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Oil & Gas

NEEDS-BASED RESULTS

 

Oil & Gas

SITUATION

A top-tier global oilfield service company was losing Brazilian market share and experiencing cost overruns due to local market contraction and bid delays.

DRIVER GOAL

Consolidate two offshore oilfield service bases (including Wireline and Pressure Pumping operations) into three existing bases in remote locations. Capture synergies to support future growth.

RESULT

Projected net financial benefit is approximately $16 million annualized. Benefits will be captured according to a defined benefit schedule. 

Case Study

Offshore Oilfield Service Base Consolidation in Brazil

Issue

Brazil’s offshore oilfield service market has contracted over the last four years, primarily due to drilling exploration delays by Petrobras, a Nationally Owned Company that controls approximately 90% of Brazil’s domestic market. In addition, the ANP (Petroleum National Agency) delayed the offering of new contractor bids until 2013. This market and bid slowdown caused a top-tier global oilfield service company to lose Brazilian market share and experience cost overruns.

Highland Approach

The Highland Group was asked to assist the firm in dramatically reducing costs, increasing overall operations efficiency and generating cash flow of approximately $18 million from the sale of two of its bases. To achieve the aforementioned management objectives, we created a 27-week implementation plan, which included detailed activities, methodologies and deliverables. Highland’s customized project approach included a Project Management Office (PMO) for the consolidation effort, leadership alignment, organizational development, process and inventory rationalization, improvement of workspace utilization and organizational right-sizing.

Actions Taken

We will achieve the Driver Goal by coordinating and executing six major workstreams:

  • PMO Wireline – Transfer Wireline operations (tools, equipment and personnel) to a new base location before July 1, 2014. On-time transfer will enable fulfillment of the base sale contract. 
  • PMO Pressure Pumping – Transfer Pressure Pumping operations to new locations, also before the July 1 deadline.
  • Synergies – Capture synergies revealed by the unification of similar functions and equipment, resulting in reduction of total resources utilized to deliver forecasted volumes.
  • Operational Area Optimization – Redesign process flows, working and storage areas to more effectively use available space and support future growth. 
  • Organizational Development – Align leadership, execute organizational right-sizing and implement a skills flexibility program to attain additional synergies. 
  • Scorekeeping – Implement savings model and measurement methodologies to track project benefits on a weekly basis, working as an independent controller for the project and reporting directly to the client’s financial organization.

Projected annualized net financial benefit of base consolidation:

$16M

We are capturing synergies from the consolidated sites to support future growth.

Related Information

industry-based

Presenting Analyst

John is a Senior Executive and Presenting Analyst at The Highland Group with more than 30 years of leadership experience in management consulting. He has led hundreds of global consulting engagements that delivered an array of operational improvement solutions with total client benefits exceeding $1 billion dollars.

Project Leader

Oil & Gas

North America

Tom is a senior project leader with over 25 years of international management consulting experience in the oil and gas, utilities, manufacturing, financial services, telecommunications, media and aerospace industries. He has served Fortune 500 and Global 2000 companies in 15 countries across North America, EMEA and Asia.

Project Leader

Manufacturing & Industrial

Joseph is a senior executive with more than 40 years of international industry management and consulting experience, primarily in the areas of process improvement, working capital optimization and operational metrics. Having served in more than 21 countries around Latin America, the Caribbean, the Pacific Rim, and North America, Joseph is skilled at implementing successful and sustainable change programs in culturally diverse environments.