COP has proven that it is incapable of competing in the low cost unconventional sector. COP management structure does not allow it to be competitive. Look at how they sit idol while competitors blow them out of the water in L48 shale development. COP has spent years convincing themselves that they know best when it comes to UR development. Meanwhile smaller more nimble competitors apply constant iterations and understand the limitations / risk of applying conventional wisdom to unconventional development. Therefore, they opt to position VPs close to the bottom and empower Engineering staff to be more creative with applying intuitive techniques to optimize development quicker. COP's understanding of SRV / DRV relationships is among the best in the industry. COP has some world class data gathering results. However, COP structure doesn't allow for quick decision making and necessary changes based off these key learnings (too many perspectives and nobody wants to make any real decisions). COP should look into creating multi-disciplinary teams based on active areas within each BU. Team members would consist of Geologist, RE, CE, PE, and could compete for capital. This would promote competition / performance amongst teams. This is one example of how a true independent operates!
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I really have to laugh at the statements "COP's understanding of SRV / DRV relationships is among the best in the industry. COP has some world class data gathering results. However, COP structure doesn't allow for quick decision making and necessary changes based off these key learnings (too many perspectives and nobody wants to make any real decisions). " COP's understanding of unconventional reservoirs is sorely lacking. They are too interested in "trying" to gather data (which they typically fail miserably at) and not interested enough in "testing" different things to actually make more oil. You can have the best data in the world, but if you don't know what it means and have no idea how to evaluate it, or what decisions it supports, what good is it? There are so many ideas that they could have tested quickly to enable decisions to be made, but in typical COP fashion, nobody has the courage to try it. That is a sad statement in of itself; why should it take courage to try something new (supported at least with a smidgen of data) when the intent is to make more oil or reduce cost? I would say that everyone at COP is risk adverse, but that is such an understatement, I don't know what to call it.
Spot on!
Here is an analogy on COP on being nimble. Turning COP around with the current ELT leadership is like turning a 750 ft ship around with a 100hp outboard motor. It can be done, but how long will it take and what distance can it be completed in! Both answers are it will take a lot of time and distance! COP does not have either!
Oil companies can no longer be the shy guy at the party that relies on rumours about having a big d!ck to close the deal. They need to be dynamic and signal to the investment community that they are willing to adapt and thrive in this new environment.
Yup.. In this price environment, COP is the fat chick in the cross fit class!
EOG- list approximate 2750 employees at the end of 2015. COP ~ 15000 employees. Some wonder why COP is losing billions!
COP still acts like an integrated oil company. Too many managers / too many layers and an ELT that can not make the right decisions!
What's the credible source of data that says COP has low cost? That ONE Rystad chart they love to show everyone - investors and employees? Rystad's data on other metrics is riddled with errors. That ONE study was cherry picked by the ELT to showcase. There are other benchmark studies that show COP is not cost competitive- especially when fully loaded with corporate overhead. I bet COP doesn't truly "know their numbers" all-in. Moving past arguing over which benchmark comparison is most accurate, there is one key indicator that shows COP is behind competitors on cost competitiveness: other companies are sending rigs back to the L48 field (especially Permian) and COP is not. That's the bottom line that tells the whole story.
OXY at the end of 2014 had the following number of employees. They have less now because they also had a reduction of workforce.
At year-end 2014, Occidental had approximately 11,700 full-time employees worldwide — with 7,740 people employed in Occidental's oil and gas and midstream and marketing operations, 3,050 in chemical operations, and 910 in administrative and headquarters functions.
How many employees are currently employed by COP? This is why COP could reduce the number of employees by about half.
If COP really wants to be an ongoing organization, it needs to have about half the employees it currently employs! Then, run it like a real independent! But most of the employees / managers & ELT do not know what it like to operate as an independent or know how!
Lower cost producer yes, but not low enough to earn a profit. At some point no more assets to sell and no more credit facilities to tap. Then what?
Fat chicks and CEOs need lovin' too. More cushion for the pushin'. Maybe that's why COP didnt became smaller and nimbler three years ago when it became an independent.
Yup... COP is the fat chick that thinks she can wear yoga pants!
I'm going to publicly correct @J3JIC1k-gta since they don't know what they're talking about. ConocoPhillips has more than three unconventional plays. There's 5 in the L48 alone, more if you count Canada and other areas too. The poster must work in the Eagle Ford since they don't know any other areas. God help us all if people really think EF is really "on top of its game".
You make it sound like a company should be making money hand over fist with the current prices. What planet are you from?!? COP only has 3 unconventional plays. There's activity in 2 of 3. Yet 1 of the plays is really the one that is supporting the company because it is "on top of its game" as you say. Without it, COP might as well shut it doors. Can COP do with less management and meetings... sure, what company wouldn't! That's not to say it won't happen. We'll see, starting on Sept 12th! However, you're showing your lack of understanding of the industry as a whole. There are too many global pieces of the puzzle that are driving the industry.
If COP is so on top their game then why are they not making money at these oil prices when several of the competitors are? They all announce it in their earnings and those don't lie. COP is a bloated mini-me former integrated has-been who still thinks they are a major. Every decision has to have fifteen assurance conversations with people who don't know anything about the business.
You have no idea what you're talking about. No, COP isn't at the top of the list, but it is closer to the top than is was over a two years ago. It IS one the lowest cost per barrel producers in the industry. You state that COP has some world class data gathering results but doesn't use it. I totally disagree with you. COP is one of the lower cost producers as earlier stated and its solely a result of using data to improve their processes. It takes a long time for any corporation to realize that their data is a true asset, but COP is on the right path. Fact of the matter is that COP is still afloat mainly because of its unconventional plays!
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