Oil & Gas

Overview

The oil and gas sector is poised for investment and growth, but rapidly changing market conditions can make investment decisions challenging. For instance:

  • The advent of unconventional sources in North America (e.g., shale) and the rise of competition from non-OPEC countries has altered the traditional market influence of Middle Eastern states, affected pricing dynamics and created shifts in supply sources
  • Consolidation up, down and horizontally throughout the value chain has pressured margins and share positions, and prompted suppliers to take sustainable, differentiated positions in the market
  • Rapidly evolving technology (Industrial Internet of Things, automation, etc.) poses potential opportunities (and risks) and disrupts the value chain

How we help

L.E.K. advises a diverse range of companies, including exploration and production companies, oilfield equipment original equipment manufacturers, oilfield service firms and private equity investors. Our experienced professionals have a deep understanding of key issues faced by our oil and gas clients, such as the purchasing priorities of oilfield service companies and how this is changing, how E&P supply chains are evolving, and how potential new fracking regulations will affect unconventional drilling.

We help clients grow and invest successfully in the oil and gas sector, focusing on growth strategy development, M&A support services, post-merger integration and market evaluation work. We are often called on by clients and investors to:

  • Analyze the oil and gas market and its competitive landscape
  • Assess where and how our clients’ capital and investment resources should be deployed

Examples of our work

In order to stay current on emerging trends, we frequently survey key decision-makers in the oilfield services sector. This fresh market intelligence helps us develop winning recommendations for our corporate and investor clients. For example:

  • For an artificial lift manufacturer, L.E.K. identified and prioritized regions for geographic expansion, product line extension opportunities and acquisition targets. We established a high-level business plan for implementing the recommended initiatives and delivered a robust and unique fact base including numerous market, customer and competitive insights. The client’s business is now growing at a double-digit rate.
  • In the frac sand mining and logistics market, L.E.K. analyzed demand trends for oilfield logistics services and explored potential synergies with a client as part of a diligence effort. Based on our work, the client implemented a forward integration strategy that included acquiring the target. Post-acquisition, we delivered a detailed roadmap and supporting comprehensive integration plans to achieve the value-maximizing potential of its acquisition.
  • L.E.K. diagnosed and developed a plan to improve cash flows and margins for an E&P drilling equipment manufacturer, leading to an additional $10 million in annual cash flow for the client.
  • The client, the leading supplier of CCUs and A60s to the offshore oil and gas industry, approached L.E.K. to perform a market review and sizing in conjunction with new investors being sought for the business. Through a combination of management estimates, secondary research and an interview program of c.60 participants, we developed a regional market model for CCU and cabin volumes sizing and forecast. The review focused on a number of key geographies that are significant either in terms of the client’s current and proposed activities, or in a broader market context. We reviewed the following markets: North Sea (excluding Norway), West Africa, South East Asia, Australia, Brazil, Gulf of Mexico and Norway. Based on our analysis, the client gained solid understanding of the market, including underlying size, addressable market, growth trends as well as growth opportunities.
  • Two global equipment manufacturers asked L.E.K. to provide a third-party perspective on discussions concerning the key strategic objectives for the proposed partnership. We supported both clients to assess: the market opportunity and potential impact of oil price fluctuations during late 2014/early 2015; the strategic rationale for the joint venture (JV); and the preferred structure for the JV. In addition, we helped to define key elements of the business concept, including: organizational structure and go-to-market strategy; responsibility for after-sales services; and potential synergy opportunities. The engagement allowed both clients to crystallize a shared vision for the JV, which provides a common basis from which to roll-out and implement a formal business plan.
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