Bertrand (senior advisor), Author at VERDAZO

November 6, 2017 by Bertrand (senior advisor)

Managing Uncertainty: the difference between Investing & Gambling

The last week of September had me doing three industry presentations that all shared a common theme, “uncertainty”. Today’s blog will focus on the presentation Uncertainty Considerations for Development Planning Type Curves. Uncertainty extends through the reservoir, drilling, completions & operations and is compounded by commodity prices. What is certain is that shareholders have little tolerance for production shortfalls. The following image show the reduction in stock price of 8 companies in 2017 that occurred following the announcement of production shortfalls. Figure 1: Stock price reactions to production shortfalls I could have easily showed you several companies who hit their production targets and maintained or increased their stock price. While it’s not important to know who these companies are, it is important to know that there are best practices that can help protect you from targeting statistically unachievable results and falling short of your production promises. Wait a minute, isn’t that called “sandbagging”? “Sandbag is a tactic used to hide or limit expectations… in order to produce greater than anticipated results” according to Investopedia. A disciplined approach to characterizing, understanding and managing uncertainty is a strategy to mitigate your downside and is consistent with the practices of “investing”. “Gambling” typically...

June 13, 2017 by Bertrand (senior advisor)

IP90 and the Datasaurus: The dangers of summary statistics

I recently read the article Same Stats, Different Graphs which spoke about Anscome’s Quartet, four highly varied datasets that are identical when examined using summary statistics, then took it to the next level with the Datasaurus Dozen by demonstrating how highly varied datasets could produce the same summary statistics. Datasaurus Datasource: Alberta Cairo The article states “It can be difficult to demonstrate the importance of data visualization. Some people are of the impression that charts are simply “pretty pictures”, while all of the important information can be divined through statistical analysis.” It also references Alberto Cairo who created the Datasaurus dataset to urge people to “never trust summary statistics alone; always visualize your data” because visualization can reveal valuable insights that could be otherwise missed. This inspired me to revisit my 2015 blog How useful are IP30, IP60, IP90 … initial production measures where I illustrated how two wells with identical IP90 production performance measures had very different production profiles. To further illustrate the dangers of using near-term production performance measures like IP90, without visualizing the production, I’ve expanded the dataset from my previous blog to show just how different the production profiles are of 33 Montney Regional Heritage wells...

May 24, 2017 by Bertrand (senior advisor)

Verdazo Analytics releases 2017.1 software update

We’re pleased to announce the spring 2017 release of our VERDAZO software. This release streamlines workflows for better usability and updates configurations based on input from our network of clients, industry experts and professionals. The release also adds sophistication to VERDAZO’s analysis capabilities, including those highlighted in our recent Society of Petroleum Engineers (SPE) multivariate analysis paper. This release is the next step in our ongoing product journey and includes some key architectural enhancements that will enable us to incorporate Pason drilling data as part of a future release. We’ll have an update for you on those plans later this year. Our clients can trigger their updates by contacting us at support@verdazo.com.

January 4, 2017 by Bertrand (senior advisor)

Pason acquires Verdazo Analytics

At Verdazo Analytics, we’ve always been a product of what we’ve been able to learn from our clients. The advancements in our VERDAZO product, services and methodologies have all been inspired and informed by the partnerships we’ve built over the last 10 years and our ‘crowdsourced’ approach to innovation. As of today, we’re embarking on our biggest business journey to date. I’m excited to announce that Verdazo Analytics has been acquired by Pason Systems Inc. Calgary-based Pason is a technology company offering fully integrated drilling data solutions, enabling users to collect, manage, report and analyze drilling data in order to optimize the performance and the cost-efficiency of their drilling activities. As part of the acquisition, we will continue to run Verdazo Analytics as a standalone wholly owned subsidiary of Pason. Our clients will have the same team working with them day-to-day. We will be collaborating regularly with Pason, very much in line with how we’ve collaborated with our clients in the past. We expect to learn a ton from them and build that intelligence right back into our business and our product. We’ll also benefit from Pason’s expansive reach into the U.S. market, where we’ll be helping even more companies...

November 14, 2016 by Bertrand (senior advisor)

How a producer started its analytics journey

At Verdazo Analytics, we are advocates of ‘Discovery Analytics.’ Discovery Analytics is an approach by which a data-driven investigation shifts with new insights revealed during the process. It’s not something calculated from start to finish. It evolves as you go, often bringing you to a point you couldn’t have predicted when you started. The results and decisions made are more pertinent and powerful as a result. I think of this idea regularly when looking back on the work we’ve done with a producer here in Calgary. They initially used VERDAZO software as part of an initiative to improve their Well Review process. Their results went beyond their expectations: they were able to free up their engineers from days of manual Excel analysis in advance of a well review, saving time that exceeded $175,000 in annual costs. But that was just the start. That initial project spawned something the producer couldn’t have initially predicted: a commitment to analytics that eventually spread across their organization. New projects and efficiencies were created and an analytical culture took hold. It was exciting for our team at Verdazo Analytics to see our client discover how much value could be uncovered, in so many unexpected ways....

October 27, 2016 by Bertrand (senior advisor)

How VERDAZO enabled an O&G startup to thrive during tough economic times

Our Oil & Gas clients continue to emphasize an increasingly acute need to do things smarter, simpler and more cost-effectively across their organizations. That’s one of the reasons why VERDAZO has been effective for them: it enhances their analytical capability and capacity no matter their economic constraints. This is important for any producer where the order of financial magnitude of a decision can be in the multi-millions of dollars. However, it may be even more critical for junior companies who often walk a thin financial line on the way to full capitalization and initial production. When Calgary-based Burgess Creek Exploration was founded in 2015, VERDAZO was its very first purchase.With 20 years of experience in the industry, President & CEO Kory Galbraith knew he could use our software to do everything from building a compelling case for initial investment capital to keeping his team lean (without sacrificing analytical insights) to creating data-driven consensus across his organization. We have always been deeply invested in our clients’ success and to see Burgess Creek thrive in such difficult economic times is a point of pride in our office. We’re very pleased at the contribution our software made to its growth. You can read...

October 17, 2016 by Bertrand (senior advisor)

Multivariate Analysis: Completion Optimization’s Silver Bullet?

The term Multivariate Analysis has gained in popularity – and hype – in the oil and gas industry, particularly as it pertains to completion analysis. The goal of Multivariate Analysis is typically to understand the relationship of multiple input variables to one or more outcomes, attempting to isolate the effect each individual input variable has on a particular outcome. Given the many geological and completion parameters that influence production profiles, it is not surprising that the industry is embracing Multivariate Analysis in its search for optimal completion designs. The use of this term has evolved to include a broad range of tools and techniques, such as: Visual tools like parallel coordinates that visually communicate the relationships between inputs and outcomes Workflows that leverage mathematical, statistical and visual techniques to identify the most pertinent inputs and determine optimal design considerations (this is where VERDAZO excels) Regression analysis (often perceived as a “black box”) that aims to isolate the most pertinent inputs that influence optimal completion designs and arrive at a predictive equation Image source: Wikipedia Multivariate analysis encompasses a broad range of tools, techniques, technologies and workflows… but not without notable dangers. I sat down with Tyler Schlosser, Director of Commodities Research, GLJ Petroleum Consultants,...

September 21, 2016 by Bertrand (senior advisor)

Verdazo’s contribution to the Alberta Modernized Royalty Framework

October marks the early opt-in period for companies to benefit from the Alberta Modernized Royalty Framework (MRF). We thought this would be a suitable time to share some of the details about Verdazo Analytics’ contributions to the process that shaped the MRF. In early 2016 we were pleased to be asked by CAPP (Canadian Association of Petroleum Producers), and several of our clients, to contribute to the recent Alberta Oil & Gas royalty review mandated by the NDP government after its election in 2015. Our invitation to participate was based on the recognition that a critical way to ensure productive dialogue between stakeholders, particularly those with different needs and perspectives, is to start from an accurate, transparent, data-driven analysis framework. As part of our contribution to the review, we used our VERDAZO software to provide rapid analysis on a variety of potential C* scenarios and the impacts they would have on the industry and its stakeholders. It was particularly satisfying to be able to present our analyses to the panel stakeholders in an easily digestible visual form with our software. In our work with clients across the industry over the last decade, we’ve learned that being able to deliver sophisticated information visually is an...

May 18, 2016 by Bertrand (senior advisor)

2016 Drilling Forecast & Production Impacts of Reduced Drilling

What kind of production impacts might we expect in Western Canada in 2016? To gauge this we need to forecast 2016 drilling activity, compare that to 2015 drilling activity and measure the impacts that 2015 reduced drilling had on production. My drilling activity forecast for 2016 is 3909 wells. That would be a 41% reduction from 2015 drilling activity and a 73% reduction since 2014. (Note: the 2016 forecast used the same method as my 2015 drilling forecast, which was within 4% of actual drilling results). Production Impacts of Reduced Drilling The reduction in drilling in 2015 yielded a surprising twist… the Spirit River formation added more new gas production than the Montney. The Spirit River formation accounted for 39% of new gas production in 2015 (with 246 wells coming on with gas production) ahead of the Montney which accounted for 33% of new gas production (with 304 wells coming on with gas production). The results are based on “Projected Formation” with the following formations grouped together as Spirit River: Notikewin, Falher, Wilrich and Spirit River. See www.formationfinder.com/ab/ . Gas production in WCSB exited 2015 at 18.75 bcf/day, a drop of only 2%. The 2015 production additions almost offset the 23.8% decline of pre-2015 gas production. New oil production from...

April 25, 2016 by Bertrand (senior advisor)

Forward Curves Are a Poor Predictor of Future Spot Prices

In building a price forecast, any single indicator, including forward curves, is usually a poor predictor of future spot prices. It is important to consider a wide variety of information when building a spot price forecast. In general, all price forecasts are wrong – the goal is to be less wrong more often and have a body of supporting information to justify each forecast. In the oil and gas industry, one of the primary uses of price forecasts is to provide a reasonable basis for the valuation of oil and gas assets. These were insights I gleaned from a conversation with Tyler Schlosser, Director of Commodities Research, GLJ Petroleum Consultants. I asked Tyler about the cautions and considerations he takes when looking at Forward Curves in the process of building the GLJ price forecast. Here is what Tyler had to say: “Oil and gas futures, or forward curves, are not true spot price forecasts. In addition to market expectations of future spot prices, other factors influence futures prices. Some of these factors are: interest rates inflation expectations storage costs and availability insurance hedging effects liquidity – can the contracts be easily bought and sold at sufficient volumes? rapid speculative position accumulation...

Posts by Bertrand (senior advisor)