“Collapsing Costs: Curing Procurement” by Rob West, Redburn

In November 2016, Redburn released a report “Collapsing Costs: Curing Procurement” written by Rob West on the need for cost reduction in the oil and gas economy, emphasizing opportunities in procurement. The research discusses cost reductions available through the use of digital platforms and highlights achievements of E&P companies, including BP, that use RigUp.

We’ve summarized the article, but please download the full report at the end of this post.

 Today’s Procurement Challenges:

  • The average Major manages relationships with 100,000+ suppliers.
  • Many oil industry buyers don’t have access to their suppliers’ financial reports or HSE records.
  • The size and complexity of the industry has resulted in an uncompetitive model of excessive sub-contracting.

Curing Procurement:

Digital procurement platforms are changing the oil and gas industry. RigUp connects 17,000 U.S. contractors with 150 E&Ps and raises bids-per-award from 2.3 to 7.1. Cost savings reach 30%, middlemen are dis-intermediated, and nimble E&Ps can run 20-30x smaller procurement teams than Majors.

BP is the only Super-Major using RigUp at this time. Contractor usage is down 30% since 2012. Conversely, Shell forces suppliers to pay a $1,700 – $3,285 fee to access its own bespoke pre-qualification system—it has half the supplier numbers of peers, yet the highest headcount in procurement.

Benefits of procuring via digital platforms, such as RigUp: 

Greater Reach. More bids can be surveyed in a shorter amount of time.

blog_redburn_002Contract Cost Savings. One E&P, Three Rivers, saved 30% on an Authorization for Expenditure (AFE) for a drilling program with savings on wellhead and cementing equipment as high as 44%.

Unbundling removes unnecessary layers of oil service margins.

Time savings: In another case study, E&P Ameredev onboarded 17 contractors in less than one week, with under 24-hours screening time per contractor.

Blog_Redburn_AvgProcurementCounts

G&A Savings. Major independents have 100-200 people dedicated to US unconventional purchasing, where smaller companies are running comparable rig crews with 4-5 people.

Benchmarking potential. Anonymized cost data is available for benchmarking from the RigUp platform.

Download the full report HERE.

And visit www.rigup.com and sign up for a free account.

RigUp’s 3-point check that verifies the bid, field tickets, and invoice

At RigUp, we’re building product features that streamline purchasing and payment for both E&P companies and service companies. We help engineers spend more time on what they were hired to do and less time on paperwork, invoice verification and other time consuming administrative tasks. We help service providers find new opportunities to win business and get paid faster for their work so they can grow in any commodity environment.

 E&P companies should be able to work with any vendor that meets their quality standards without worrying about the arduous MSA processes.

When you schedule a job with a service company through RigUp, we take care of confirming an existing MSA. If there isn’t one, the service company can utilize our MSA and custom-built insurance solution to ensure 100% coverage. The service company’s bid is used to check the accuracy of the field ticket and invoice. No more guessing as to what the job was actually supposed to cost.

Service companies have the ability to push updates, change requests, and signed field tickets to your job dashboard in real time, allowing you to track the job as it happens. Once the invoice is ready for submission, service companies can submit it through our simple and intuitive invoice submission portal. We verify the invoice against both the field ticket and the bid to ensure accuracy of cost and scope.

We call this our 3-point check: bid, field ticket, and invoice all in alignment before it reaches your desk. You’ll receive an invoice submission with a cover sheet outlining our verification, our guarantee to you that you’re paying exactly what you should and not a penny more.

blog_3pt_verificationService companies, if the only thing holding you back from winning work is lack of an MSA or failure to meet the ever-increasing general liability insurance requirements, we can help.

RigUp can get you on location with an E&P company. Once the job is done, you have the option to expedite payment in the event you don’t want to wait for the E&P’s invoice cycle. We offer various options to get you paid quickly (as quickly as 3 business days) so you can stop worrying about outstanding invoices and focus on growing your business.

We believe in a fair and transparent market where the best companies are free to do business in an efficient and safe manner. Our new job scheduling functionality is just another step towards that goal. If you work at an E&P company and want to learn more about how we can save you time and money, get in touch with us. If you’re a service company that has lost work due to lack of an MSA or insurance coverage, contact us to find out how RigUp can get you covered and back to work.

Email support@rigup.com or call 512-501-5452.

You can sign up for a free account today at www.rigup.com.

Bidding & Procurement Using RigUp – 5 Ways Cabot and Silver Creek Succeed

In the last year, we have made significant improvements to our product to enhance usability for engineers, procurement professionals, and compliance managers within our online marketplace. RigUp has earned praise as “the best-in-class bidding & procurement solution for oil and gas.” While still keeping true to our core mission (helping operators and service companies connect more efficiently), we have listened intently to all user feedback, and continue to perfect and mold the platform to meet the needs of our ever growing user base.

To illuminate some of the changes that have taken place over the past year, RigUp turned to a few of our early adopters, Cabot and Silver Creek to analyze the impact. In our analysis, jobs were compared only if their work scope, location, and job requirements were identical from last year to this year.

Quote_Cabot Oil & Gast Corporation

Bidding & Procurement quote

As RigUp introduced more powerful bidding and procurement features such as bid templates, E&Ps and service companies alike have benefitted. For example, both E&P companies showed a significant increase in the number of unique service companies who submitted bids to win the work. Silver Creek had a 27% increase in submissions and Cabot saw well over double the amount of bid submissions over the span of one year. In addition, both E&Ps showed significant improvement in bid submission rates.

Bidding & Procurement Improvements

Despite WTI crude prices increasing 33%+ during the same time frame, Cabot saw costs savings ranging from 14% to 32% on RFQ’s year over year for identical job work scopes. These requests included coiled tubing unit packages, isolation tool work (well intervention), wireline pressure control equipment, coiled tubing motor and mill packages, and workover rig jobs.

Cost Savings Improvements

Silver Creek also saw cost savings of 9% on the same jobs over a similar year duration. The jobs being compared in Silver Creek’s analysis involve completion systems and well intervention by means of running new tubing on all wells with a liner hanger, liner-top packer, and toe-sleeve to test the liner prior to fracturing operations.


5 ways Silver Creek and Cabot leveraged RigUp to improve efficiency & reduce costs:

  1. Sourced more and new vendors through Open Market Bidding.
  2. Tapped into the power of RigUp Bid Templates to allow for apples to apples comparisons.
  3. Took advantage of RigUp’s permission settings and messaging functionality to make it easier for the technical owner and the purchaser to execute an RFQ much faster while maintaining security and transparency.  
  4. Utilized RFQ Reports which allowed for streamlined analysis of multiple bids – allowing Cabot and Silver Creek both to bid to more vendors.
  5. Awarding work and assigning call positions provided a clear call-out structure for their company men in the field.

To learn more about RigUp and sign up for FREE, visit rigup.com or give us a call at 512-501-5452.

5 Key Takeaways from the 2016 Wharton Energy Conference

 

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RigUp attended the Wharton Energy Conference in late October 2016, and we noted a few key insights that will undoubtedly follow the industry into 2017.

RigUp’s CEO and Co-Founder, Xuan Yong led an Upstream Panel that included David Keyte, Founder of Caerus Oil & Gas; James Obulaney, Vice President at Denham Capital; Vidisha Prasad, Managing Director of Guggenheim Securities’ Energy Investment Group;  Jerry Schretter, Managing Director and Co-Head of Upstream at Citi; Tom Tyree, Co-Founder, President, and CFO of Vantage.

A few questions from this panel included: What opportunities exist for mergers and acquisitions in the Upstream space? What assets are economic at $40 a barrel? When do non-core areas of U.S. shale gas come back to play? What’s the outlook for International shale, deepwater, oil sands? What are the ramifications for spending deferral in E&P?

Here are our 5 Key TakeAways from the Wharton Energy Conference: 

#1) The current down cycle has separated winners from losers. Independent E&Ps with quality acreage alongside best in class technologies have grown stronger. While culturally backwards E&Ps have become weaker.

#2) Super major oil companies are valued at a discount relative to leading independents (even in lower commodity prices).

This had made it extremely hard for super-majors to act as consolidators in the down-cycle. Leading independents have used their premium valuations in the public market to capitalize on further acquisitions strengthening their positions.

#3) Leading management teams in “shale” will be statistically driven.

No one drills “dry-holes” anymore. Binary outcomes made winners and losers in a “conventional” E&P world historically. Winners and losers are now made by running leaner and more sophisticated with operating leverage built into an E&P company’s business model.

#4) More distributed teams operating closer to the field. Where as Houston, Texas has historically been the center of E&P headquarters, we are observing a resurgence of E&Ps locating key engineering managers to locales closer to the asset base. Pittsburgh, Denver, and Midland are becoming more relevant than ever.

#5) L48 and North America in general are becoming the swing producer of hydro-carbons. It’s more than just energy independence, it’s energy prowess in the global world.

In summary, it should be no secret that the next up cycle will be dominated by a new class of nimble and sophisticated independent E&Ps.

RigUp can help E&Ps keep up and outpace their competition. Sign up for FREE today!

Questions? Comments? Contact lindsey@rigup.com or visit www.rigup.com to learn more.

Consultants make more by contracting through RigUp

Oil and gas contractors have historically been represented by consulting firms that collect resumes and bring them to the offices of the E&P. Through RigUp, the oilfield’s online marketplace, oilfield consultants can now complete a single application within minutes that presents their experience to even more E&Ps.

RigUp’s operator network spans over 150+ E&P companies. These E&Ps utilize RigUp’s bidding and procurement platform to find various oilfield services, some of which they will subcontract through RigUp. RigUp subcontracts work to consultants with day rate and work acceptance agreements all occurring on the online platform. 

Utilizing its best in class technology and a premier insurance program, RigUp can subcontract at rates of 5-10%, which are significantly less than the traditional industry average (typically ranging from 15% to 25%). For example, an independent Mud Engineer at Parsley increased his day rate that ultimately saved him tens of thousands of dollars.

Quote Copy

Oilfield consultants who have switched to securing work through RigUp have made an additional $170,000 in annualized earnings given RigUp’s industry leading take rates.

The platform goes even further by supplying a compliance and labor manager tool for the E&P. RigUp’s Labor Manager provides an automated compliance platform that allows E&Ps to successfully onboard and manage their consultants seamlessly. Each consultant is personally screened and ready to go within a single business day. RigUp allows for real-time HSE monitoring of the contingent labor workforce, all available at the operator’s fingertips.

Select oilfield consultants for the job

Specify Training Requirements

RigUp has created a platform that allows oilfield consultants to showcase their experience in the industry directly to the E&P company. That said, RigUp has changed the dynamic between E&Ps and consultants for the better. Consultants are exposed to additional work opportunities while E&Ps can select the best workforce for any project at hand.

If you’re an E&P interested in hiring labor through RigUp’s marketplace, or if you’re a Oilfield Consultant looking for more work opportunities and better pay, get in touch with us today.

512-501-5452 | consulting@rigup.com | rigup.com

Open Market Bids allowed Jones Energy and The McDaniel Company to connect and prosper

In July 2016, RigUp introduced the option for E&P’s signed on to the platform to place Open Market Bids. Every time an Open Market Bid is created, the bid is posted automatically to Service Companies’ dashboards. An email is also sent out weekly to the user base that the bid applies to, inviting them to bid on the work.

For the first time ever, Service Companies can search for new jobs in real time and bid on work for Operators they may have never previously had access to. RigUp listened to what Service Companies had been asking for, and we took their feedback seriously. We are always aiming to provide the highest level of service and ease of use to our users.

“When we added Open Market Bids to our online marketplace, we thought it would gain traction quickly with both E&P’s and Service Companies. The feature not only adds another layer of connection to the bidding process, but is an obvious positive for Service Companies because they can now bid on and win more jobs than ever before.” Tyler Myracle, Director of Product, RigUp

Jones Energy quickly took advantage of this new feature and put out an RFQ for Plugging and Abandonments in the Panhandle / Oklahoma region. Through Open Market Bidding, they received pricing from nine vendors. The McDaniel Company was one of the companies awarded, and neither party had worked with one another previously. Through RigUp and Open Market Bids, service providers can find new clients and develop new relationships.

According to Jones Energy, an E&P company in the U.S. Mid-Continent, their approach to doing business is “traditional and strategic, and their methodology is contemporary and forward-thinking. They are never afraid to look at things different and try new ideas.”

RigUp was ultimately an obvious win-win solution for both Jones Energy and The McDaniel Company.

Open Market Bid Quote

“We awarded work to two companies and one of them was The McDaniel Company, a completely new vendor for us. Austin McDaniel was incredibly thorough with his quotes and is great at follow-ups.”

Jennifer added,It’s nice to have more than one dependable company to work with on these projects, and using RigUp helped us find The McDaniel Company.”

In a much similar scenario, The McDaniel Company has been using RigUp for about six months now, and one of the first projects they were awarded through the platform was the opportunity to work for Jones Energy.

Open Market Bid Quote

The McDaniel Company serves over 150 clients ranging from small independents to many major oil & gas companies. Operators across a six state territory, including Texas, New Mexico, Oklahoma, and Louisiana, utilize McDaniel’s P&A services. The McDaniel Company is also active in the Oil County Tubular Goods (OCTG) distribution & sales business specializing in used reconditioned & inspected tubulars.

“Why are we in the business? To save our clients time, money and provide them with the assurance that any job which we perform will be carried out in a reliable, safe and hardworking manner,” says Austin McDaniel.

In just a few short months, open market bidding has become a go-to for many Operators when placing bids, and Service Companies have been quick to react and adopt the feature. The Open Market Bid stats speak for themselves.

Open Market Bid Stats

Are you an E&P Company? Start utilizing Open Market Bidding on RigUp today. Click HERE to log-in.

Some of the quickest and easiest products to bid out include casing, tubing, and plug and abandonments. If you need help, contact us, and we’ll get you in touch with one of our Petroleum Engineers.

Are you a Service Company? Visit your RigUp dashboard to find new jobs that have been posted to the Open Market. Click HERE to log-in.

Questions? Call us at 512-501-5452 or email us at support@rigup.com.

RigUp helps Operators keep their workforce happy by offering Contractors More Jobs and More Money

RigUp Subcontracting Program Quote

American Resource Development, LLC (Ameredev) is an Austin based E&P company focused on the Permian Basin. Ameredev has successfully leveraged RigUp’s Subcontracting Program as a solution to help build out their oilfield crew to work on drilling, completions and production activities, which include Mud Engineers and Lease Operators.

Ameredev was able to get up and running with the RigUp Subcontracting Program in next to no time, onboarding 17 new contractors in less than a week, with each individual screened and ready to go in 24 hours.

Zach Boyd, Operations Superintendent at Ameredev provided some feedback on his recent experience with RigUp. He explained, “It’s a very simple process onboarding the Contract Personnel.”

Based on a company’s requirements, RigUp can perform background and reference checks, drug and alcohol screenings and the validation of training requirements to meet an organization’s standards. Once complete, contractors are ready to step foot on location and get to work.

Zach added, “RigUp allows ease of operations to assign work and is prompt and straightforward with invoicing.”

In addition to a seamless onboarding process, RigUp offers payroll administration for its subcontractors, including an easy way to log hours online. RigUp’s professional support team is always on-hand to assist both operators and contractors with any industry related challenges.

“The contractors have all been exceptionally pleased to be under the RigUp subcontracting umbrella. I have had very good feedback from the field,” says Zach Boyd.

The high level of satisfaction reported by RigUp’s subcontractors directly correlates to the benefits RigUp provides. By offering the best rates in the industry (substantially less than the standard of 15-20%), contractors take home more of their hard-earned money and receive it on-time, every two weeks. Since signing up to the RigUp program, the independent contractors performing work for Ameredev have realized a combined increase of more than 10% in their net earnings.

RigUp Subcontracting Program

Start leveraging RigUp’s subcontracting solutions for contingent labor today. Whether you’re a an Operator looking to build a team for your next project or an Independent Contractor looking for more work and more money, get in touch with us.

Sign Up as a Contractor consulting@rigup.com | 512-501-5452 x708

Sign Up as an Operator  |  support@rigup.com  | 512-501-5452                                         

Three Rivers Operating Company: Drilling Lean in the Permian with Volatile Commodity Prices

A case study on how RigUp helped streamline the bidding process to save considerable time and money.

In today’s environment of uncertain commodity prices, there remains a constant pressure to ensure operations remain on track, often by doing more with less. This case study is an example of how operators are changing their behavior in order to continue drilling lean in a volatile market.

In April of 2016, Three Rivers Operating Company (3ROC) leveraged the RigUp platform to revise an AFE. In next to no time their engineers were able to:

  • Build “Requests for Quotes” (RFQs) for key products and services within their drilling program.
  • Select qualified vendors from RigUp’s network of 10,000+ Service Companies (many of which were previously unknown to 3ROC, but experts in the Permian).
  • Distribute 8 unique requests to more than 60 vendors at the click of just a few buttons.

Pricing came back within a week and 3ROC were delighted with the results:

Drilling Lean

By marketing our drilling projects through the RigUp platform, Three Rivers was able to discover, investigate and ultimately contract a turnkey option at a significant discount to our daywork budget.Grant Sirgo – Drilling Engineer, Three Rivers Operating Company.

Cost Savings

  • 30% cost savings compared to a previous round of bidding of the exact same services, from just a month earlier.
  • Increased exposure to vendors; More Vendors = More Competition = Lower Prices
  • Almost 90% Execution Rate on pricing received.

Time Savings

  • Consolidated workflow; RigUp acts as a one-stop-shop for creating, compiling and tracking all requests in a single location.
  • All vendor communications are managed on the platform with no phone-tag or email correspondence to worry about.
  • All received pricing is consolidated in an “RFQ Report” to help you quickly analyze bids and take the hassle out of sifting through dozens of documents (potentially saving up to 6+ hours per RFQ).

Process Transparency

  • Real time AFE re-bidding; a must have in the current commodity market.
  • Unbiased, no nonsense, decision making. RigUp acts as the conduit between you and your vendors, effectively removing unnecessary communication from factoring into the decision making process.
  • All bids and communication is retained on the platform for audit purposes.

Looking to get fresh pricing for an upcoming job or program?

  • If you have an account already, click here to start bidding out work today.
  • Otherwise, we’d love to hear from you and help you start saving time and money. You can email us at support@rigup.com.

Templates for Every Bid

Without clear ways to standardize your RFQ results, you end up comparing apples to oranges. Often there has been a misunderstanding about what line items to bid on – some may have included freight while others did not. Some set a flat fee for delivery while others charged by the mile.

In an attempt to alleviate those frustrations, RigUp began to work with operators to create job specific templates. These powerful tools augment the bidding and normalization process by giving the service companies specific guidelines. Using a template ensures all vendors are bidding on the same line items, dramatically reducing time spent in the analysis phase.

All of our templates are tagged by product or service allowing you to easily find one that is specific to the needs of your job. If you find that our current templates do not match your company’s requirements we will work with you to create templates specific to your company’s bid.

You may think that this is only beneficial for an operator and that most service companies would rather not use a template. We have found, however, that bid submission rates increased when templates were included on a request. Based on the RFQs of five RigUp operators, those who used templates saw a 13% increase in submission rates. 

Bid Templates Submission Rates

This increase could indicate that service companies appreciate the elimination of guesswork in the bidding process. They know exactly what the operator is looking for without having to waste time clarifying.

We have not only been able to create templates for tangible goods but also for many complicated services including frac jobs, directional drilling, etc. No matter what the job is, our experienced team of petroleum engineers will create templates that are up to industry standards.

Recently we worked with WPX to create 6 templates for a wide variety of bids. We asked District Production Engineer, Justin Warren what he thought of the process:

RigUp aids our company in creating a consistent bid process by utilizing one of their many standardized templates that cover multiple disciplines. These templates are an integral part of normalizing pricing and obtaining apples-to-apples comparisons. The RigUp Team is also exceptional at understanding what I need in a RFP and have the ability to create a specific template that completely suits my needs. The vendor pool is vast and new vendors can be added in minutes by one of many “more-than-willing-to-help” team members. Customer Service is top-notch. RigUp allows management to stay well-informed of all on-going RFPs.

Have an upcoming job you want a custom template for? Reach out to us at support@rigup.com.