Documentation and reporting in production forecasting
It is important to maintain a clear audit trail of the production forecasting process. The purpose of an audit trail is to clearly state the assumptions and decisions underpinning the forecast so that it can be understood and replicated if necessary. Unfortunately, historically this has not always been done which prevents lessons being learned and improvements identified and implemented.
A production forecast audit trail document is expected to include, as appropriate:
- Date of issue
- Purpose and objectives
- Time constraints for generating forecast
- Forecasting approach used – discussion of choices made, options rejected and reasons why
- Assumptions used to build the forecast including system constraints, activity scheduling, development scenarios, technology applied, commercial assumptions
- Uncertainty approach used – discussion of choices made and reasons why
- Key uncertainties that drive the uncertainty ranges
- Summary of risks and opportunities – what has been considered in the analysis and what has not
- Any adjustments or discounts applied outside of the uncertainty analysis
- Comparison to historical production or analogues
- The resulting decisions to be made from this work
- Change record as forecasts are updated
Report writing and presentation guidance
A recent interviewee for a senior reservoir engineer position was asked how she might present the results and conclusions of her technical work to different internal audiences. These might be senior management, peer reviewers or the other members of her asset team. Looking somewhat puzzled, she replied that she would not vary her communication, as the message was always the same. This view that “the numbers speak for themselves” is widespread amongst petroleum engineers (and other technical disciplines involved in production forecasting). As a result, forecasters often do not understand why their message is not clearly understood when it is presented in such a clear way!
It is with some trepidation that suggestions and advice are given here with respect to communication, as each individual has their own unique style, whether written or verbal. Generalizations are, therefore, hard to come by, as each of us has to find our own way of engaging to the best effect with both the material and the medium through which we are communicating it. This chapter, then, seeks to give only pointers or highlight important considerations (many of which apply to any specialist communicating with a non-specialist audience), recognizing that many organizations will have established reporting structures and formats. Common pitfalls for the production forecaster and ways to avoid them are discussed in particular.
As with any piece of work, begin by defining objectives for your report or presentation. In particular, you may want to develop a small number of key messages that you wish to deliver to your audience. Bear in mind that the numbers will not necessarily speak for themselves and that important conclusions will have to be stated explicitly. It is vital to consider what your audience wants to get out of reading your report or listening to your presentation. Along with your audience’s objectives, also take into account their likely level of understanding and familiarity with the topic. Other constraints may also hamper understanding, such as the amount of time they have to listen to a presentation or to read your report.
Developing your own objectives and considering the needs of different audiences should allow you to structure your reports and presentations to obtain the best effect.
Reports and other written documentation
One of the basics taught in school science lessons is to always write up your work, but this is often forgotten. It should always happen (even after a verbal report has been given). One of the factors resulting in little or no report writing is that insufficient time is scheduled into study work or business processes at the outset. Even if time is scheduled, it is usually the final scheduled activity and is often truncated when other activities overrun the time allotted. Ensure enough time is given in project schedules and process timelines to write up work, and that this time is used for this activity.
Written communications include everything from detailed technical documents to emails following a verbal discussion. All require careful thought to complete them effectively. Even for a follow-up e-mail, the phases of completing a report: planning; writing; summarizing; proofreading and checking (which may include informal or formal signoff), should be considered carefully. Note that this is not necessarily time-consuming and becomes quicker with experience . A blank sheet of paper (or electronic equivalent) is a terribly intimidating thing to face. Two ideas to consider that may help with this are the construction of standard templates for reports that are prepared on a regular basis or that are common to several fields or forecasts. Such templates could be merely a table of contents or a list of section headings. The second idea to think about is to note your thoughts as work proceeds by maintaining a notebook (hardcopy or electronic, as preferred).
Note that structure and format of your report may depend on the medium through which the report is made. In particular, electronic and online formats allow scope to include soft links from, for example, Executive Summary or Conclusions sections to those with more detail.
Suggested report format
Ideally, a written report comprehensively documenting a production forecast should include the following sections:
Do not just cut and paste from other sections, but consider what the audience needs to read here. Do not include too much detail. Do include objectives and main conclusions and recommendations.
Conclusions and recommendations
Clearly distinguish between a conclusion and a recommendation. The advantage of including this section near the start of the report is that the reader has additional context for the subsequent discussion.
Provide context for the report and work presented in terms of the business process for which the production forecast is being made (e.g., reservoir management, infill well or other investment decision, annual reserves reporting, etc.). Clearly list the technical objectives of your work as well.
Provide sufficient information about the field(s) under discussion so that the reader can place the production forecast in an appropriate context without having to make unwarranted assumptions.
Clearly state, at length if necessary, assumptions implicit and explicit in the production forecasts to be presented.
Present both in tabular and graphical formats. See comments below with respect to clarity.
Provide some form of commentary on the forecasts, in particular, relating the assumptions stated in the earlier section with significant features of the forecast (e.g., plateau duration and rates, well startups, changes in uptime assumption,s etc,).
Define specialist terms and acronyms. Also provide clarity over units used if necessary.
Graphical and tabular presentation of forecasts
It is not the intention to give detailed advice on every aspect of report writing, but the reader is asked to pay particular attention to the presentation of production forecasts in tabular and graphical form. For the latter, always make sure that axes are labelled clearly and that units are included. Explanatory notes are often useful to clarify features of graphs. Preferences for bar charts or line graphs are individual, based on company practice or internal rules. In either case, if production rates are shown, then state the period over which the rate applies. For instance, if an annual production volume is shown as an equivalent daily rate, then explicitly report this (i.e., rate = annual production ÷ 365). If possible, avoid use of instantaneous or “spot” rates in plots. For clarity, it is preferable to have the “area under the curve” in a plot equate to ultimate recovery (or reserves, depending on the nature of the plot). Many of the same comments apply to tabular presentation of production forecasts. For instance, a clear statement of units used is required and use only an appropriate number of significant figures for values included.
Official governmental and stock exchange documentation
It should be noted that many Government and Stock Exchanges require production forecasts on a regular basis and in a specific format to fulfill certain obligations associated with owning, developing and producing hydrocarbons in that specific country and for a company to be listed on a specific stock exchange. While there is often a greater focus on asset reserves and resources, the underlying production forecast will invariably form an intrinsic part of the accompanying document. Examples of such documents include:
- Field Development Plans for Government approval
- Competent Person’s Reports and Reserves Reports required to float a company on a stock exchange. These are usually updated annually to inform stock holders and the regulators of progress on development, and any changes to forecasts made based on new information.
Individuals should refer to the guidelines published by the specific Government or Stock Exchange they report to as requirements and formats differ somewhat.
Verbal reports (Including presentations)
Much material is available to the reader on making effective presentations, formal or informal. Indeed, many companies provide their staff with training on presentation skills. Key factors of such training are reinforced here, based on experience of making and being in the audience of production forecast presentations.
Informal Verbal Discussions Without Prepared Material
These can range from ad hoc meetings to short briefings for, say, senior managers.
- Pause briefly at the start to collect your thoughts and plan how to answer the question asked in a logical manner.
- Do not be afraid to illustrate your points with drawings as you proceed (flip charts, whiteboards etc.) for the sake of greater clarity.
- Always follow up with a short written summary (most likely by e-mail).
All production forecasters are advised strongly to attend a formal presentations skills course. Choose a course recommended by your employer or someone else you trust. A good course will make the following points, among many others:
- Follow the same planning process as for a written report and ensure that there is sufficient time both to prepare adequately and rehearse your presentation, if necessary.
- Do not forget that you are the presentation and slides are your visual aids.
- If your presentation is made in conjunction with a written report, create a completely separate presentation pack. Do not simply try to reduce your report to a presentation by editing it down. Do not just “cut and paste” whole sections of text into your slides.
- Your presentation should stand alone as a “verbal report” of your work. Do not try to make it a substitute for a written report by including large amounts of written material on your slides.
- During the course of your presentation, check for understanding from your audience. Do not be afraid to pose questions and solicit answers.
Again, a comprehensive discussion is not included, but based on observation of many reports and presentations here are key skills to develop and enhance:
- Clarity - Deliver your presentation at a measured pace. Do not rush. Do use short sentences.
- Plan - The better prepared you are, the more likely the message you want to get over will be received as you wish.
- Language - If presenting in something other than your first language, consider if your skills are adequate. If you’re giving a presentation in a language that isn’t the first language of most of your audience, consider the complexity of language and phraseology you use, as well as your pace of delivery. This applies even if a simultaneous translation is being provided.
- Style - In written reports use short sentences, bulleted lists and include a glossary to achieve clarity.
How to Improve Skills
- Practice, practice, practice.
- Take whatever opportunities to practice come along. Any readers who are managers or team leaders should consider creating opportunities in a supportive environment for team members to practice and to provide feedback, such as internal department or team meetings.
- If you know someone who writes well or presents well, talk to them about how they achieve what they do. Ask them to give you feedback on your presentations.
- If you see a good/bad presentation or read a good/bad report, consider what makes it good/bad. Note this down and compare to your own work – does it have similar features? After each presentation you make or report you make, solicit feedback to evaluate the effectiveness of your communication. Is the feedback consistent with what you feel? (We are often our own harshest critics). Maintain a log of your reflections; action should arise from any reflection.
Use of jargon and acronyms
In the planning phase, identify where specialist terms and abbreviations are likely to be used. Incorporate appropriate explanations.
Too much detail
The most common errors made are (1) failure to provide just the right level of detail to deliver key messages; and (2) beginning with too high a level of detail and maintaining this level throughout. Even when a high level of detail is needed, it is often better to start with an “outline” of the argument and then proceed to greater detail.
Assumption of a level of knowledge not reasonable to expect from the audience
Frequently, in presentations, comments are made similar to, “as you can see from the semilog plot………”, or in reports “Figure 1 clearly shows that……..” The interpretation made may not be clear to your audience. Consider their level of knowledge and include general explanations, if necessary.
Different conventions exist in different professions for “shortening” large numbers for ease of presentation. The most common source of confusion in a production forecasting context is the use of “M”, “m”, “MM” and “mm” as shorthand for thousands and millions. The use of “M” to mean thousands by petroleum engineers is particularly confusing where the same abbreviation is used to mean millions by finance and accounting colleagues. This is another instance where common usage by the audience should be considered and clear explanations of abbreviations used included.
Use of barrels of oil equivalent (BOE)
Barrels of oil equivalent are often used to express volumes of other hydrocarbon production streams (primarily gas) on a similar basis to oil. This is chiefly so that volumes of different product streams can be added together. The calculation is achieved by estimating the amount of energy contained in a unit volume of each product – typical values used are 5.8 or 6.0 barrels of oil per thousand cubic feet of gas. For example, 10 Bcf gas ≡ 1.7 MMBOE. Common areas of confusion are when in-place hydrocarbon volumes, as well as recoverable volumes are discussed, and the reader tries to relate one to the other via a recovery factor. Another such, is when readers try to relate previously documented oil volumes (in, say STB) with BOE. Try to avoid use of BOE wherever possible. However, recognizing that it is unavoidable in certain circumstances, always express volumes at both standard or stock tank conditions as well as in BOE. For example, 83333 BOE/D (500 MMscf/D gas).
Definition of production rate
Labelling graphs or tables with oil, gas, or condensate production may not be sufficient to identify exactly what is being forecast. Readers or audience may be used to dealing with production volumes at particular points in the production system and may make an incorrect assumption about what is being shown (wellhead, pipeline entry, point of sale, whether downtime is included or not, etc.) Explicit statements are needed for clarity.