How to Navigate the Uncertain Deepwaters – Corporate Restructuring with a Twist
The recent recession, combined with the collapse in oil and natural gas prices, has triggered a shift among oilfield service companies about the restructuring realities in their business models. Prior to the economic meltdown, the industry was already starting to see signs of this restructuring, largely because of higher growth rates in areas outside the U.S. such as the deepwaters of Brazil and West Africa, offshore drilling in Asia and natural gas development in Australia. Recently, this restructuring effort gained further momentum hastened by the Gulf of Mexico oil spill which spurred a slowdown in both deepwater and shallow water drilling. Now, the industry expects that there could be a ripple effect from EHS regulations for shale plays making the cost of operations higher than before.
Given these new challenges, it is natural for companies to rethink their overall business and operations. This will be easier for large multinational energy companies who are already operating in multiple countries and continents with diverse portfolios. However, for others this could mean a bit of a mismatch in terms of products, services and people. These challenges call for a comprehensive restructuring effort that takes a holistic view of strategy, operations, supply chain, sales and delivery, research and development, general and administrative support, tax and finance considerations. In this article, we will explore certain facets of this new reality and how those are driving the current wave of corporate restructuring for oilfield service companies.