Palantir’s Rapid Portfolio Valuation workflow allows E&P companies to understand the potential value of all assets in their portfolio by combining data analysis and portfolio techniques to reprocess data and unlock additional value.Learn More
E&P companies have a very good certainty of the value of their base assets, a fairly good certainty of the value of their development assets, but have little to no certainty of the value of their exploration assets and, further out, of their prospects or potential land base. Because of this, most companies are unable to get a complete picture of their portfolio. They tend to spend the bulk of their energy and resources attempting to get a precise view of their known projects. As a consequence, they have a limited understanding of the exploration and commercial options available to their portfolio. Frequently, the decisions that make some of the most impact on the future value of the company are made using “back of the envelope” calculations, ad hoc spreadsheets or third party information. The result is decision making that is disconnected from the results of the strategic planning and business planning processes.
The Palantir Rapid Portfolio Valuation workflow quickly characterizes the more uncertain parts of a company’s investment portfolio. The reason we built this workfow was because a number of years ago, a client wanted to communicate the value of their exploration portfolio to their investors. They found that they had a portfolio of 250 exploration prospects but had a valuation for only 5 of them. By using their internal process, it had taken 4 months to get valuations for those 5 prospects.
In response, Palantir applied the Rapid Portfolio Valuation workflow to the other 245 prospects and were able to give a fully risked valuation of that exploration portfolio in under 2 weeks. The information was used, with positive effect, to educate the company’s investors.
Palantir matches information on the range of resource potential of an opportunity to a realistic development scenario. Costs, commodity prices and fiscal terms are applied to build up a robust representation of an opportunity. This process is repeated many times to build up a full range view of the potential range of values for each opportunity. The collection of discrete outcomes is aggregated into a portfolio.
From this portfolio data, various scenario plans are created to model a variety of different commercial assumptions, budget constraints and commodity price environments. By making the process consistent and repeatable, the cycle time for each scenario is reduced, enabling companies to evaluate more scenarios and opportunities in a shorter period of time. The RPV workflow brings a greater understanding of how to unlock the option value of a company’s portfolio and identifies multiple strategic options that align with the corporate objectives and targets.
In addition to providing rapid valuation of portfolio options, the RPV process is also highly repeatable. Strategic reviews of the portfolio can be triggered as the global commercial and economic environment changes. The combination of the RPV solution and Palantir’s PlanningSpace™ enables companies to plan at will; the annual business plan becomes a thing of the past and is replaced with a living business plan. The Rapid Portfolio Valuation workflow highlights extra value in a company’s portfolio by allowing decision executives to make fact based decisions using reliable, timely data.
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