S-022 - Asset Value Management
An Asset can be defined as any tangible element that contributes to the potential value of a Corporation. Asset Value Management (AVM) aims at optimising the Asset’s contribution to the company’s cash flow. This is done through analysis of all options & scenarios in which an asset can be developed during its operational life cycle, based on their impact on cash flow and profitability.
In order to analyse these options and scenarios, we need to know all influencing elements of the asset’s value, being positive or negative. Asset Value Management uses Activity Based Cost Modelling for the quantification of all influencing elements in a comprehensive way in a single integrated platform at any desired level of detail. This could be at equipment and resources level through to (sub) asset level, specific to project requirements. AVM provides a structured and auditable approach and allows for the optimisation of life cycle costing through reliable analysis of different “what if” scenarios.
In addition to the cost model, AVM incorporates an economic model that generates common economic indicators for the asset scenario revenues and expenditures in line with the project applicable fiscal terms and petroleum agreements.
Asset Value Management is a process that may be instigated at the start of a new venture or new project, or be applied to existing assets. It can be triggered by certain events (for instance a variation in crude oil price) but should be repeated at regular intervals, for example linked to the annual Corporate Planning and Capital Allocation processes, thus allowing the optimisation of resources at a corporate level.
Besides life cycle budget forecasting, Asset Value Management provides a most powerful tool for analysing the Asset’s End of Economic Life and associated Decommissioning,
issues that are easily ‘overlooked’ in project screening. It furthermore provides the road to Benchmarking.
Based on previous experience in the industry, EEE offer the required business expertise and tools to provide the application of AVM on a client’s Asset portfolio. In addition, customer specific training and facilitation of the Asset Value Management process can be provided.
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René SnoodijkGeneral Manager
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