There are many ways to navigate volatility in a soft market. And as oil and gas consultants, we see upstream clients respond to market volatility in several ways. Some organizations “hunker down”, preserving cash, and opting to weather the storm as their financial position and appetite for uncertainty do not fit well with their strategic goals. Others with vulnerable balance sheets will seek to shed assets, opening the door for those with strong balance sheets, solid cash flows, and a sound strategic plan to exploit the volatility and acquire those assets through mergers and acquisitions, at a discount.
How any particular oil and gas company responds to adversity depends on their specific strategy for gaining an advantage for the eventual market rebound. One of our clients has chosen to take this time to overhaul their internal processes and systems. Working with Stonebridge, they are taking a pragmatic approach to achieve their end state, with the related goals of process efficiency and data standardization and governance. Their roadmap includes process mapping and data management definition; system selections for drilling and completions, site and rig management, production accounting, field data capture, land, accounting, and AFE; implementation and enterprise integration employing Stonebridge’s EnerHub solution and master data management architecture; BI and reporting capabilities utilizing Spotfire, as well as acquisition loaders to reduce the amount of time and costs required to assimilate assets acquired through targeted M&A activity.
Another Stonebridge client has formulated a strategy focused on containing costs via a third-party managed services approach. Our SmartSource℠ managed services program offered a cost-effective solution that provide small and medium-sized businesses the same technology services – such as real-time application support for WellView and on-demand DBA resources – that benefit larger organizations but scaled to fit their budget.
Navigating a soft market requires a balance of risk and reward. And whether yours is a “hunker down” or acquisition strategy, today’s volatility represents tomorrow’s opportunity. Being able to take advantage of future opportunities depends on the proactive measures you choose to take now.