How did an oil and gas company strategically build its market position and increased its production efficiency by focusing on the industry’s macroeconomic scenario?

The US-based Oil company had been in the production of pulp and paper for two decades when in 2017, it acquired a declining oil facility in the North East of the Permian Basin in Texas. However, since the company lacked the experience and without an in-depth analysis of the field at a macro level, it was unable to meet targeted expectations. It sought the services of Research Nester consultants to re-strategize its operations taking into consideration the macroeconomic factors influencing the industry.

The Story

The previously built oil-producing unit had a deep-draft semisubmersible platform. After its acquisition by the company, it was modified, rejuvenated, and refurbished to have a capacity of 20,000 B/D of oil and 25 MM cf/D of natural gas. The facility did not require much investment and also facilitated a reduced cycle time and carbon exposure. The company also duly complied with the requirements of the New State of Texas Environmental Electronic Reporting System (STEERS) and after a detailed registration received the standard permit. Nevertheless, even with promising future prospects, the company failed to efficiently utilize the available resources. The price volatility and shifts in market trends had a significant impact on the revenues of the oil company. This gradually led to financial uncertainty. In the first two years, the company adequately followed the environmental regulations. However, it failed to keep track of the changes in safety norms and the introduction of stricter standards. This negligence got the company into a legal battle with the government authorities for flouting the Clean Air Act. Finally, in 2020, the growing uncertainty regarding the operability and sustainability of the business pushed the company leadership to seek the services of RNPL analysts to work out a strategy for their business after assessing the macroeconomics of the industry.

Our Solution:

The major issue with the company’s unproductive strategy was, it had failed to do thorough and extensive research on the global factors that influence the oil and gas industry. Research Nester analysts observed that the company had not been able to pursue offshore drilling effectively owing to inefficient resource allocation. The semi-submersible had a large payload capacity and low water depth sensitivity but remained underutilized. RNPL consultants offered the company a customized solution in the form of an analysis report on the Offshore Drilling Market, that had a detailed account related to the opportunities, segments, and current and emerging trends of the industry. In addition, Research Nester consultants offered the following suggestions that could help the company re-strategize its production and business policies.

Being up-to-date with the global geopolitical situation
Researching the sector on a macroeconomic scale to anticipate future risks and uncertainty.
Adopting best practices and custom-engineered equipment solutions.
Implementing measures that could prepare the company to face fluctuations in global economic growth and consequent price volatility.
Hands-on approach toward the changing regulatory norms and safety standards
Understanding the business landscape and leaving scope for scalability.
Taking measures for reducing GHG emissions and lowering the carbon footprint.
Adopting strategies to promote itself as a reputable, reliable, and environmentally responsible oil and natural gas company.

The company adopted the measures and integrated them into its business operations. The macroeconomic strategies facilitated better decision-making and efficient production processes, with the optimal utilization of resources.

Results

The company aimed to specialize in the exploration, production, and distribution of oil and gas products. But owing to the inefficiency in production processes, resource allocation, and understanding of market trends and environmental regulations, the company failed to build a strong foundation for its business. The growth in the first year was 10%, it further showed an insignificant rise of 12% in 2019 and after being encountered for greenhouse gas emissions, the growth went down to a meager 4%. This is when Research Nester analysts were brought into the business domain of the company to facilitate an efficient and effective transformation. With the incorporation of suggestions and strategies, the company was able to gradually multiply its growth. The output increased by 20% in 2021 and around 35% in 2022. The integration of macroeconomics with the practical expertise of RNPL and the resources of the company brought about a win-win situation for the business and paved the way for its sustainable growth.

How did an oil and gas company strategically build its market position and increased its production efficiency by focusing on the industry’s macroeconomic scenario?

The Story

Our Solution:

Results

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Vishnu Nair

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