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The Final Frontier: E&P's Low-Cost Operating Model

ISBN: 978-1-119-37654-5
192 pages
March 2017
The Final Frontier: E&P

Description

The energy industry's accelerated evolution requires visionary change

The Final Frontier parses the evolution of the oil and gas sector to map out a plan for going forward. The global energy industry is huge, and it is in disarray; between low oil and gas prices, climate change, rising development costs, and ever-mounting regulations, the need for change has been made crystal clear—but planning is much easier than implementation, and stasis is not progress. This book shows how redesigning internal operating models can bring about the necessary change in the implementation of upstream capabilities-driven strategies. From integrated, national, major, and independent oil companies, to the service companies in the upstream supply chain, there isn't an enterprise in the sector that cannot benefit from reduced costs and increased efficiency. Knowing that change is necessary is not enough—this book shows you what to change, and how to change it to get off the treadmill and start moving forward.

With expert guidance through each redesign element, this insightful guide provides more than simply ideas: it provides real, practical guidance on transforming operations to keep pace with the changes and create lasting advantage.

  • Identify the most relevant organizational capabilities for your resource portfolio, as well as the changes that can translate into savings and efficiency
  • Build a workable plan for real-world implementation
  • Redesign the operating model most suited to the needs of your business on an organization-wide basis
  • Learn what to do differently and how to do it differently

The energy industry has made great strides: our understanding of the global resource base, the nature of ownership and principal stakeholders, new technologies for resource development, and our economics and business models have all undergone a tremendous revolution, but now the more difficult—and more valuable—task begins. The Final Frontier helps you navigate the future and implement the changes necessary to avoid getting left behind.

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Table of Contents

Acknowledgments

Abstract

Chapter 1: Introduction

A Vital Industry

What Now?

Industry Evolution

Ten Reasons to Update Your Operating Model

E&P Needs a New Agenda

Notes

Chapter 2: The New Agenda

Upstream Cost Transformation

“Cut Costs and Grow Stronger”

E&P Capabilities

Resource-Based Key Capabilities

Notes

Chapter 3: E&P Operating Model Redesign

Internal Operating Model

Business Delineation and Performance Measurement

Organization Structure, Capabilities and Workflows

Operations Management Processes

Delegation of Decision Rights

Informal Social Norms & Corporate Culture

Implications of Industry Evolution

Business Model Considerations

Notes

Chapter 4: PMI and other Event-Driven Redesigns

Chapter 5: National Oil Company Considerations

National Oil Company Context

Sovereign and National Oil Company Strategies

Business Model Implications

Notes

Chapter 6: Collaborative Operating Models

Who Uses Joint Ventures?

Joint Venture Strategic Intent

Joint Venture Value and Valuation

Deal Structure

Joint Ventures in Practice – the “How”

Notes

Chapter 7: Financial Implications

Financial Strategy and Policy

Hedging & Trading

Notes

Glossary of Terms

Other Useful Links

Works Cited

About the Author

Index

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