Lessons from Past Energy Crisis

How do you define a business crisis? How about this: Whenever commodity prices drop significantly enough to pressure your profit margin. Or, whenever economic pressure is enough to threaten the status quo of your business. When it hurts. You feel it. Maybe it’s happening now. If you find yourself in a crisis, what do you do?
Here is what has worked in the past.

Embrace that a crisis forces a rethink and justification of your business processes.
Is it time to ask: Why do we monitor and report production and expenses like we do? Is there a better way?
A staff reduction may be needed.
The US Bureau of Labor Statistics notes that total employment in Oil and Gas extraction has declined by 46% in the last 40 years. (https://fred.stlouisfed.org/series/CES1021100001) Yet the industry managed to grow production during that time.
Improve your well portfolio.
Wells deplete, and water cuts increase. The trend may not be your friend. lt may be time to cut loose those marginal wells.
Improve your focus on revenue and expense management.
Are you suspicious that some of your oil is disappearing with water hauls? Have you ever found duplicate invoices that were paid?
Why not regularly rethink your business?
- Conclusion:
  Short term: Focus on workflows and expenses first for quick wins. Is it time to bring in new technology with digital workflows and automation?
  Long term: Focus on portfolio management.
  Rethink every key part of your business.
  Don’t let a crisis go to waste. You are in the business to make money, not volumes.

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