Driving superior returns through strategic alignment in oil and gas
Matt Guthridge A and Jason Miller APwC.
The APPEA Journal 55(2) 434-434 https://doi.org/10.1071/AJ14069
Published: 2015
Abstract
In the past decade, Australia has enjoyed significant investment in its LNG, gas and oil projects, with the combined value of projects at the publicly announced stage totalling A$197 billion. The cost of developing new LNG, gas and oil projects has escalated in the past 10 years, making Australia less competitive with locations such as North America and East Africa.
The higher costs mean that many proposed projects, especially greenfield developments, will not reach a final investment decision. In this constrained investment environment, it is important for oil and gas companies to execute strategies that earn a strong return on the capital they employ.
More than 200 Australian and Asian energy and resources executives were asked to rate their company’s strategic execution capability; this revealed that oil and gas companies that have strategically aligned operating models earn higher returns on capital employed (ROCE). It was found that while 79% of respondents believe their organisations have the correct strategy in place, only 55% believe their organisation is executing their strategy well now.
The research revealed that highly aligned oil and gas organisations are three times more likely to be executing successfully than their less aligned peers. Overall, the results imply that top teams who clearly align behind a strategy and successfully translate its intent throughout their organisations make better use of their invested capital.
The level of strategic alignment is a key question for both oil and gas investors and company executives.
Matt Guthridge has more than 15 years of local and international experience, working with oil and gas clients on strategy execution, leadership development, capability building and change management topics. He has advised some of the world’s largest capital intensive industries to help them make significant and sustainable improvements in their alignment and performance. Matt is a partner and former leader of PwC Australia’s mining, oil and gas sector for its consulting business, and before this he was an associate principal at McKinsey & Company. As a qualified psychologist, executive coach, mediator and facilitator, Matt frequently works closely with senior executives and board members to improve their personal and team alignment. |
Jason Miller is a director in PwC’s Strategy team with experience across a range of industries including resources, financial services, telecommunications, infrastructure and logistics. Jason’s consulting and strategy experience includes enterprise performance alignment, individual performance alignment, strategy development, strategic planning, commercial due diligence and economic value assessment. |
References
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