Facts and Questions
You talk about costs of having my own production accounting department – what are they?
- Entry Level CAPPA Survey 2011 average $4,508 base
- Junior Production Accountant CAPPA Survey 2011 average $4,946 base
- Intermediate Production Accountant CAPPA Survey 2011 average $5,599 base
- Senior Production accountant CAPPA Survey 2011 average $7,441 base
- Specialist CAPPA Survey 2011 average $8,672 base
- Supervisor /Team Lead CAPPA Survey 2011 average $9,127 base
- Manager CAPPA Survey 2011 average $10,763 base
- Hiring costs
- Termination costs
- Accounting software
- Other Software
- Computer hardware costs plus technical support
Your fees seem high. Why is that?
You have to ask yourself – what am I actually getting for my money? We pay our staff at fair industry levels. While we do not operate from class A office space we do provide a friendly and personal environment. We provide our staff with the best equipment. By placing our employees’ needs to the forefront we maintain an experienced and qualified staff. When you choose Ptarmigan you choose not only an individual but a team. Your contact may be a single production accountant but behind that person there is a wealth of experience and support. This support is not available in many organizations or from sole contractors. Look at our employee profiles to understand the level of expertise within Ptarmigan and also the loyalty of our staff.
You talk about relationship - what do you mean by that?
In order for this arrangement to be successful we must enter into a friendly relationship with you so that we work towards a common goal. However, we are not your partner – we do not share in your success except by way of payment.
Our production accounting has proven time and time again to be a problem. Should I outsource to get rid of that problem?
That is one way to look at it. We would prefer that you let us handle your Production accounting and NOT worry about it.
What is needed for a good outsourcing relationship?
You the client must trust that Ptarmigan will provide what you need and perform to the required levels. We must develop a relationship. We firmly believe at Ptarmigan that our success is built upon the cornerstones of Trust and Relationship.
We have been burned by contactors and outsourcing companies in the past who where unable to deliver what they promised. What do you do to prevent this?
Simply, we only take on the work that we have the time and the resources to do. It is attractive to look at potential dollar revenue as a carrot and say “Yes we can do it.” However, if we are unable to fulfill the mandate then ill feelings, stress, and dissatisfaction are generated. We are in this business for the long term, this city is too small and people are too mobile for us to earn a bad name. We have turned down well-paying business because we felt that we were not in a position at that time to deliver the appropriate service.
How do you charge amendments?
Amendments are seen by many as being synonymous with production accounting. As a rule, we prefer not to do amendments. We try our best to prevent the need for amendments – however human error and some incorrect data cannot be eliminated in a current month. We perform amendments based on materiality and discussion with our client. Amendments for which we assume the blame will be made at no charge. Other amendments are based on an hourly charge – we encourage our clients to pass this charge back to the party who was responsible for the error.
What are the terms of your contracts?
In general, we have a yearly contract that renews annually. We require 90 days’ notice of termination during the year. This allows us to treat our employees fairly and to not unduly expose them to the fluctuations in client cycles.
We do not own our own production accounting software what should we do?
That question depends upon your size, your corporate philosophy, and your corporate goals. We have an Entero One Production Accounting software license and can save you the cost of obtaining a license, set up, and maintenance. Having us use our license can make economic sense. Dependent upon your size you can have us do your production accounting for cheaper than what it would cost for your own production accounting software alone.
If you prefer to own your own software then we can “dial in” to your software and are proficient in Entero, Triangle, Prism, and Allmark.
Silly question - what is a Ptarmigan?
Any of various grouses of the genus Lagopus, inhabiting arctic, sub arctic, and alpine regions of the Northern Hemisphere and having feathered legs and feet and plumage that is brown or gray in summer and white in winter. We like to think that we as Ptarmigans are natural to Calgary but we are distinct individuals and in common with the bird adapt to the conditions.
Our Company has a three year plan to develop assets then to de-vest. How does Ptarmigan fit in with this plan?
Many of our clients have shared these goals. We embrace them. It benefits us to grow alongside you; you can manage your costs and you are not faced with layoff costs etc. once you have realized your goals. We can facilitate production accounting coverage when the final property sale goes through – we help give you a professional image. While we are sad to see a client leave for any reason we do celebrate that we have helped you realize your goals. A testament to our services is that old clients rehire us when they embark upon a new adventure!
Our Company is starting out small with big plans for rapid growth. Are we a good fit with Ptarmigan?
You are an excellent fit – in the beginning we bring to you a level of knowledge and expertise that you would not normally be able to afford. As you grow it is our responsibility to find the capacity to grow with you. We generally charge on an entity/well basis therefore you can easily estimate incremental costs of new production – your costs match your revenue. You do not have to deal with the time-consuming costs of Human Resources management. You do not have to provide workspace and equipment. We own production accounting software that is very expensive for you to buy or rent.
Our Company has always operated with production accountants. Why would we outsource in whole or part?
Many companies have traditional functions, which where historically viewed as core (such as accounting and human resources), BUT they are not what you compete on. Often small companies find themselves dependant upon one person in a key area or perhaps because of personnel changes you no longer have that expertise. Production accounting staff turnover can be a significant cost in terms of personnel search, training, and supervision.
Why would we not handle our own production accounting?
What is your core business? I am quite confident that you did not say production accounting – it is our core business, it is our sole business.
Production accounting is not your single activity. Are your individual resources best spent on your core business or “our business”? Is your production accounting expertise/knowledge sufficient?
I do not want to be dealing with a new face every few months what do you do to stop this?
We experience very little turnover – we expect this to continue. Our profitability is adversely affected when we have turnover – so we work to minimize this.
In general, a senior-level accountant sets up your property and develops procedures. The property is then passed to another accountant after a few months. This is done; 1. To ensure that the most knowledgeable individuals set up your property and 2. In a short period of time, two of our staff have knowledge of your business.
I have added up the dollars and I could hire a junior production accountant for the full month for the same price as you, why should I hire you?
Cost reduction is a concern but this does not necessarily mean that clients will spend less money than they did before outsourcing began. Ptarmigan believes that you will receive a superior and/or timelier service by outsourcing – would you spend more money for that service? Cheaper alternatives come with the hidden costs of supervision, space, equipment, and human resources. We do not supply junior accountants. Junior and sole accountants do not have access to a support organization
We currently have one or two accountants why should we outsource?
Many of our clients find themselves in the situation of having purchased properties that they cannot integrate into their organization because of the current workload or because the properties are more complex and out with their employee’s skill set. Ptarmigan can take a new property and leave your employees to work on their current load alleviating stress, hiring, space concerns, and need for a superior skill set.
When we become involved with your company we encourage your current employees to use us as a resource. You hire an ally not just in specific properties but in terms of your overall business.
Another alternative is to make us responsible for the production accounting freeing up your accountant’s time to undertake analysis, ensure correct billing methods, etc.- Items, which directly affect your bottom line. How many ideas for projects do you have, which remain on your “to-do” list because of lack of time?
How do I measure the success of the outsource process?
There are many ways to measure success – some may look at the dollars spent versus alternatives. But I suggest you ask – are all deadlines met? Are you registry compliant? Are you receiving penalty invoices? How do YOUR business associates view your production accounting services? Are you bogged down in solving production accounting problems? Are you always doing amendments due to your errors? What makes you profitable – production accounting or implementing your vision? How much time do you spend on staffing and human resource issues?
There are other outsourcing companies. What differentiates Ptarmigan?
We have competitors but two things differentiate us from them;
1. We are not a software developer and seller. A number of companies provide Production Accounting outsourcing because they see it as a way to sell more software. Production Accounting is not their focus. My question in evaluating these services would be to ask “What is my final monthly production accounting and software bill going to be?” Ptarmigan gives you one price that includes both the outsourcing and the use of the production accounting software we use.
2. Experience. Ptarmigan employees’ depth of knowledge and long-term commitment to Ptarmigan cannot be beaten.
Why would we just not hire a contractor?
Good question, there are many contractors out there, and some even come at reasonable rates! However, you must ask yourself where will the contractor be in a year. Ptarmigan has been around for a significant time, with a very consistent core staff. It is our responsibility to ensure coverage for vacation, illness, unexpected circumstances, and the possibility that someone’s career aspirations change. With a contractor, these responsibilities generally fall back to you the client.
Contractors often want to use your space, use your equipment and have you provide the accounting software. These are extra costs to you above their contract rate.
Revenue Canada is looking closer and closer at whether your contractor is deemed to be an employee – if it is ruled that the contractor is an employee you will be responsible for unpaid government deductions. There is no equivalent risk to you when you hire Ptarmigan.
No individual knows everything and our staff is no different from a contractor or employee in that respect, however, our employees are part of a team – a wealth of knowledge and expertise – your client contact may not know the answer to your problem immediately but they do have a strong support network that can help answer any question or concern.
Will you work from our offices?
We only work from our offices. This is because then we are available to you each and every business day – otherwise, we are only available e.g. two days per week. – It becomes more efficient for you.
It is also more economical for you – production accounting can be a stop-and-go process, by working at our offices we can use your downtime to work on other clients thus reducing the cost to you. By us working our office you do not face the costs of office space and equipment.
When you hire Ptarmigan you do not hire an individual accountant but a highly skilled knowledgeable team. When you speak to your client contact you are gaining access to the knowledge of the team – this works most efficiently at our location. Depending upon your operations and needs we can arrange weekly, monthly, etc. meetings where we can get together and work through problems face to face. How we deal and interact with a client depends upon you – the client.
At Ptarmigan we provide our employees with a distinct working environment and culture. We find that if our employees work at your offices they end up falling between working for us and working for you. They also lose the important support system that our office provides.
If I outsource my production accounting, will I lose control over this function?
You do not lose control – when you outsource your production accounting you transfer the ownership of the business process to us – you leave the decisions on how the work is done up to us – we assume ownership of the process, and we ensure that it works. You still retain control of everything else.
In outsourcing, the client does not instruct Ptarmigan how to perform its task but, instead, focuses on communicating what results it wants and it leaves the process of accomplishing those results to Ptarmigan.
Control is not lost in an outsourcing relationship; only the means of control have changed. When you outsource you no longer have to dictate the process – it is our job to do your production accounting in the most effective and economical manner. Production accounting is our business we have the knowledge, and depth of expertise.
What duties are undertaken by your production accountant?
- Manage complex-operated oil & gas properties
- Compile and analyze field gauge reports
- Maintain property files
- Maintain production accounting system and property-specific master file data
- Input and process monthly volumetric data
- Confirm third-party volumetric data (fluid receipts and dispositions)
- Provide ‘volumes available’ to working interest owners, third parties, and clients.
- Analyze processed data prior to publishing
- Generate pipeline forecasts (Form A/B)
- Prepare and publish oil and gas pipeline splits based on information provided by working interest owners, third parties, and clients.
- Generate and submit provincial government regulatory reports (Alberta, Saskatchewan, British Columbia, and Manitoba.)
- Generate crown (provincial & federal) and non-crown royalty payments
- Input revenue into the production accounting system
- Pre-balance receivables (purchasers) for the current month
- Monthly reconciliation of oil crown royalties
- Respond to internal & external queries of a normal business nature
- Manage prior period adjustments/amendments
- Prepare an upload to your financial accounting system