Oil and Gas Reorganizations: From Surviving to Thriving in Challenging Times

by Michelle Grant, CIRP, LIT
April 12, 2017
Since the price of oil began to slump in mid-2014 oil and gas companies have gone through an intense period of reorganization. In December 2016, EY, in association with the University of Calgary’s Haskayne School of Business — Executive Education, conducted a survey of more than 70 organizations in Canada’s oil and gas industry to gain insight into how those organizations responded to continued low commodity prices. You can access the full report here: Canadian oil and gas reorganizations: From surviving to thriving in challenging times Key highlights from the survey are summarized below:
  • Actions taken by the survey respondents were focused on providing immediate cost savings including headcount reductions with over 80% of organizations surveyed reducing headcount.
  • The majority of survey respondents that reduced headcount also took the opportunity to restructure internally — shifting work, role changes, streamlining processes or consolidating areas, functions or business units. The internal restructuring initiatives were largely short-term solution focused, more complex solutions such as outsourcing and work elimination were not really considered.
  • Survey respondents that identified the reorganization efforts as successful had these things in common:
    • Strong coordination across the organization, including from HR and Communications
    • Took the time to apply more upfront rigour and discipline
    • Engaged a broader stakeholder group (outside of executive leadership)
The last two years have been very challenging for the oil and gas industry, and these challenges will continue. It is important for organizations to take stock of the changes that have been implemented, measure these changes against the perceived outcome and determine what (if any) additional changes are necessary to move from survival mode to a thriving business again. From EY’s perspective, now is the time to think more strategically about what organizations can do next to address these challenges, focusing on people as drivers of success, and on longer-term sustainable and structural solutions.