3 Data and Operations Reporting Best Practices to Boost Investor Confidence
- Dec 8, 2020 5:15 pm GMTDec 8, 2020 3:18 pm GMT
- 676 views
The coronavirus pandemic, combined with international disagreements over oil production levels, has left the energy industry flat-footed. Whereas oil demand had been trending upward steadily since 2006, orders for refined products have fallen off in 2020 by at least 20%.
To keep investors engaged, energy companies must act quickly to stop the bleeding and show business sustainability. One integral way to do this is through improved standardized reporting and disclosure systems, which provide better insights that translate to higher ROI.
Historically, the energy sector has focused resources on increasing profit margins and minimizing expenses during times of economic downturn. Oil and gas is an expensive industry, after all, and the technology and resources necessary to operate in it are often seen as high risk. However, those priorities and perceptions are changing. The energy sector is advancing its reporting capabilities — though it still has a ways to go to reach the ease and accountability that investors seek.
To ensure your company provides top-notch reporting for stakeholders, especially in this fluctuating market, follow these steps when updated your system:
1. Use new, flexible solutions for analyzing data.
First and foremost, you must transition to a flexible reporting and disclosure solution that allows you to analyze, slice, and dice financial and production data. This will not only satisfy investors' accountability needs but also increase your company's profitability. Profitability comes from using the tools and resources necessary to analyze data more efficiently, which could save upstream and downstream customers money — and lead to improved investment opportunities.
Your flexible system should make it easy for field operators to identify cost-saving opportunities so they can focus on resources/capital in the most profitable areas. Whereas company analysts often focus on anomalies, such as spikes and dips in cash flow or orders, investors want to see the whole picture. More pertinently, they desire the flexibility to decide what's relevant to them — not to energy insiders.
2. Compare data against multiple sources.
Often, the back office and front office make decisions based on the same data — they run reports, dump the data, and make changes. But how do they know it's validated or even correct? Double- and triple-checking this data whenever possible can help.
Cross-referencing is especially important when using unstructured data, like the various texts and images found in presentations, reports, spreadsheets, etc., that are often unorganized and difficult to use. Not only does cross-referencing ensure data accuracy, but it also improves your confidence in that information.
You could turn to software solutions that streamline the cross-checking process with robust reporting options. You could also double- and triple-check your data by cross-referencing with Excel or running it one more time against your legacy system (if you're converting to a newer ERP). And as a last resort, you could ask Betty or Ben in accounting to have a look (and hope they're not burned out or seeing cross-eyed).
3. Design with an eye on customization and integration.
Not everyone processes data the same way. Your reporting and disclosure solution should be customizable, allowing stakeholders to examine the data in ways that make sense to them. A single-source solution is the best way to make data analysis even more seamless. This also can help you make sound business decisions, boost confidence in the numbers, and minimize any issues with data quality.
Many companies use different software to provide a fuller picture of their business, including third-party budgeting tools. However, the disconnect between data systems can lead to vulnerabilities in data quality. A reporting system that integrates with other systems, providing a unified and comprehensive base, is vital.
Ultimately, energy companies only stand to benefit by enhancing their reporting and disclosure metrics. By designing more flexible and integrated solutions for investors and clients, oil and gas companies can boost confidence in the numbers and secure more investments.