CGI's Triangle solution modernizes oil & gas production accounting at APF Energy and provides solid platform for growth

“Not only would CGI Triangle provide a better, long-term solution, CGI clearly wanted our business more than the competitors, and were more flexible and willing to make changes to the software and to the implementation plan to ensure we got what we needed.”

Murray Heather, Manager, Production Revenue Accounting, APF Energy Trust

Located in Calgary, Alberta, APF Energy Trust is a royalty trust that was created in December, 1996 to provide unit-holders with stable, regular dividend distributions based on cash flow generated from high-quality oil and gas properties located throughout Western Canada and the United States. Unlike typical oil and gas exploration and production companies that retain cash flow within their businesses to invest in further exploration and drilling, APF pays the majority of its cash flow out to unit-holders in the form of dividends.

The Challenge
Because APF does not invest in potentially risky exploration and drilling ventures, it must, instead, continuously expand its production volumes through acquisition to meet the dividend growth expectations of its unit-holders. Through seven corporate acquisitions and numerous oil and gas property acquisitions, APF has increased production from 1,707 barrels/day in 1996 to 18,262 barrels/day in the third quarter of 2004.

To keep track of its oil and gas production, APF has been using CGI's Allmark production accounting application. However, with the growth in production volume and numbers of wells and partners that APF has been experiencing, the Allmark product, designed primarily for smaller operations, reached its capacity. In addition, APF's financial accounting application needed greater integration with the Allmark production accounting system than Allmark had been designed to provide.

Adding further to APF's situation, support for Allmark was scheduled to end, and APF didn't want to be using a product nearing the end of its lifecycle. APF clearly needed a new production accounting system – one that would not only meet its immediate needs for greater capacity, but also its long-term needs for a scalable and well-supported platform that interoperates effectively with other systems.

The Strategy
After receiving proposals and getting demos of several oil and gas production accounting products available in the marketplace, APF chose CGI's Triangle solution. A more robust production accounting application than the older Allmark product, Triangle is also better suited for larger, more complex organizations and would integrate better into their other applications such as financial accounting.

“Not only did we find that Triangle is in wide use amongst other energy trusts, our investigation showed that the product meets all our business requirements and offers the capacity and functionality we need,” says Murray Heather, Manager, Production Revenue Accounting at APF.

APF determined, for example, that Triangle offers the best Gas Plant Allocation functionality to help them manage the payment allocations back to Working Interest Owners based on the different physical and chemical compositions in the gas streams supplied to their plants.

Explaining why APF also felt there was advantage in choosing Triangle so they could stay within the same vendor/product family, Heather adds, “In addition to avoiding the cost of transitioning to another vendor's product, we were able to keep our Allmark system active free of charge in case we needed it periodically for audit purposes or if we ever had to search back into our transaction history.”

Commenting further on why CGI's Triangle solution was chosen, Heather explains, “After outlining our business model to CGI, making it especially clear that 20% to 30% yearly growth in well count is normal for us, they presented the best pricing package, particularly with respect to 'cost of growth'.”

What toppled the scale in CGI's favour, however, was the fact that a multi-year project sponsored by leading oil and gas players EnCana, Husky, Talisman and Devon to develop the next generation Production Accounting Software (PAS) had recently been awarded to CGI.

“We wanted to work with the vendor that won the PAS contract so that we would be assured of working with a vendor that was committed to our industry for the long haul,” explains Heather.

CGI used a staged approach to installing Triangle and migrating all 1600 APF wells over from the Allmark system. The CGI team undertook this conversion property by property, running the new Triangle system in parallel with the old while they helped each of APF's five production accountants ease gradually into using the new system – how it worked, how it generates information, what each piece of data coming out of the system means, how it was different from the old one and so on. What was initially planned to take only four to five months to complete, however, ended up taking longer due to some significant challenges encountered along the way.

For example, APF made several acquisitions during the Triangle implementation period – including Nycan, Canscot and Great Northern Exploration – that added nearly 400 new properties to its portfolio. In addition to there being even more properties to convert to Triangle than originally expected, some of those properties are located in the U.S., which required CGI to make some process modifications to deal with the different currency and exchange rates, as well as the different units of measure – cubic feet in U.S. imperial measure versus cubic metres in Canadian metric terms.

The last phase of the implementation was to integrate Triangle with APF's financial accounting application and other CGI products deployed at APF, including a field data capture system that feeds volumetric data collected from the wells into Triangle for tracking daily production volumes.

To ensure a stable, continuous systems environment at APF, CGI's Database Services provides ongoing system monitoring and support for APF's application software and database from the local CGI office in Calgary.

The Technology

• CGI Triangle Production Accounting application
• Oracle database
• UNIX operating system
• CGI PVR field data capture system

The Results
After one year of operation, APF reports that results from using Triangle are as expected. Not only is Triangle handling APF's growing portfolio of properties, but its ability to integrate with their financial system has eliminated the need to maintain two parallel separate sets of master file data as before. Now, a single master database resides in the financial accounting system, resulting in less data entry, fewer errors and a single, consistent set of data being shared by multiple systems.

“We wanted a vendor capable of delivering a turnkey project – install it, transition the data, get it running, test it, and simply hand it over ready to go – and the implementation team that CGI put forth was exactly what we needed to achieve this,” says APF's Murray Heather. “Production accounting can be very complex, but the CGI consultant working onsite with us had an excellent combination of IT skills and experience in oil and gas field operations and knew what he was doing. He quickly became an integral part of our group, and we enjoyed an excellent working relationship with him,” he concludes.