Skip to main content Skip to footer

How oil and gas companies can build resilience in uncertain times

March 20, 2020

State of the oil and gas (O&G) industry

6 actions oil and gas companies can take now to build resilience

Setup a 24x7 virtual command center to keep a pulse on the market, dynamically stress test the business, and ensure business continuity

  • Generate or assess potential market balance/price scenarios, and identify leading indicators associated with each scenario to trigger actions ahead of time.
  • Put business continuity plans and cash flow to a rigorous stress test under various scenarios focused on identifying key gaps and shortfalls over a three, six and 12-month period.

Protect your employees by creating a digital workplace to enable safe and productive ways of working

  • Adopt a culture for the changing work environment.
  • Deploy and scale collaboration tools including virtual environments.
  • Enable reliable, secure and ubiquitous remote network connectivity.
  • Enhance business continuity plans.

Zero-base everything rapidly

  • Launch a data and advanced analytics-driven program, leveraging a battle-tested AI tool to quickly scan and assess spend and generate insights from efforts within and across the industry.
  • Challenge every cost, spend item (third party or internal), investment decision and supply arrangement.
  • Ask "why is this needed" rather than "how can we reduce it." This will create a clean sheet with no "sacred cows," sustainable over time without impairing the business’s ability to grow when the cycle turns.

Rebalance Capital Spend and Portfolio

  • Reevaluate all decisions about growing the core business and scaling new businesses—what makes absolute sense to pursue or keep unchanged through this cycle versus deferring without affecting long-term prospects and objectives.
  • Surgically assess every asset, capital spend and new business decision to reflect the new reality—namely, lower and more volatile commodity prices.
  • Evaluate all options—stress test marginal assets and evaluate all new investment decisions with a higher bar for risk. Update all CapEx and OpEx plans for the next 6,12 and 24 months.
  • Prepare to make changes dynamically as there will be considerable volatility over the next several months, and portfolio decisions will need to change accordingly.

Manage Customer and Commercial Risks

  • Maintain intimacy with customers with a view to partnering with them through “thick and thin”. Reinforce partnership and commitments to key customers through concessions and flexible arrangements.
  • Review offtake and supply/service agreements and hedges to identify optimal monetization options and favorable contracts to carefully manage through the cycle.

Unlock inefficiencies and value in support infrastructure

  • Consolidate and outsource back office operations to realize a variablized and flexible cost structure.
  • Rationalize applications and optimize IT maintenance cost.
  • Enable pay-per-use models.

How oil and gas companies can emerge stronger

Visit our Subscription and Preference Center