. Iran 4,231,000

5. China 4,073,000

6. Canada 3,592,000

7. Iraq 3,400,000

8. UAE 3,087,000

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Enterprise Upstream Production Management

All Things Equal, Squeeze

Everything out of EU Production

Managements Allocation Engine

• Multi-Tier Allocations

• Information Only Products

• Custom Dispositions

• BuyBack

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Enterprise Upstream Operations “Squeeze”

North America

Operational Data Ware house

Volume Allocation Engine

International

Operational Data Warehouse

Volume Allocation

Engine

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Enterprise Upstream Operations “Squeeze”

North America

Operational Data Ware house

Volume Allocation Engine

International

Operational Data Warehouse

Volume Allocation

Engine

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Enterprise Upstream Operations “Squeeze”

North America

Operational Data Ware house

Volume Allocation Engine

International

Operational Data Warehouse

Volume Allocation

Engine

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Unique Financial Challenges with International

• Production Sharing Contracts/Agreements

– Simple Definition

– Components and Simple Example

• International Joint Venture

– Cash call requirements

– AFE Management

• Reporting Requirements

– NAPIMS in Nigeria

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Simple PSA

Key Components

• Production

• Lifting

• Recoverable Costs

– Sliding Scale

– Well Phases

• Profit Oil

• Royalty

• Taxes

• Overhead

• R-Factor

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International

Joint Venture

Cash Calling JV Partners by

including Cash Flow Elements

• Define Net Cash Flows

(Current Assets – Current

Liabilities)

• Determine Cash Call

Position (Cash Calls Issued –

Cash Calls Received)

• Include Budget or Forecast

amounts

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International AFE Managing AFE & Work Programs

Efficiently

• Government Budgets (Annual Work

Programs)

– Work Programs require Its own set of

Account & Categories

– Generate Monthly Performance Reports

to Government

• Capital Projects (Authorization for

Expenditures)

– Automated integration between EU AFE

and Oracle GL Budgets

Automated AFE Closure to

Fixed Assets

• AFE Close event

automatically creates Fixed

Asset Lines and its respective

GL Journal Entry re-

classification

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Government Reporting

• Oil & Gas National Companies

required to report as per their

regulatory organizations

• Individual Assessment

• Experience

• Capitalize on Solutions

Capabilities

Every Country a New

Government Reporting

Challenge

National Petroleum Investment

Management Services (NAPIMS) is

the Corporate Services Unit (CSU)

and the Exploration and

Production (E&P) Directorate of

the NNPC.

Managing Nigeria Government's

investment in the Upstream sector

of the Oil and Gas industry

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EU International Solution OPERATIONAL, PSA, ETC.

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Taking Advantage of EU Operational Capabilities

Form Fields

• Well Test

– Frequency

– Detail

• Gas and Oil Analysis

• Events

• Equipment Reading Details

• FlexFields

• Forms Customizations and Forms

Personalization

Operational Forms

• Engineering TPMS – CC and PQ

• Operating Units

• User Defined Events

• Equipment Forms

– Chemical Injection

– Common Equipment

– Heater Treater

– Pipeline

– Separator

– Valve and Choke

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“BUT WAIT,

THERE’S MORE”

Operationally

focused modules in

Enterprise Upstream?

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Operational Modules in EU

Well Activities

• Plans and captures specific operational activities both at well and

completion level. Includes detailed forms and cost per activity.

Terminal Management

• Forecast tank stock inventories and party lifting positions as well as

account for party ownership positions of actual trips and movements.

Production Sampling Analysis

• A flexible tool that captures the analysis of oil, gas, water chemicals and

water micro-biological agents. Also tracks and monitors chemical

treatment data and corrosion data as well as pigging operations.

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EU’s Production Sharing Agreement

Production Sharing Agreements

(PSA) manages cost and production

transactions and allows users to

manage their PSA requirements with

easy to define calculations.

With PSA, you can easily manage

your agreements, track costs and

production, as well as manage the

complex calculations required by

each agreement.

Capabilities

• Full integration with Enterprise

Upstream Joint Venture Accounting

(JVA)

• Costs extracted from JVA module

• Manages prior period adjustments

• Allows users to define recoverable

accounts at the agreement level

• Allows for user-override of

recoverable accounts at data input

• Builds on JVA integration with Oracle

Financials

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EU’s Joint Venture Accounting (JVA)

• Calculate Overhead

• Calculate Utilization

• Division of Interest (DOI)

• Allocate Costs

• Manage Cash Calls

• Billing Processing

• Generate Invoices and Statements

• Analyze Operating Costs/Operated by Others

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EU’s Authorization for Expenditure

• Generate AFEs

• Track and Monitor Project Progress and Expenditures

• AFE 3D Drill Down

• AFE Accruals

• AFE Capitalized Interest

• AFE Capitalized Overhead

• AFE Reclassification

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Sahara Upstream EU SOLUTION

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Oracle • General Ledger (GL)

• Payables

• Receivables

• Fixed Assets

Enterprise Upstream • Field Operations

• Production Management

• Revenue

• Joint Venture Accounting (JVA)

• AFE (Authorization for

Expenditure)

• LOS (Lease Operating

Statements)

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Solution Module Data Flow

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Challenging Requirements

Business Challenge

• Reservoir and Operational

Focused

• Industry and Solution Expertise

• Remote and stand alone FDC

Solutions

• Operational Capabilities of EU

Production

• ESI/Sahara relationship

• Field Capture solution of Field

Operations

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Allocations and Operations

Module Implementation & Training

• EU Production Management

• EU Field Operations

Module Capabilities

• Now and Moving Forward

Industry Best Practices

• KPIs

• Operational Data

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Challenging Requirements

Business Challenge

• A suggested process for

optimizing Working Capital

• Alternate Capitalization of WIP

Expenditures to Fixed Assets Process

• Joint Venture Accounting and

AFE’s Reporting under NAPIMS Values

Solutions

• New Perpetual Cash Call

method, which includes: Costs,

Expenditures Inflow, Outflow,

Budget & Forecast Factors

• New Integrated AP-GL-JVA-AFE-

FA Business & System Process

• Sahara and NAPIMS COA values

are mapped for pivot reporting

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AFE Re-Class Solution Details

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Financial Reporting Solution

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Government Reporting Solution

• Setup and use of mapped

COA values for government vs.

internal reporting

• ESI Customer Report

Every Country a New Opportunity

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ESI International Clients

THE END