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Turnaround & Wind-down of an E&P Company

Situation

A Private Equity firm sought Carnrite’s help addressing poor financial performance in one of its Exploration and Production portfolio companies. After conducting a performance assessment, Carnrite presented a turnaround proposal, outlining significant cost reduction and revenue enhancement opportunities. The PE firm hired Carnrite as the interim management team to turn the business around and tied the compensation package to company performance.

Approach

Carnrite implemented efficient decision-making processes, as well as transparent communications throughout the organization. These changes built a renewed sense of ownership and buy-in from the entire organization, who quickly identified high-impact initiatives that were vetted and approved by the management team.

Key Results & Outcomes

Highlights of accomplishments within the first 60-days:

  • Increased focus on operating safety and orderliness, resulting in a 20% reduction to TRIR
  • Implemented operational process improvements and renegotiated service contracts with contractors and vendors to reduce opex by 35%
  • Streamlined organization and reduced overhead spend, resulting in 40% reduction in G&A
  • Stabilized revenue by implementing a downtime management program, resulting in a 40% reduction to downtime
  • Strengthened Debt to EBITDAX ratio from 5.1x to 3.0x, altering ownership’s view of the company from a risky “going concern” to one of the lowest risk assets in their portfolio

Carnrite’s Unique Value Contribution

Carnrite’s stand-in management team found new and innovative ways to motivate and communicate to the workforce. From managing leading indicators to creating monthly revenue and cost savings challenges, the staff was re-energized to accomplish their objectives and financial targets. Carnrite not only focused on execution of the plan, but also the long-term sustainability of results, ensuring the company’s continued success post-turnaround.

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