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Operations Transformation of an U.S. Onshore E&P

Situation

An onshore E&P company emerged from bankruptcy with a high cost-structure and declining production base. The new CEO and Board agreed the company needed an outside perspective to assess the portfolio and drive significant operational improvements and engaged Carnrite to implement a turnaround in operations.

Approach

Carnrite partnered with client teams to perform a full assessment of the company, including a macro assessment using proprietary benchmarks and deep industry operations experience. Through analysis of detailed cost and operational data, interviews, physical observations and process mapping, Carnrite identified short- and long-term G&A and LOE cost improvement opportunities across the entire company, and delivered a series of recommendations, complete with an implementation plan, to deliver additional value from existing resources, increase production from core assets, and package non-core assets for divestiture.

Key Results & Outcomes

  • Lowered lease operating expenses (LOE) through a detailed redefinition of practices and roles and consolidated field routes
  • Reduced general and administrative (G&A) expenses through a streamlined accounting organization, complete with standardized processes, a business-driven IT roadmap, and reclassified G&A costs to LOE accounts, resulting in significant economic value for the enterprise
  • Outsourced marketing processes and roles to a third-party provider, resulting in a net benefit reaching upwards of $2-3 million annually
  • Established an explicit set of values and principles to drive a culture of collaboration and continuous improvement, while aligning management’s incentives with those of the shareholders and employees

Carnrite’s Unique Value Contribution

Our client faced a difficult path emerging from bankruptcy, with no roadmap for avoiding major obstacles and pitfalls. Carnrite’s experience and skillsets allowed the company to hit the ground running with a distinct set of objectives and values, designed to align with the company’s core competencies, while overcoming significant hurdles. As the management team set out to re-establish an environment of results-oriented performance and disciplined execution, the expertise that Carnrite provided increased the scope and magnitude of what was accomplished – helping the company achieve over a 30% reduction in contract labor and a 40% reduction in parts and supplies spend.

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