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Independent Oil and Gas Companies Value Agility and Communication

By Lynn Cielec on 08/23/2017

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As it turns out, competing against enormous energy conglomerates isn’t as daunting for small and mid-sized independent oil and gas companies as one might expect.

Last year, Rigzone released its first-ever Ideal Employer Survey focused on independent oil and gas producers, and the research yielded some actionable insights for up-and-coming oil and gas producers.

After surveying nearly 8,500 industry professionals, Rigzone ranked the U.S.’s Anadarko Petroleum Corp. as the top independent employer in the global industry. In addition to ranking individual companies, Rigzone also asked participants to detail characteristics that help independent oil and gas companies compete with super-sized energy conglomerates.

Increased Agility

These smaller businesses first and foremost have the ability to quickly react to market changes. This agility means that independents can adjust their overall organizational strategy in tandem with unpredictable shifts in their respective markets

The increased reactivity that comes with a smaller organization allows them to assume risk and move investments into promising opportunities rapidly, in turn empowering them to capitalize on quickly unfolding trends and events that bigger competitors might have to pass up.

Technology: A Key Component For Success

Independents who invest in data-gathering technology see immediate returns — even the most agile organizations need to make informed decisions when aligning their gameplans with market conditions.

According to Linda Castaneda, U.S. Oil & Gas Advisory Leader at Ernst & Young, independents need to digitize their organizations to bring operating costs down even further.

“To survive in today’s new price culture, fundamental changes will need to be made to cost structure,” Castaneda told Rigzone. “Companies will need to become more digitized and truly transform their workforce for success.” These changes should help to establish a more stable workforce, which is a crucial asset for any younger independent company.

However, reliance on low-cost technology can be something of a double-edged sword. Take the shale boom, for example. Following an industry-wide decision to load up on cheap debt, the boom in shale prices was driven by an industry-wide series of technological advancements. Unfortunately, excessive hype created a damaging supply glut that could have been avoided with the correct market analysis.

On the flip side, Director of Transaction Advisory Services Practices at Navigant Consulting Thomas McNulty recommends that independents maintain reasonable debt levels as they explore new drilling strategies. The reasoning goes that the most successful independents will be those that have strong balance sheets, unencumbered by massive liabilities.

Communicate for Success

Without multiple management tiers, independents can directly communicate between departments, leading to faster decision-making and a more cohesive company-wide strategy. This is a major leading factor behind the agility and flexibility that enables these organizations to move in concert with market shifts.

Independents also have the ability to undertake cutting-edge innovations — provided, of course, that those risks are justifiable. Even if a strategy fails, independents have the ability quickly change course, enabling them to adopt a sort of “failing forward” strategy. As Castaneda pointed out, independents are “able to make decisions quickly, but backtrack if they make a mistake.”

Cost-Effective Gas and Oil Operations

As the Rigzone survey demonstrated, a strong balance sheet and reasonable cost structure together help independent oil and gas producers succeed in a competitive, ever-changing market environment.

Many of these operations depend on unencumbered access to drilling and gas compressor sites. To make sure access roads are always open for business, Midwest Industrial Supply, Inc. offers soil stabilization solutions and managed programs to strengthen those often unpaved roads. When applied to gravel roads, our EnviroKleen® technology binds natural soils to create a strong surface, capable of handling heavy traffic and resisting water damage.

Most importantly, stabilized roads equate to huge cost savings, as a reduced need for regular maintenance and a lower initial road construction cost will help independents keep their balance sheets just where they need to be to stay competitive in an ever-changing global market.

About Author

Lynn Cielec

Written by Lynn Cielec

Lynn Cielec is the Industrial Business Unit Manager at Midwest Industrial Supply. She is an experienced executive sales director with a proven track record of results and sales growth. Effectively utilizes consultative selling methodologies within a CRM system while incorporating other value based selling tools. Expertise in building and leading high performing sales teams, strategic planning, P & L management, new business development, compensation development, market/trend analysis, new product launches and multi-sales channel distribution.

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