Contract automation helps Stena Drilling better align performance objectives, accelerate cash flow

By Andrew Parker, Stena Drilling, and Alex Bunkers, Smartchain

Stena Drilling has long embraced technology to deliver results for operators. Yet, like many other drilling contractors, there was a reliance on manual/complex processes for regular operator billing. The lack of system integration led to limited financial visibility, misalignment with the customers’ contract expectations and periodic billing delays.

To address this, Stena Drilling partnered with Houston-based SmartChain to automate the billing process using digitized contracts and real-time operational data. This ensured alignment between financial and operational data, enabled faster invoice submission and laid the foundation for advanced digital contracts that better align the contractor’s performance targets with the customer’s objectives.

The challenge

Stena Drilling’s commercial model, like that of most offshore contractors, is governed by highly detailed service agreements. These contracts contain intricate details that determine the rate based on the specific operational activity under way. These rates vary from customer to customer and can change from well to well.

Previously, each rig’s timesheets were managed semi-independently, with rig managers maintaining their own spreadsheet-based approval processes to track rates and facilitate customer approval. This siloed approach created several issues, including:

• Lack of standardization: Each rig used its own templates, preventing fleetwide visibility and consistency.
• Customer misalignment and delayed invoicing: Multiple revisions created an unnecessary back-and-forth with the customer, delaying payment.
• Poor financial visibility: Tracking revenue ahead of the month-end timesheet and management reviews was laborious and time consuming.

The solution

The Stena Drilling team, alongside SmartChain, implemented a digital contract execution platform that reads operational data from multiple sources and cross-checks drilling activities against the applicable contract rates in real time. Instead of waiting days or weeks to compile an approved monthly timesheet, Stena Drilling now has:

• Live contract timesheets: As operational activities occur, the contract automation platform compiles a contract timesheet in real time.
• Fleetwide standardization: Rig managers now operate on a unified digital system, eliminating spreadsheet fragmentation and enabling executive insights across the fleet.
• Proactive customer alignment: Operators are looped in earlier when memories are fresh. Rather than waiting until month-end, rig managers can send daily or weekly digital timesheets ensuring constant alignment and consistent data with operational drilling software.
• Accelerated cash flow: With validated timesheets and customer approval in place, Stena Drilling can submit invoices faster.

The impact

In the current market, monthly billings can be several million dollars per drilling unit. By enabling earlier approvals, the automated contract platform has directly increased Stena Drilling’s speed to cash without sacrificing accuracy or transparency.

For operators, this automated process gives them a clear and auditable view into rig activity billing, which in turn can help them manage budgets and performance in tandem.

Stena Drilling is now looking to use contract automation to establish a shared truth with the operator. This will enable continuous alignment to ensure that performance expectations are being constantly met.

With contract automation in place, the company can better monetize the efficiencies engineered over the past decade, everything from managed pressure drilling infrastructure and rig automation to improved crew performance programs. Meanwhile, operators gain greater confidence that they’re paying for performance, not just time. DC