Pioneer Resources Relies on AS$ET™ for Quick, Independent Economics Modeling in Gabon

Customer Profile
Pioneer Natural Resources, based in Dallas, is a top-tier independent exploration and production company. Pioneer operates in the U.S., Canada, Argentina, South Africa, Gabon and Tunisia and has total proved reserves equivalent to 4.4 trillion cubic feet of gas and 737 million barrels of oil. Though the company has a strong existing reserve base, its primary growth engine is exploration, with key new ventures activities in the Gulf of Mexico, South Africa and Gabon.

Business Challenge
With a heavy emphasis on exploration, Pioneer regularly evaluates multiple countries in which to invest, as well as specific projects or blocks. For greater efficiency in locating new ventures, Pioneer has increasingly looked toward economics tools that will equip engineers with the ability to perform their own fiscal analysis — rather than adding the time and cost of bringing in outside consultants or relying on economists. Primarily, engineers look for tools that enable them to access country-specific fiscal terms quickly, and then model the impact of changing assumptions for fiscal terms, costs and production to support various scenarios.

The IHS AS$ET Advantage
Pioneer uses AS$ET software as the primary economics modeling tool for the company's exploration activities in Gabon. Michael R. Dunkel, Senior Staff Reservoir Engineer for Pioneer and lead engineer for the Gabon project, selected AS$ET for the software's ease of use, it's constantly updated database of fiscal regimes, and its flexibility in making ongoing changes to models. AS$ET offers a database, updated quarterly, of fiscal regimes that include over 200 fiscal models representing 117 countries.

In its search for new ventures, Pioneer uses AS$ET in two primary ways. First, it looks to AS$ET for multi-country initial economics screening, where Pioneer inputs generic economics for a given field size, then taps into the software's built-in cost estimation module, and reserves and fiscal modeling capabilities.

"Other cost estimating software we've used has been slower and required more manpower," Dunkel explained. "There's really not a competing product that will run the screening like AS$ET can. As we get into more specific project evaluations, AS$ET allows us to make new country files to reflect new terms for certain blocks, and feel confident about doing it without outside help. That's pretty powerful."

Assessing Multiple Outcomes by Changing Fiscal Terms
When the Gabon team narrows its evaluation down to specific projects or block level, they use AS$ET to pinpoint opportunities by bringing in detailed cost data and reserves analysis from geologists and engineers on the team. At this level, they can repeatedly alter the fiscal terms to see a variety of outcomes.

Dunkel especially likes that AS$ET offers a summary level, where once the architecture is laid out for fiscal terms, he can easily change profit splits versus rate, or royalty splits versus rate, or cost recovery.

"All of those factors are just numbers in the summary table and very easy to change," he explained. "In the previous software, all those were hidden in formulas and it was hard to be sure you were changing numbers correctly. With AS$ET, it's faster and you are more confident you're doing it right."

AS$ET's economic dashboard, a single-screen that rolls up all essential modeling inputs, with graphical views of results, further simplifies the process of changing sets of assumptions and seeing the impact. When a geologist has insights into a particular basin, for example, he can select that basin from the menu, change as many as half or one-third of the assumptions on specific geologic properties, and then can immediately see the effects of those changes tracked through to net present value of the investment.

Pioneer also saves time with the ability to build Excel files using data from other cost studies, reserves estimates and production forecasts and then import them into AS$ET for fiscal analysis. Likewise, they can export findings from AS$ET into an Excel spreadsheet.

Product Support from Seasoned Industry Professionals
Beyond the software's functionality, Dunkel also appreciates the support he receives from IHS. He values that support professionals bring specific experience using AS$ET, as well as backgrounds in the oil and gas industry and familiarity with economic analysis.

In the future, Dunkel looks forward to using AS$ET's ring-fencing capabilities to evaluate properties in combination, and hence, understand how deductions or losses in one block could help overall economics in a specific county, on a post-tax basis. "It will help us make decisions about investing in another country versus another block in the same country," he said.

Engineers Can Analyze Fiscal Scenarios Independently
Overall ease of use in AS$ET translates to simplified project evaluations. Launching from the built-in fiscal regimes in AS$ET, users can model fiscal scenarios easily and confidently, without the help of outside consultants. That enables Pioneer to shorten the evaluation and decision-making cycles on new ventures, and empowers engineers to perform analysis independently.

"With AS$ET, we can quickly run scenarios without having to call in a consultant to set up the fiscal models," Dunkel said. "With a few clicks we can set it up ourselves and we're done. Evaluations that could have conceivably taken a few weeks to do now literally take just a couple of hours."

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