Competitiveness in energy through a zero-based lens

by admin

Competitiveness in energy through a zero-based lens

by admin

by admin

Leading oil and gas companies are taking a page from margin-driven businesses and embracing a Zero-Based Mindset to unlock trapped value. This mindset offers absolute transparency into what constitutes working money driving return on investment (ROI) and what is non-working money. It combines this insight with operational analytics to generate savings, which are banked and reinvested. With 15-30% savings achievable, there is potential to take portfolio breakeven points toward $30-40/boe.2 Here’s what is different about ZBx:

  • Unprecedented transparency from visualization and advanced analytics. Spend is broken down into granular, industry-standard cost categories with data science and automation. Then it is powerfully visualized for budget owners, bringing new light to hidden spend, anomalous spend, and benchmarks by well, asset and region. Companies use advanced analytics to dissect complex issues and maximize ROI.
  • The holistic pursuit of spend productivity. Multi-disciplinary teams target unit costs by re-evaluating contracts, challenging consumption based on underlying activities, testing assumptions for equipment specifications above industry standards, and digitally transforming businesses. A deep understanding of potential safety, production, and reliability impacts boost spend decisions. Trade-offs are optimized for the company, not for individual functions, assets, and regions.
  • The continuous flow of insights to challenge costs. Validated savings targets are locked into budgets, and a self-reinforcing closed loop begins. During execution, initiatives are continually tested to ensure they remain on track. Cost category owners bring a healthy tension to budget owners, aided by variance reports. These spend conversations have proven highly effective across multiple industries.
  • The shared discipline of zero-based thinking. Bottom-up targets informed by “should-cost” analyses and benchmarks replace top-down cuts. Budget owners put it all on the table, dusting off old ideas and embracing new ones. Crucially, they feel supported to make informed decisions that create value for the company at their expense. Teams relentlessly eliminate waste together. Leadership helps budget owners overcome roadblocks.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Top