Taking Advantage of Turbulent Times

Abstract

Management Set in motion by the global financial markets collapse, oil and gas markets have suffered a huge setback since July 2008 when commodity prices began to fall. Energy demand has fallen in all sectors of the global economy, and the lack of available credit and seizing of credit markets had an immediate impact on economic activity in all sectors, signaling the beginning of a deeper and longer recession than we have seen in the last 30 years. These turbulent times require fast and immediate reaction. Supply and demand balances have been difficult to determine, and oil prices have been volatile over the past year. Today's uncertainty adds considerable complexity to the process of making the right investment decisions for future supply. If the situation does not change soon, the industry may be subject to a very severe supply crunch in the middle of the next decade. Extraordinary times can also create opportunity. Many companies used the last four years of rising commodity prices as an opportunity to reduce debt and bolster their balance sheets. That may lead to an uptick in mergers and acquisitions of companies with strong and proven reserve positions in politically stable host countries. The risk/reward balance is tilting toward the purchase of whole companies to replace reserves produced. The ability to quickly integrate an acquisition into the enterprise, which can save millions of dollars, is a significant agility requirement in these troubled times. Today, technology can enable the faster integration of an acquired company's assets with overlapping assets within the enterprise. Using Web-based systems and service-oriented architecture, a virtual consolidation of the underlying enterprise systems can be quickly achieved at the presentation layer, pulling data from the different legacy systems into one unifying view. This virtual consolidation enables the quick integration of overlapping assets with consistent work processes, resulting in faster realization of economies of scale and elimination of redundancies, and gives the acquisition-integration teams more time to harmonize the legacy business systems.