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Australian Energy Producers Journal Australian Energy Producers Journal Society
Journal of Australian Energy Producers
RESEARCH ARTICLE (Non peer reviewed)

Leading practices in business development: a driver of competitive advantage*

R. Curtin A , J. Audcent A and A. Nicholls A
+ Author Affiliations
- Author Affiliations

Ernst & Young.

The APPEA Journal 51(2) 723-723 https://doi.org/10.1071/AJ10103
Published: 2011

Abstract

Oil and gas companies, like most other competitive organisations, have a relentless desire to achieve high levels of growth. In an environment where drill-bit expansion is becoming harder and more expensive, asset and corporate acquisitions are becoming a viable alternative for achieving aggressive targets. While the present uncertainty in financial markets has put a brake on activity, the near-term environment is seen as being particularly conducive to mergers and acquisitions (M&A) in the oil and gas sector.

It is viewed this way for the following reasons:

  1. In general, the rising costs and lowering returns associated with exploration—which are expected to continue;

  2. Many producers are sitting on significant cash reserves following a period of sustained high commodity prices; and,

  3. New pressures caused by tighter capital market conditions (equity and debt) on those companies that have large evaluation and development funding obligations associated with their projects.

Companies looking to grow through acquisitions should be aware that the M&A game has changed. Investors are now firmly focused on the risk aspects of their investment, heavily scrutinising any deal in terms of strategy, value, execution and delivery risk. In such an uncertain market, robust thinking and a well-thought-out acquisition process are key criteria for a successful transaction. Getting the right deal for the right reasons is essential for winning the support of your shareholders. This presentation will explore the importance of an effective business development process, drawing on our observations from recent transactions and big oil thinking around corporate strategy, decision-making processes, leadership and assessment tools.

As Ernst & Young’s oil and gas assurance leader in Oceania, Russell has financial reporting and technical accounting expertise specific to both independent and integrated oil and gas companies. He frequently consults on transactions unique to the industry including joint ventures, production payments, accounting method conversions, business combinations and financial risk management activities. Russell has also managed various acquisition due diligence reviews and capital market transactions.

Justin is a partner in Ernst & Young’s Perth office, specialising in advice to companies in connection with mergers, acquisitions, joint ventures and divestments, with a primary focus on the oil and gas and related service sectors. With more than 18 years of experience in corporate finance across the UK, Europe and Australia, he has advised on more than 200 corporate transactions, including numerous cross-border deals. Justin is a qualified chartered accountant, a senior associate of the Financial Services Institute of Australasia, and a graduate of the Australian Institute of Company Directors.

An associate director in Ernst & Young’s Perth office, Andrew specialises in mergers, acquisitions, joint ventures and divestments. During his seven-year career with Ernst & Young, Andrew has worked in Australia and the UK and advised on numerous cross-border deals across the energy, base metals and related service sectors. Andrew is a qualified chartered accountant and a senior associate of the Financial Services Institute of Australasia.