According to Ian Norbury, with Paras Consulting, with a couple of exceptions,
the larger companies have delivered better performance over the six-year
"Many of the larger companies have retrenched and their levels of investment
per unit of production were below average," he said. "Despite this,
eight of the 10 largest companies are in the top half of our performance
He said there are several reasons for this higher than average performance
by large companies:
Quality of assets.
They have concentrated on and around existing assets to enhance reserves,
production and revenues at relatively low cost.
They focused on maximizing the value of earlier investments and owned
infrastructure by increasing throughput via low-cost satellite developments.
They have driven the cost base down and improved earnings performance.
These companies have reduced exploration in mature areas other
than value-based, near-field exploration close to owned infrastructure
but they also have maintained exposure to potentially high-impact
plays in deepwater along the Atlantic Margin.
Several large firms have divested non-core or high-cost/low potential
reward mature properties to concentrate financial and technical resources
on higher reward projects and therefore have enjoyed the benefits
"Northwest Europe is still core to these companies because of the production
and cash flow, but they are unable, in the long term, to replace reserves
and production organically at an acceptable risk and cost," Norbury
Of course, he added, these companies have some inherent advantages
that drive performance:
- They benefit from strong legacy asset positions because of their
early involvement in the region.
- They have large inventories of investment options globally and can
continually high-grade to generate better performance and results.
- They have applied rigorous processes for cost control and enjoy
low unit costs across a large production base in the region.