[author: Kyle Luong]

During an upstream oil and gas asset transaction, one of the first items to be converted is business associate (BA) information. BAs are the building blocks of all other datasets contained within any system (such as Quorum eSuite, OGSys, Excalibur, Enertia, etc.) and capture several critical data points such as the associate’s name, address, contact information (email, telephone, etc.), payment information (payment terms, bank account number, routing number, etc.), tax ID, etc.

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A few examples of how BA records are used include operator set up on a well or property, working interest partners on a JIB deck, and royalty owners on a revenue deck. 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 into an ERP system:

1. Group Business Associate Records

BAs can be grouped by type, depending on the system. Generally, each system will classify BAs as vendors, owners, operators, purchasers, and/or landowners. It’s important to verify that all the BAs you’ll need for the data elements being converted (e.g., JIB decks, revenue decks, leases, etc.) are present. In most asset/entity purchases, this would include:

• Operators from the well master
  • Partners and owners from active JIB and revenue decks
  • Active purchasers from current contracts
  • Landowners on leases, ROWs, deeds, etc.
  • Vendors
    • When converting vendors, it’s best to set a maximum date range that you’d like to convert. Typically, that range is anywhere from 1-2 years from when the vendor was last used on the purchased assets. It’s crucial to set a maximum date range to ensure legacy vendors that weren’t inactivated don’t inadvertently get converted.
    • Current business processes the company has regarding MSAs.
• Owners and/or partners in suspense
  • If possible, request an initial pull of minimum and legal suspense to compare to the list of owners and partners that were included in the decks. Generally, additional BAs will come from this exercise.
  • Owners/partners/vendors/purchasers from open AR, open AP, outstanding AP checks, and outstanding revenue checks that weren’t included in any of the above datasets.
  • Historical BA records depending on type and extent of historical data to be converted that weren’t included in any of the above datasets.

2. Cleanse The Data

Once all BAs are gathered and in a central depository (Tip 1) begin to clean and purge duplicate BAs. If this is an integration and not an implementation it’s best to then combine the acquired BAs to the legacy list of BAs. If the acquisition occurred in an area currently being operated there’s bound to be duplicate BAs. It’s essential to ensure that the BA conversion is done right to avoid any downstream issues.

For example, if this isn’t done properly, it could lead to issues such as paying the wrong AP vendor. An accountant could select the wrong vendor if there are duplicate vendors set up in the ERP. When operations review actuals by the vendor and duplicate vendors are identified in the ERP, it can lead to skewed reporting. This skewed reporting can potentially affect operations’ overall decision-making. Additionally, if there are duplicate owners, a division order (DO) analyst could select the incorrect BA when adding an owner or completing a transfer to a deck. Additionally, there could be duplicate owners’ set up with different addresses potentially leading to payment being sent to the wrong address. The previous issues aren’t the only ones as the list could go on.

To help mitigate any issues or duplicates in the BA records, it’s important to review the following four key items during the conversion process: name, address, tax ID, and usage type. By using these items, a clean list of BAs can be created to be converted into the ERP system.

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3. Understanding The Systems

Not all ERP systems handle BA records in the same manner. It’s important to understand how different data elements are used and stored in the ERP system that you’re converting from. Before populating any upload templates, mapping documentation should be created to cross-reference not only data fields but also the data elements stored within those fields. To do this during an integration, it’s critical to request code tables from the seller (if applicable) that include the ID and description for the different codes.

When creating this cross-reference, it’s important that all groups that are dependent on BA records and any resources from the seller’s team (if applicable) involved in creating this cross-reference to ensure all potential uses of the BA records are considered. This will ensure that mapping takes all use cases into consideration to limit any downstream issues. The conversations from these meetings could lead to the creation of additional codes that’ll need to be created before template load.

4. Consider Downstream Processes

Consider other systems and processes that could rely on the BA records set up in the ERP system. One 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 for multiple components attributed to name and address (Name1, Name2, etc.), as well as different character counts that can be stored in those components. Note that this doesn’t always correspond to what a bank will allow you to print on a check.

This could lead to major downstream issues when printing the name on a check or what address is printed on an envelope. So, even if your ERP allows multiple components and an extended number of characters, it’s not always best to utilize all the space as other systems that are connected to your ERP cannot handle it.

5. Consider The Banking Information Conversion Plan

An additional consideration is bank information to be included for the BAs that were acquired via the acquisition. If banking information is included, management needs to decide if it should be included in the conversion. If it should be included in the conversion and a duplicate BA is found, but the banking information doesn’t match, which banking information should be used?

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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 of the one that was last used. Another option is to not use the banking information from the seller and send out letters, not only informing owners/vendors of the acquisition but also request automated clearing house (ACH) information. This option does require more upfront work as all new vendors/owners would be placed as check disbursements and analysts would need to update BAs when new ACH information is obtained. The positive that comes out of this is that you have a trusted source of banking information that came directly from the vendor/owner, and this will help mitigate downstream issues.

Summary

BA conversion is a fundamental step when converting data during an upstream oil and gas acquisition or a system implementation. These records are the building blocks to most of the other pieces of a conversion and, if done right, can lead to a smoother conversion process. The five tips provided above aren’t the only items to take into consideration, but they should help put you on the right path.