Reloading the funnel (opportunity identification screening)

March 2018

Picture this: the oil price recovers enough for there to be an appetite to grow the oil & gas business organically again.  You look in the cupboard and the cupboard is bare. Where do you go? The answer is probably simpler, cheaper and faster than you might have thought.

Organic growth in conventional oil & gas exploration has had a rough ride over the last few years for reasons that many of us are only too familiar with. Few companies can afford to maintain full-time new venture teams working solely on opportunity identification and delivery but there is a cost effective and efficient alternative. You can now reload the funnel in the space of a week simply by drawing on the knowledge within your organisation without the need for dedicated teams.

New offering

Exploration new ventures teams traditionally replenish the funnel by combining proactive opportunities (basin mastery) with reactive (farm-in) opportunities. Replenishment tends to be episodic but too often when there is an industry down-turn, the cupboard is bare, despite the increased richness of the opportunity landscape. K2V Ltd announces the launch of new accelerated services to reload your funnel by ranking conventional exploration opportunities or basins. The services go under the general banner “Opportunity Identification Screening” and are split in to two main (optional) groups:

FUNNEL OPTIMISATION services

• Initialisation (facilitated)
• Loading (unfacilitated - most confidential)

DATA ROOM services

• farm-in
• farm-out (under development)

Funnel Optimisation (services)

Funnel optimisation accesses knowledge holders in your organisation, regardless of what they are currently working on or where they may be located in the world. These services are aimed at organisations that possess the content knowledge but do not have the teams or the time to commit the resources to do a full evaluation on all opportunities. Once harvested, knowledge within your organisation can be applied to rank opportunities in under a week to be assessed in more detail in support of potential investment decisions. Funnel optimisation is designed to fastrack the loading of the opportunity funnel, allowing your organisation to rapidly screen invitations to farm-in when a team specifically examining that country or basin does not yet exist within your organisation. It can also be combined to rank opportunities already in the funnel, offloading those that have lost their strategic importance to keep the funnel fresh and replenished. Click HERE to find out how funnel optimisation works.

Data Room (services)

Data rooms are commonly managed to very tight schedules, often requiring teams to overcome large information and knowledge gaps, whilst trying to build a case for or against significant investment decisions. There could be compelling strategic reasons to favour one opportunity over another but ranking them is not easy when you don’t have the content knowledge in your organisation to make the judgment. Without access to the relevant content knowledge, the risk of a bad decision increases dramatically. Having the capability to screen these opportunities “in or out” early on in the process represents an opportunity in itself.

K2V has designed a simple platform, which provides a common focus for the review team, all of whom have been examining different components of the value chain for the opportunity. Opportunities identified (during the process of funnel optimisation) for dilution or divestment can be monetised in the normal way for your organisation. What is new and experimental is to use the K2V knowledge harvesting tools to crowd-source opinion for farming out an opportunity, potentially even to crowd-source funding for maturation. Whether these 21st century solutions can displace traditional market transactions is conjectural. K2V Ltd is actively working with others in the field to pioneer new ways of doing business.  K2V Ltd are available to conduct visits to your office to demonstrate how this works with a simulated data room.  Contact info@k2vltd.com to arrange a booking.

What do you get?

Opportunity identification screening provides robust ranking based on user-defined technical, economic and commercial criteria that can:

a)  be used to clearly explain to upper management the near-term new ventures plan

b)  highlight the strengths and weaknesses of each opportunity allowing evaluation teams to focus on key deal success factors

c)  for lower ranked opportunities - define what needs to change before those are reconsidered, and

d)  help characterise new opportunities with respect to existing focus areas.

The future for oil & gas exploration

In the 21st century, we are less concerned about the finite nature of fossil fuels as a resource so much as the responsible management of that resource in the future. Exploration has been pushed to the boundaries of exploration maturity, partly by success and because active basins are being fully exploited at full price, lowering the margins. In extreme low maturity frontier areas, which are lean in data, there is normally a fundamental reason why these basins have not been explored in the past, making them very high risk. In extreme mature petroleum systems, we are not short of connected data but we are short of connected knowledge. There are four types of “white space” in petroleum exploration: physical white space (gaps in data), technical white space (gaps in data quality), intellectual white space (gaps in play-based thinking) and organisational white space (gaps in business focus). Knowledge is the key to mining both extreme maturities responsibly; only by conducting the right kinds of conversations with the right people can what we unlock what we “don’t know that we don’t know”.