Oil and gas quarterly financial results highlight need to improve operational excellence

Oil producers must build long-term sustainability

CALGARY, March 16 2016 /CNW/ - Cost cutting continues in Canada's oil and gas sector, and companies across the board are trying to do more with less to help drive down the cost per barrel and remain competitive. According to a new EY report, there are a number of innovative ways companies can get value out of the oil they are producing.

"Quarterly financial results are highlighting the massive pressure the industry is under," says Lance Mortlock, EY's National Strategy Services Leader. "Innovative and strategic thinking about how to organize and execute the business through operational excellence is especially critical at times like this."

EY's report, Driving operational performance in oil and gas illustrates how operational excellence is a type of approach that addresses how to adjust leadership, principles, processes, systems and tools to improve key metrics, both on the capital and operating sides. It needs a multi-pronged approach from every angle of a business.

The key components of operational excellence are:

• Health, safety, environment and quality – a relentless pursuit to eliminate injuries and incidents for employees, contractors and the environment
• Integrated planning – the development of short- and medium-term operating plans that are incorporated into the long term strategy
• Operating model – how processes, people and systems are organized to achieve optimum efficiency
• Asset reliability and integrity – a deliberate focus on the life cycle of assets from design to decommissioning
• Cost efficiency – cost improvements are strategically addressed to highlight the hidden costs of inefficiency, and implement tools and technology to focus on increased output
• Supplier and contractors – agreements are structured so that objectives contribute positively to business performance

According to EY's survey, on average, more than 80% of large oil and gas companies have run operational excellence programs. Of those programs, 43% have improved health, safety and environment metrics, 43% see cost saving, and nearly one-third (29%) acknowledge they have improved asset uptime/availability and increased oil/gas production.

"A good operational excellence program delivers measureable results," says Mortlock. "Especially during difficult times, companies can see the direct value of their efforts. And at this stage of the game, any improvement pays huge dividends."

For more information and operational excellence, or EY's oil and gas sector services, visit EY Canada Oil & Gas.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

SOURCE EY (Ernst & Young)

Sasha Anopina, [email protected], 416 943 2637; Julie Fournier, [email protected], 514 874 4308; Leigh Kjekstad, [email protected], 604 648 3807