[author: Kyle Luong]
During a upstream oil and gas asset transaction, one of the first things to convert is the business associate (BA) information. BAs are the building blocks of all other datasets contained in any system (such as ESuite quorum, OGSys, Excalibur, Enertia, etc.) and capture several critical data points such as name, address, contact details (email, phone, etc.) of the associate, payment information (payment terms, bank account number, routing number, etc.), tax identification number, etc.
Some examples of the use of BA records include the operator installed on a well or property, partners of direct interest on a JIB bridge, and royalty owners on a revenue bridge. These details are essential for upstream oil and gas companies to track and maintain to ensure accounts payable (AP), accounts receivable (AR), revenue, and land administration processes are uninterrupted.
Since BAs are a crucial part of any data conversion effort, we’ve identified five tips that should be considered when converting BAs to a ERP system:
1. Files of the group’s commercial partners
BAs can be grouped by type, depending on the system. Typically each system will classify BAs as sellers, owners, operators, buyers and / or landowners. It is important to verify that all the BAs you will need for the data items to be converted (eg JIB decks, income decks, leases, etc.) are present. In most asset / entity purchases this includes:
- Well master operators
- Partners and owners of JIB bridges and active income
- Active buyers of current contracts
- Landowners on leases, rights of way, deeds, etc.
- When converting vendors, it is best to set a maximum date range that you want to convert. Typically, this range is 1 to 2 years from the vendor’s last use on the purchased assets. It is essential to set a maximum date range to ensure that legacy providers that have not been deactivated are not inadvertently converted.
- The company’s current business processes for MSAs.
- Owners and / or partners pending
- If possible, request an initial draw of minimum and legal suspense to compare against the list of owners and partners that were in the decks. Usually, additional BAs will come from this exercise.
- Owners / Partners / Suppliers / Buyers of Open RA, Open PA, Pending PA Checks, and Pending Revenue Checks that were not included in any of the above datasets.
- Historical BA records based on the type and extent of historical data to be converted that was not included in any of the above datasets.
2. Clean the data
Once all the BAs are gathered and in a central repository (Tip 1), start cleaning and purging duplicate BAs. If it is an integration and not an implementation, it is preferable to then combine the BAs acquired with the list inherited from the BAs. If the acquisition took place in a currently exploited area, there will inevitably be duplicate BAs. It is essential to ensure that the BA conversion is done correctly to avoid any downstream issues.
For example, if it is not done correctly, it can lead to problems such as paying the wrong access point provider. An accountant can select the wrong supplier if there are duplicate suppliers configured in the ERP. When operations examine actual numbers by the vendor and duplicate vendors are identified in the ERP, it can lead to skewed reporting. These distorted reports can potentially affect the overall decision making of operations. Additionally, if there are duplicate owners, a Division Order (DO) analyst may select the incorrect BA when adding an owner or performing a transfer to a deck. Additionally, there could be duplicate owner setups with different addresses, which could result in payment being sent to the wrong address. The above problems are not the only ones as the list could go on.
To help mitigate issues or duplicates in BA records, it is important to consider the following four key elements during the conversion process: name, address, tax ID number, and type of use. Using these elements, an own BA list can be created to be converted into the ERP system.
3. Understand the systems
Not all ERP systems handle BA records in the same way. It is important to understand how the different data elements are used and stored in the ERP system from which you are converting. Before populating upload templates, mapping documentation should be created to refer not only to the data fields, but also to the data elements stored in those fields. To do this during an integration, it is essential to request code tables from the seller (if applicable) that include the ID and description of the various codes.
When creating this cross-reference, it is important that all groups that depend on BA records and any vendor team resources (if applicable) involved in creating this cross-reference to ensure that all the potential uses of BA records are taken into account. This will ensure that the mapping takes into account all use cases to limit downstream issues. Conversations from these meetings could lead to the creation of additional codes that will need to be created before the model loads.
4. Consider downstream processes
Consider other systems and processes that could rely on the BA records configured in the ERP system. An example could be a system used to manage AP workflow and coding activities. Another critical example could be an application used to generate checks. Many ERPs allow several components assigned to the name and address (Name1, Name2, etc.), as well as different numbers of characters that can be stored in these components. Note that this does not always correspond to what a bank will allow you to print on a check.
This could cause major downstream problems when printing the name on a check or the address printed on an envelope. So, even if your ERP allows multiple components and a large number of characters, it is not always better to use all the space because other systems connected to your ERP cannot handle it.
5. Consider the banking information conversion plan
An additional consideration is the banking information to be included for BAs that have been acquired through the acquisition. If banking information is included, management must decide whether it should be included in the conversion. If it should be included in the conversion and a duplicate BA is found, but the bank information does not match, what bank information should be used?
In this case, a potential option would be to compare the last time the BA was paid in each system, and then take the information from which one was last used. Another option is to not use the seller’s bank information and send letters, not only to inform the owners / sellers of the acquisition, but also to request automated clearing house (ACH) information. This option requires more upstream work, as all new vendors / owners would be placed in the form of checks and analysts would have to update BAs when new ACH information is obtained. The good thing that comes out of this is that you have a reliable source of banking information coming directly from the vendor / owner which will help alleviate downstream issues.
BA conversion is a fundamental step when converting data during a upstream oil and gas acquisition or system implementation. These records are the building blocks of most other parts of a conversion and, if done right, can lead to a smoother conversion process. The five tips provided above aren’t the only things to consider, but they should help get you on the right track.