Detailed cash flow forecasting enables agile planning for midstream energy company

M3 Midstream LLC (aka Momentum) is an independent midstream energy company that provides oil and gas producers with flexible, responsive midstream services linking the wellhead to the market. One of their current projects, Utica East Ohio Midstream, is building and operating the largest single location natural gas processing plant in the United States. M3 Midstream’s growth-oriented strategy has resulted in a history of consistent performance for their stakeholders, including producers, employees, and investors.

M3 Midstream’s business model and revenue stream depend on them providing a turnkey natural gas production facility. This involves planning for the physical capacity of over a billion dollars in property plant and equipment, and also the human capacity in terms of a trained and productive workforce.

In the past, they relied on spreadsheets to manage their budgeting and forecasting processes. As they grew and their processes became more complex, this manual process became too inefficient and error-prone.

Moving from Excel to a FP&A software saves time and enhances collaboration for detailed forecasting

“For each of six operating companies on separate SAGE general ledgers, we need to provide an annual budget and series of quarterly forecast revisions including projecting cash flow requirements over the course of the year. We were spending far too much time chasing down broken links and double-checking formulas for errors.”

According to their Controller, Gina Davis, M3 Midstream was able to create their annual budget twice as fast than they could using spreadsheets in their first year after onboarding with Centage. Now that their model is set up, they expect to save even more time creating future annual budgets.

Managers from across the organization can now gather together in virtual forecast planning sessions and watch how discussed strategy changes would impact their budgets. With each change to assumptions, they can verify the projected effect in real time.

Driver-based budgeting and detailed cash flow forecasting to fit a dynamic business model

“When we started looking at solutions to help manage our process, we knew we needed one that had very detailed cash forecasting capabilities, and that led us to Centage. We also liked the fact that the solution has user-defined drivers to create and revise our budget and forecasts automatically as we adjust these key volume and rate metrics.”

Gina’s team set up a series of drivers hyper-specific to their business at a macro level within Centage, and are now able to compare not only the financial impact, but also compare these assumptions on versions and see differences between budget forecast and actuals. Adjustments to forecasted volume by customer and changes in processing cost are the primary focus of their operations and maintenance budget. Seeing the immediate effect of these changes is crucial in managing their performance.

After processing costs, their next largest expense is personnel. They are delighted with the granular payroll tax calculations enabled by Centage – especially how easy it is to adjust for actual start date and the natural cascade of related expenses. If people aren’t hired, or if they staff up a facility more quickly than planned, these personnel expenses have a dramatic impact on cash flow.

Being able to accurately forecast the resulting demand for cash over an 18-24 month pre-production cycle is paramount to M3 Midstream’s success, which is why Centage’s solution has proven so valuable over time.

A 2-3 day process now done in hours

“Centage gives us the capacity to communicate budgets to our employees at a more detailed level, empowering our employees to make a positive effect on our bottom line.”

Before, it would take M3 Midstream’s finance team two or three days in Excel to show the impact of adding a major new greenfield project, or selling a part of an existing asset. Now they can model major changes in hours. Minor changes are done with management in a real-time strategy session.

Making on-the-fly adjustments and seeing the decision’s impact with confidence gives M3 Midstream better decision-making capabilities, which trickles down to a positive effect on their bottom line.

Book a demo to see how Centage can save you time and improve your decision-making process.