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Upstream companies: Adapt or perish seems to be the advisory
Dec 08:   Cash flows and margins of upstream companies have been under pressure for several years, even during periods when oil prices exceeded $100/bbl.
8This trend points to deteriorating industry fundamentals primarily driven by two factors: resource complexity, which is forcing producers to spend more for proportionally much less return, and project complexity, which  is leading to larger and more costly projects.
8The recent oil price decline has exacerbated this pressure and forced upstream players to focus on short-term austerity and cost control measures.
8Four main trends are being highlighted here: First, a strong drive towards increasing project efficiency; second, collaboration among industry stakeholders to focus on gains and synergies as well as risk sharing; third, a portfolio revolution to ensure focus on core competence and cash generation; and lastly the need to work with governments to reduce their take which is currently the largest cost for E&P companies.
8These trends will define the future of upstream industry and players would structurally and fundamentally need to redefine their business model to align with these trends in order to grow and restore value.
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