Key Performance Indicators: Oil & Gas Industry: BY A.Gokulakrishna
Key Performance Indicators: Oil & Gas Industry: BY A.Gokulakrishna
Key Performance Indicators: Oil & Gas Industry: BY A.Gokulakrishna
BY
A.GOKULAKRISHNA
(AG0C84254@TechMahindra.com)
CONTENTS
• Key Performance Indicators
• Key Performance Indicators in Oil & Gas Industry
• Categories of KPIs
• Important Core and Additional KPIs
• Comparative Analysis of top six Oil & Gas Companies of Europe and
USA
• Benchmarks and Best Practices in Oil & Gas Industry
• Upstream and Downstream Challenges
• asd
• Global Refining capacity
A key performance indicator (KPI) is a business
metric used to evaluate factors that are crucial to
the success of an organization. “Key performance
indicators” means factors by reference to which the
development, performance or position of the
business of the company can be measured
effectively.
KPIs should provide a balanced view of the business to give a complete picture of a company’s health and performance
The oil and gas industry plays significant role in the contribution of
the world’s economy. In terms of dollar value, the oil and gas
industry is considered to be one of the biggest sectors. The oil and
gas industry can be categorized into three main key areas:
• Exploration Industry
• Production Industry
• Exploration Industry:
• The quantity and quality of seismic data produced and the time taken to obtain such
data.
• The quality of interpretation of such seismic data and the time taken to process the
data.
• Down Time which is the number of man-hour losses as a result of equipment failure or
stakeholder disturbances.
• Production Industry:
• Production rate which is based on the number of barrels of oil produced per day.
• The production cost for each barrel is also the key in assessing performance and
efficiency.
• The Down Time as a result of equipment failure or stakeholder disturbances.
• The number of environmental issues such as oil leaks due to equipment failure,
technical glitches or even the sinking of oil containers at sea.
The performance indicators are organized under two categories –
• Employees (thousand)
The employees indicator consists of the annual average full-time employee equivalent of the total
number of people on full-time or part-time employment contracts with company, including the share
of employees of certain additional joint operations.
40
($ Billion)
30
20
10
0
CONOCCO
BP SHELL EXXON MOBIL CHEVRON TOTAL SA
PHILLIPS
2012 16.8 36.84 56.17 38.81 24.71 13.92
2013 17.55 32.7 44.91 35 23.63 16.09
2014 25.86 34.53 45.12 31.48 21.24 16.74
2015 16.28 24.13 30.34 19.46 19.79 7.57
Data Source:
Top Six Oil & Gas Companies of Europe and USA Annual Reports
Inference: As this indicator reflects the ability to generate cash for both distributions to shareholders and
investments. Its Important for the companies to generate cash from their operating activities to sustain in the
business. Exxon Mobil has been at the top in this category since 2012 as per data.
Production available for sale (thousand boe/d)
2015
4000
3450
3500 3277
(thousands boe/d)
2622
2500 2300
2000
1540
1500
1000
500
0
BP SHELL EXXON MOBIL CHEVRON TOTAL SA CONOCCO
PHILLIPS
Data Source:
Top Six Oil & Gas Companies of Europe and USA Annual Reports
Inference: In 2015, BP and Exxon Mobil have almost equal production available for sale.
Earnings per share ($)
16
14
12
Inference: Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share
of common stock. Earnings per share serves as an indicator of a company's profitability. It can be seen that
BP’s EPS is the lowest throughout. Whereas Chevron and Exxon Mobil have done comparatively well.
Capital investment ($ billion)
40
35
30
Capital Investment
25
($ Billion)
20
15
10
0
CONOCCO
BP SHELL EXXON MOBIL CHEVRON TOTAL SA
PHILLIPS
2012 10.73 23.5 25.6 24.8 18.78 11.63
2013 6.54 33.54 34.2 35.61 23.22 6.25
2014 15.44 15.65 26.98 29.89 20.16 15.13
2015 14.73 19.31 23.82 23.81 20.28 8.66
Data Source:
Top Six Oil & Gas Companies of Europe and USA Annual Reports
Inference: Capital investment is a measure used to make decisions about allocating resources and assessing
performance. Capital investment in the year 2013 was the highest as Shell, Exxon Mobil and Chevron invested
almost equal amount. This was because Oil price at that time was quite high which was giving a high return to
the companies.
Benchmarks and Best Practices in Oil & Gas Industry
• Six areas where the Oil and Gas companies have been constantly focusing to
achieve the highest return.
• Operations
• Supply Chain Management
• Finance
• Risk Control
• Human Resources
• Information Technology
Operations
• To achieve this, oil and gas companies should look at the following
opportunities in order to deliver better supply chain value:
• Supply Chain Market Intelligence
• Materials/Supplier Relationship Management
• Supply Chain Talent & Technology
Finance
• Key metrics to benchmark best finance practices:
• Business days required to close and report to executive management.
• Metrics included in the monthly management report.
• Preparation of annual budget along with annual forecast.
• To achieve this, oil and gas companies should look at the following
deliverables:
• Evaluation of existing finance function in terms of both cost and value created and
assessment of the enablers including organization, people, process and technology
compared with peer group organizations, and best practice.
• Understanding key gaps and initiatives required to deliver the finance vision in
alignment with business strategy.
• Performing a high level cost benefit analysis in order to validate top down
hypothesis and prioritize improvement opportunities.
Risk Control
• refining capacity
• Complexity
• utilization rates
Refining Capacity
• Refining capacity refers to the amount of oil a plant can refine.
• Complexity determines the type of crude oil consumed and the
quality of refined products produced.
• Utilization rates show how much of refining capacity is used to refine
oil, which can depend on things like efficiency, maintenance, and
turnaround activities in the unit.
• The higher the refining capacity and utilization rates, the higher the
production of refined products, and so refining capacities and
utilization rates directly impact the revenues of refining segments.
Refinery Complexity
• Nelson complexity
• Measurement
• Complexity cross factor
• Uncertainty
References:
• www.bp.com
• www.conocophillips.com
• www.shell.com
• www.total.com
• www.exxonmobil.com
• www.chevron.com
• www.pwc.com
• www.bain.com
• www.marketwatch.com
• www.moneycontrol.com
• www.yahoofinance.com