Oil & Gas
A top-tier global oilfield service company was losing Brazilian market share and experiencing cost overruns due to local market contraction and bid delays.
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.
Projected net financial benefit is approximately $16 million annualized. Benefits will be captured according to a defined benefit schedule.
Offshore Oilfield Service Base Consolidation in Brazil
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.
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.
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:
“We are capturing synergies from the consolidated sites to support future growth.”