Man­ag­ing more than 550 wells and 100,000 acres of land in the mid-con­ti­nen­tal U.S. is no sim­ple task, but Mus­tang Fuel Cor­po­ra­tion has earned a rep­u­ta­tion for ener­gy excel­lence in part through its abil­i­ty to suc­cess­ful­ly adapt to ever-chang­ing indus­try, eco­nom­ic, and tech­nol­o­gy environments.

Based in Okla­homa City, the pri­vate­ly held company’s cur­rent-day oper­a­tions include oil and gas explo­ration and pro­duc­tion, nat­ur­al gas gath­er­ing and pro­cess­ing, and nat­ur­al gas mar­ket­ing. Found­ed in 1949, Mus­tang Fuel is one of the mid-continent’s lead­ing inde­pen­dent oil and gas com­pa­nies — and, as it recent­ly cel­e­brat­ed its 70^th anniver­sary in 2019, became a cloud-based indus­try leader by imple­ment­ing SAP S/4HANA.

In suc­cess­ful­ly migrat­ing to the cloud, the com­pa­ny unlocked busi­ness effi­cien­cies and trans­formed its pro­duc­tion rev­enue account­ing process­es, accord­ing to Kyle Hobbs, CPA – Con­troller at Mus­tang Fuel, who joined the com­pa­ny in 2016. He will dis­cuss its trans­for­ma­tion sto­ry at next mon­th’s ASUG Best Prac­tices: SAP for Oil, Gas, & Ener­gy con­fer­ence (Sept. 14 – 15; in Dal­las, TX; learn more).

“Uti­liz­ing our core system’s tech­nol­o­gy through SAP is now part of our nor­mal process,” Hobbs told ASUG. ​“Much of our account­ing staff is new since 2019. They don’t even know how long things used to take.” 

Secur­ing the Future 

Mus­tang Fuel first imple­ment­ed SAP on-premis­es in 2010, adopt­ing SAP ERP Cen­tral Com­po­nent (SAP ECC) and run­ning that instance until 2019, when exec­u­tives decid­ed that an upgrade was need­ed to stream­line pro­duc­tion rev­enue account­ing (PRA) and dri­ve com­pet­i­tive edge. 

“As part of the move to SAP S/4HANA, we sought to secure our future ERP oper­a­tions and avoid cost­ly cus­tomiza­tions,” said Hobbs. ​“The most press­ing need was in pro­duc­tion rev­enue account­ing, where we elim­i­nat­ed mul­ti­ple man­u­al process­es and time-con­sum­ing updates to the busi­ness warehouse.” 

Specif­i­cal­ly, with­in pro­duc­tion rev­enue account­ing, Mus­tang Fuel sought automa­tion func­tion­al­i­ties includ­ing cal­cu­la­tions of pro­duc­tion depre­ci­a­tion and gas bal­anc­ing, escheat man­age­ment, and Office of Nat­ur­al Resources Rev­enue (ONRR) reporting.

Eval­u­at­ing its PRA roadmap, as well as an SAP S/4HANA imple­men­ta­tion, exec­u­tives were aware they hadn’t uti­lized var­i­ous ECC enhance­ment packs or upgrades in the past and decid­ed to move for­ward by pur­su­ing cloud migra­tion. ​“We made the deci­sion to move to SAP S/4HANA and imple­ment a PRA roadmap at the same time,” Hobbs said. 

Ulti­mate­ly, Mus­tang Fuel saw three oppor­tu­ni­ties with cloud trans­for­ma­tion: to enhance its PRA process­es by automat­ing pro­ce­dures using the SAP PRA mod­ule; to move from a lega­cy on-premis­es data­base to a full cloud solu­tion; and to design a road map for step-by-step improve­ment of finan­cial pro­cess­ing using a data­base with both trans­ac­tion­al and ana­lyt­i­cal pro­cess­ing in memory. 

From Over­com­pli­cat­ed to Indus­try Standard

From a resource stand­point, exec­u­tives knew that an ear­ly migra­tion to S/4HANA would be ben­e­fi­cial to the com­pa­ny and avoid over­bur­den­ing its small sup­port staff with time-con­sum­ing migra­tion require­ments lat­er on, after SAP dis­con­tin­ued sup­port for gen­er­al ECC environments. 

In con­sul­ta­tion with Ernst & Young (EY), with its deep knowl­edge of both the oil and gas indus­try and SAP tech­nol­o­gy, Mus­tang Fuel ini­ti­at­ed its 11-month jour­ney to S/4HANA, suc­cess­ful­ly mov­ing its SAP envi­ron­ment to Microsoft Azure, a pop­u­lar sys­tem host for cloud SAP solu­tions. Mus­tang Fuel went live in Novem­ber of 2019, fol­low­ing a three-day sys­tem conversion. 

One major push dur­ing the SAP S/4HANA migra­tion, accord­ing to Hobbs, was to adapt Mus­tang Fuel’s busi­ness process­es to the world of cloud ERP. ​“Our uti­liza­tion of ECC soft­ware wasn’t what it should have been,” Hobbs not­ed, with Mus­tang Fuel not hav­ing imple­ment­ed all updates to its on-premis­es ERP sys­tem and strug­gling with an over­ly cus­tomized (and thus ​“over­com­pli­cat­ed”) tech­nol­o­gy land­scape. As a result, elim­i­nat­ing sev­er­al third-par­ty cus­tomiza­tions was a pri­or­i­ty to reduce the com­plex­i­ty of future upgrade efforts.

“Dur­ing our con­ver­sion, we took out cer­tain cus­tomiza­tions and tried to stan­dard­ize,” Hobbs said. ​“We real­ly tried to look at our busi­ness process­es and our cus­tomiza­tions and say, ​‘Are we com­pli­cat­ing the soft­ware by try­ing to fit our busi­ness process, instead of just look­ing at our busi­ness process and adjust­ing that to uti­lize the soft­ware better?’”

“We’ve Saved Days”

Mus­tang Fuel has seen sig­nif­i­cant improve­ments in pro­duc­tion rev­enue pro­cess­ing and report­ing since imple­ment­ing S/4HANA and fol­low­ing best prac­tices rec­om­mend­ed by SAP. Its con­vert­ed PRA process is no longer depen­dent upon man­u­al inputs to use val­ues from the pro­duc­tion mod­ule of auto­mat­ed sys­tem val­ue func­tion­al­i­ty in its month­ly rev­enue distribution. 

“We’ve saved days through uti­liz­ing sys­tem val­ue and uti­liz­ing PRA to reduce the man­u­al inputs we had been doing,” Hobbs said. ​“We con­tin­ue to reap ben­e­fits there.”

Stan­dard finan­cial pro­cess­ing at Mus­tang Fuel now inte­grates in-house, cus­tomized prod­uct depre­ci­a­tion cal­cu­la­tions, as the com­pa­ny con­tin­ues to move toward automa­tion in bank rec­on­cil­i­a­tion and var­i­ous accounts payable process­es. Month­ly, Mus­tang Fuel saves an esti­mat­ed 4 – 8 hours in the cal­cu­la­tion and pro­cess­ing of escheat pay­ment, and 24 – 32 hours through automat­ing the flow from prod­uct val­ue to rev­enue to gas bal­ances. Addi­tion­al­ly, it esti­mates 12 – 16 hours in time sav­ings through automat­ing roy­al­ty report­ing to ONRR. 

Accord­ing to Hobbs, Mus­tang Fuel has dou­bled its prop­er­ty count and added to its well count since 2019, with­out need­ing to dra­mat­i­cal­ly increase staff. ​“That wouldn’t have been pos­si­ble if we hadn’t made those changes and rec­og­nized enhance­ments that came with migra­tion to S/4HANA,” he said,

Mus­tang Fuel is still look­ing to improve its finan­cial report­ing process­es, includ­ing those around SAP Busi­ness Intel­li­gence (BI) reports. In the ​“old days” before S/4HANA, Hobbs said, it took two hours for BI reports to update after entries were post­ed, as employ­ees had to wait for the company’s SAP Busi­ness Ware­house (BW) to refresh. ​“We were lim­it­ed by the sys­tem,” Hobbs said. ​“Now, if we make a change, it’s imme­di­ate­ly posted.” 

Still, Mus­tang Fuel seeks to update its approach to finan­cial report­ing, per­haps through SQL servers that will allow its con­trollers to pull in dif­fer­ent non-SAP data sources and link them togeth­er. ​“We’re look­ing for a mech­a­nism to com­bine data sources for our gas pro­cess­ing plant account­ing with SAP data, to do not only finan­cial report­ing but also set up fore­cast­ing mech­a­nisms,” Hobbs said. ​“We want to be able to uti­lize that data­base and attach it to what­ev­er exter­nal resource we want to use, be that Spot­fire or Pow­er Query in Excel.” 

Change Man­age­ment: Teach­ing Teams to Fish

Amid Mus­tang Fuel’s trans­for­ma­tion, Hobbs has learned the busi­ness val­ue of change man­age­ment and con­tin­u­ous edu­ca­tion for employ­ees across his orga­ni­za­tion. With new hires com­ing into his com­pa­ny, the ques­tion Hobbs always asks as a guid­ing prin­ci­ple is, ​“How do we nav­i­gate change and share knowl­edge around where to get infor­ma­tion and how to exe­cute with­in the system?”

For Jim­my Num­my, Assis­tant Con­troller at Mus­tang Fuel, who joined the com­pa­ny last year, lever­ag­ing SAP S/4HANA to its fullest extent has only been pos­si­ble because of Hobbs’ efforts to build a knowl­edge base across the com­pa­ny and demon­strate how to nav­i­gate SAP sys­tems most effectively. 

Cloud trans­for­ma­tion impacts more than just IT depart­ments. One of the bridges Num­my has worked to build, between account­ing and IT, can be sum­ma­rized by a clas­sic proverb: ​“Give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for a life­time.” At com­pa­nies with finite IT resources, ensur­ing oth­er depart­ments can learn how to access data and nav­i­gate process­es, he said, is essen­tial to free­ing up IT for more high-lev­el build­ing and coding. 

In attend­ing the ASUG Best Prac­tices: Oil, Gas, and Ener­gy con­fer­ence in Dal­las to share Mus­tang Fuel’s sto­ry, Hobbs and Num­my said they hope to gain key insights from oth­ers around stan­dard SAP con­fig­u­ra­tions and process­es that could be applic­a­ble at Mus­tang Fuel. That’s why their ses­sion, ​“The Good, The Bad, and the Ugly: A User’s Expe­ri­ence with SAP Soft­ware,” will serve as an open dia­logue around how to know if users are uti­liz­ing their SAP instances most effectively.

Both Hobbs and Num­my believe they have wis­dom to impart as well and agree that what Mus­tang Fuel’s team learned about cus­tomiza­tions through­out their S/4HANA jour­ney could be rel­e­vant to oth­ers con­sid­er­ing or pur­su­ing dig­i­tal trans­for­ma­tion. ​“Eval­u­ate whether you’re mak­ing the sys­tem com­pli­cat­ed in ser­vice of areas that don’t pro­vide any val­ue,” Hobbs said. ​“Part of prepar­ing for the future is uti­liz­ing and ana­lyz­ing best prac­tices to sup­port your business.”