The Final Frontier: E&P's Low-Cost Operating Model

CHAPTER 4PMI and Other Event‐Driven Redesigns

Historically, despite industry evolution, companies have been reluctant to undertake change in operating models on an enterprisewide basis, although there have been cases where operators have implemented major change, such as the BP North Sea case of two divisions, with one focused on mature field operations. Other exceptions to the rule are typically event‐driven cases of operating model redesign, such as post‐merger integrations (PMI) and financial restructurings—for example, the many divestments of downstream refining and retail operations and corporate unbundling, like the disaggregation of Fletcher Challenge (which included Fletcher Challenge Energy, subsequently acquired by Apache and Shell) and Canadian Pacific Limited (which included PanCanadian, subsequently merged with Alberta Energy to form EnCana). The split of EnCana was also a financial restructuring that afforded enterprise‐wide changes to operating models, splitting the company into two more focused businesses—Cenovus, an integrated oil company, and EnCana, a pure‐play natural gas company. An initial public offering can also trigger event‐driven operating model redesign.

Event‐Driven Operating Model Transformation

With oil prices so low, it may seem an odd time to sell shares in the world's largest oil company. But a Saudi Aramco initial public offering (IPO) is not about market timing. Nor is it principally a financial transaction. It will serve as a catalyst for ...