Abstract
In any economic environment the success of a business is based on the growth of its profits. In that context, today oil and gas E&PD (Exploration and Production Development) companies are challenged with about two thirds decline in revenue and disproportionate operating costs. The situation becomes direr for NOCs (National Oil Companies) where revenue must be compensated to balance the State's budget. Similarly, IOCs and other operators are challenged by taxes, royalties and/or concession agreements with unfavorable return on investment at low oil price regimes. As such there is an inclination to augment hydrocarbon production rates albeit at disproportionate operating costs. Therefore, a need exists to significantly improve business performance.
The objective of this paper is to present an overview of what contributes to an effective business model for oil and gas E&PD companies aimed at reducing operating expenses in addition to augmenting and optimizing revenue. Key strategic programs are discussed such as policy, organization, field development plans, workforce, and contracting philosophy.
The conclusions indicate that typical E&PD planning systems should be fluid in par with the performance of development plans and sensitivity to profitability margins. Observations in this paper capture opportunities to exploit organization capabilities, effectively focus capital investment, and evaluate benefit of acquiring support services versus spinoff in addition to establishing criteria for retaining and selecting specialized services and adopting successful contracting strategies.
