PROJECT PROFILES

Mega-Project Development Strategy
For a major U.S. oil company, CERA and SDG Oil & Gas led the evaluation of a $2.5 billion-dollar pipeline investment in Central Asia. The client's primary challenge was to determine what near-term investments it should make in Central Asia to keep the longer-term pipeline option open. The opportunity was enormous, and would be far and away the largest value creation opportunity in the entire corporate portfolio. But if the client invested near-term and the pipeline fell through, the financial impact would be catastrophic.

We began by clearly defining what the near-term options were, when they needed to be made, and how they affected the longer-term probability of the pipeline moving ahead. A particular challenge was to define and quantify the political risks inherent in reaching a sustainable agreement with dozens of entities, each with its own objectives.

Insights from this effort led to changing ownership of the pipeline to align the interests of critical players. Our analysis also provided the client with the information needed to effectively negotiate with the country's government over fiscal terms and the timing and structuring of the near-term investments.

Growth Business Strategy
A major integrated energy company faced the daunting challenge of creating value in the high-cost, high-risk Gulf of Mexico deepwater. Competition was intensifying and the company was falling behind, in part because the organization lacked consensus on setting priorities for leasing, acquisitions, target areas/plays, and infrastructure.

CERA and SDG Oil & Gas worked with the client to build a powerful, aligned, and credible strategy for the organization that involved significant changes from the momentum path and added more than $2 billion in value potential.

Capturing the value remained a challenge however, because the organization's complex structure impeded rapid and integrated exploration and development decisions. CERA and SDG Oil & Gas led an implementation effort that significantly changed work processes, org/team structure, capabilities, and incentives for the group. The effort led to better project decisions, and greatly reduced cycle times and cost. The project was recognized and rewarded as the top effort of its kind for the organization that year.

Mature Business Strategy
A multi-billion dollar operating business had been one of the leading cash generators of a global supermajor, and a key contributor to technical leadership and innovation. However, the company's status quo strategy was to "make the most of what we have"; senior leadership was focused on operations rather than discovering breakthrough alternatives.

CERA and SDG Oil & Gas helped break this paradigm by demonstrating a surprising insight: The total added value of all discretionary activity was very small but consumed half the management resources. This insight led to an urgent search for the valuable options that deserved focus and funding.

As a result, the organization chose to limit its focus to the few material opportunities with the potential to substantially boost near-term performance. The company reorganized into a leaner, more focused organization that successfully tested these options and gave management a clear framework for efficient, decisive, value-focused action.

Portfolio Strategy & Resource Allocation
A multi-billion-dollar operating business was a leading growth opportunity in a new deepwater basin for a global supermajor. The company faced numerous conflicting challenges including too many promising leads to fully test prior to expiry, critical staff constraints and limited drilling rig availability, and the need to efficiently allocate more than $10 billion of exploration and development capital across hundreds of potentially rewarding but risky projects.

CERA and SDG Oil & Gas collaborated with the client to design and implement a corporate portfolio management tool and strategic planning process that facilitated decision-making and prioritized and allocated resources across the entire set of opportunities. After proving the methodology, we then worked with client teams to apply the process. We considered a range of portfolio-level alternatives that made explicit tradeoffs between the constraints to ultimately arrive at consensus on a high-value path forward.