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Enhancing return on invested capital: Three actions for oil and gas companies

How to enhance return on invested capital in the oil and gas industry amid volatile oil prices.

Overview

Now, more the ever, enhancing return on invested capital (RoIC) is crucial for oil and gas companies around the globe. Focusing on growing top or bottom-line earnings is proving to be unsustainable—an integrated approach to RoIC across the asset portfolio is essential to deliver significant RoIC uplift.

In approaching return on invested capital (RoIC) enhancement strategies, oil and gas players need to take an integrated approach across their respective portfolio across three key pillars:

  1. Achieve commercial optimization through asset-backed trading.

  2. Optimize balance sheet through alternative capital structures.

  3. Gain portfolio expansion through sophisticated investment and M&A deal execution.

The 3 Golden Rules
Read more in this Future Refining and Storage supplement article featuring Ogan Kose.

DOWNLOAD THE FULL ARTICLE [PDF]

First published in Future Refining & Storage in February 2016. See www.energyinst.org for more information.

Recommendations

Achieve commercial optimization through asset-backed trading. A trading-centric operating model optimizing long and short positions in an integrated portfolio can significantly enhance trading net operating profit after taxes (NOPAT).

Optimize balance sheet through alternative capital structures. Alternative commercial arrangements and capital structures, including off-balance sheet greenfield investments can provide an effective means to secure asset capacity without having to commit full capital funding.

Portfolio expansion through sophisticated investment and M&A deal execution. With future NOPAT set to rely heavily on future capital investments and M&A, enhancing transactions execution is key—oil and gas players will need to leverage advanced financial and risk analytics to improve their risk-adjusted returns.

ABOUT THE EXPERT

Ogan Kose

Ogan Kose
Managing Director, Energy, Accenture

Ogan Kose is a managing director in Accenture Strategy and leads Accenture Trading, Investments & Optimization Strategy globally. Overall, he has more than 15 years of experience helping commodity players with their earnings and risk management.

His primary focus areas are commodity trading, risk management, investment evaluation and financial analysis, pricing and commodity contract structuring. At Accenture, Ogan has worked to help clients across multiple geographies, such as the United States, Europe, China and Southeast Asia.

He holds bachelor of science and master of science degrees in chemical engineering (Imperial College, London) and a master of business administration from Georgetown University. He is a member of the Global Association of Risk Professionals and is a financial risk manager. He is based in London.

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