Regional Energy Strategy for a Major Oil and Gas Company

The Challenge

An independent oil and gas company engaged Decision Strategies to undertake a strategy development study, specifically targeting its assets in the Rockies. Following the successful completion of strategy studies on the oil shale and Rock Springs area, the client came to the realization that a broader regional strategy was necessary in order to maximize the value of the company’s Rockies assets. In particular, given the diversity of client’s asset base in the Rockies, it was decided that a portfolio approach should be adopted in order to achieve the desired objective. Importantly, the Rockies assets act both as growth vehicles as well as funding sources, primarily responsible for generating stable production growth and cash flows for the company over the next five years.

Our Approach

We proceeded with the strategy development exercise by implementing our Integrated Decision Management® (IDM) methodology (a proprietary approach developed by Decision Strategies) to address the client’s issues and questions, regarding the asset strategic decisions.

In addition to the four pure strategies considered initially, several hybrid strategies were developed from elements of the pure strategies were evaluated, one of which the team eventually selected. The selected hybrid strategy consisted of the following key elements:

– Retaining existing E&P assets and continuing on the current path of conventional exploration, development and production.

• Fully developing the unconventional plays of CBM and EOR.
• Providing seed funding for the new businesses of CTL and Oil Shale.
• Positioning the client to take advantage of opportunities in Power.

Results

The selected energy strategy showed a potential fully risked net present value of $11B with minimum downside risks. While synergies did not play a large part in attaining value, the client has seen a 40% increase in gross oil sales volumes since the analysis.