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Oil and Gas Business Plan

Published Mar.28, 2024

Updated Apr.23, 2024

By: Alex Silensky

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Table of Content

The oil and gas sector is a highly regulated industry. A well-structured oil and gas business plan can help navigate these complexities.

According to a survey by EY, inadequate business planning is one of the top reasons oil and gas projects fail to achieve target profitability. “Firms that take a comprehensive approach through integrated business planning are better positioned to withstand market volatility and capitalize on opportunities,” notes Herb Listen, EY’s U.S. Oil & Gas Leader.

In this article, we’ll outline the key elements of an oil and gas business plan along with an oil and gas business plan template. By the end of this article, you’ll understand what it takes to develop a robust oil and gas drilling business plan.

What Is the Business Plan for an Oil and Gas Company?

A business plan for the oil and gas industry is a professional document that:

• Outlines the company’s goals
• Specifies strategies
• Producing oil and gas resources

The oil and  gas station business plan  serves as:

• A roadmap for the company’s operations
• A tool for securing financing from investors or lenders

Here are some key components typically included in an oil and gas business plan:

• Executive Summary:  A concise overview of the business, its objectives, and the key elements of the oil and gas development business plan.
• Company Description:  Details about the company, its history, ownership structure, and legal form.
• Industry Analysis:  An assessment of the current state of the oil and gas industry, including market trends, competition, and regulatory environment.
• Operations Plan:  A description of the company’s operational processes, including techniques, methods, processes, and logistics.
• Marketing Plan:  An outline of the company’s plans for marketing and selling its oil and gas products, including target markets, pricing strategies, and distribution channels.
• Management and Organization Team:  Details about the company’s management team, organizational structure, and key personnel.
• Financial Projections:  Detailed financial forecasts, including projected financial statements, supported by assumptions and analyses.

The oil and gas company should tailor the oil and gas startup business plan to their specific goals and circumstances, and they should regularly update it to reflect changes in the industry, market conditions, and operations.

Why Do You Need a Business Plan Sample for an Oil and Gas Exploration Company?

There are a few key reasons why you would need a solid business plan, like the  biodiesel business plan  when starting your own oil and gas business:

• Attract Investment:  The oil and gas industry requires significant upfront capital for exploration, drilling, equipment, and operations. A detailed oil and gas upstream business model and plan demonstrates to potential investors a viable strategy for generating returns.
• Guide Operations:  An oil and gas field business plan serves as a roadmap for executing exploration and production activities. It lays out key milestones, timelines, capital expenditures needed, regulatory requirements, and operational plans.
• Analyze Economics:  Thorough market analysis, cost projections, pricing forecasts, and breakeven modeling allow testing the economic viability of prospects before committing major resources. The oil and gas exploration business plan quantifies potential returns and profits based on various scenarios.

To illustrate the importance of a sample business plan, let’s walk through the key sections of an oil and gas business plan template for a fictional oil and gas exploration firm called TX Energy:

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Clear and detailed

Alex provided us a detailed report on a business we were thinking of buying. The report was very clear and detailed, and he was available to answer any questions. We highly recommend his service

Executive Summary

Business overview.

TX Energy is a newly formed independent oil and gas exploration and production company headquartered in Houston, Texas. Our mission is to become a leading operator in the Gulf of Mexico region through the acquisition and development of high-quality offshore prospects.

Management Team

With a seasoned management team that has over 100 combined years of experience in the offshore Gulf, we plan to leverage our deep industry knowledge and technical expertise to build a portfolio of attractive assets.

Business Strategy

Our initial focus will be on identifying and acquiring undervalued offshore leases with proven undeveloped reserves and executing low-risk, high-return drilling programs.

We are seeking $75 million in equity financing to fund lease acquisitions, drilling operations, and general working capital needs during our start-up phase.

Financial Projections

Financial projections show the potential for strong growth and returns, with estimated revenues of $50 million by Year 5.

Company Overview

TX Energy is an independent exploration and production company in the Gulf of Mexico. We were founded in 2024 by a team of seasoned industry professionals with a successful track record in this region.

Corporate headquarters:  Houston, TX

Operating region:  U.S. Gulf of Mexico

Business Concept

Leverage management’s expertise to:

• Identify and acquire undervalued offshore leases
• Optimize development plans for discovered resources
• Execute low-risk, high-return drilling programs
• Rapidly build a diversified portfolio of producing properties

Industry Analysis

The U.S. Energy Information Administration expects the demand for oil and natural gas will grow in the coming years. Some key industry statistics and forecasts:

• The oil and gas market size is projected to increase from $7,625.82 billion in 2024 to $9,347.9 billion in 2028, with a CAGR of 5.2%. (Source –  The Business Research Company )
• The global oil demand is forecasted to rise by 1.7 million barrels per day (mb/d) in the first quarter of 2024. The expansion pace might slow down from 2.3 mb/d in 2023 to 1.3 mb/d in 2024. (Source –  IEA )

Key Industry Drivers and Trends:

Business plan for investors.

• Rapid adoption of subsea tiebacks and multi-well platforms to reduce costs
• Increased interest in re-developing legacy fields using advanced recovery techniques
• Growing regulatory oversight and focus on safety/environmental practices
• Persistent workforce shortages requiring investment in training pipelines

Customer Analysis

Our primary customers will be midstream companies, refiners, and utilities purchasing our crude oil and natural gas production. We have identified the following key players as potential off-takers in the Gulf region:

• Mid-Continent Oil Pipelines (Crude oil transport)
• Kinder Morgan/BP (Natural gas processors)
• Marathon Petroleum (Refiner)
• Southern Company (Utility)

As a non-integrated independent producer, we will aim to establish long-term sales agreements and strategic relationships with creditworthy counterparties. Our go-to-market strategy will focus on:

• Leveraging management’s industry network to engage top prospective customers early
• Ensuring adequate takeaway capacity ahead of new wells coming online
• Negotiating favorable pricing terms based on our high-quality offshore crude
• Bundling gas production with crude offtakes where possible

Competitive Analysis

Large integrated operators such as Chevron, Shell, and BP, as well as several large independent companies, dominate the upstream market of the Gulf of Mexico. Fewer mid-sized players focus solely on exploiting stranded/bypassed reserves on the shelf. Our primary competitors include:

Our primary competitors include:

Relative to these competitors, our key advantages are:

• Unrivaled management experience and technical capabilities specific to shelf opportunities
• Exclusive focus on low-risk, quicker cycle time development projects
• Simple value investment proposition vs. diversified multi-regional operators

Other competitive strengths include a projected low operating cost structure and established relationships with service companies active in the region.

Marketing Plan

TX Energy will position itself as the premier low-risk, low-cost developer of shelf oil and gas resources in the Gulf of Mexico. We will pursue a commodity-focused strategy, marketing our high-quality crude and gas production to maximize netbacks.

Pricing Strategy

As a non-integrated producer, we will pursue a commodity marketing strategy focused on achieving maximum netback pricing for our offshore production. Specific tactics include:

• Crude oil – Secure term marketing agreements with refiners or marketers, pricing based on regional benchmarks like LLS or WTI
• Natural gas – Pursue portfolio-based sales to LDCs, utilities, and marketers at Henry Hub+/- basis pricing

Sales & Distribution Channels

We will employ two primary sales and distribution channels:

• Crude oil production – Pipeline connections from offshore platforms to main corridor pipelines like LOCAP and NGPL
• Natural gas production – Subsea tiebacks into regional gathering systems and interstate/intrastate pipelines

Strategic Partnerships

Establishing strategic relationships across our supply chain will be a critical success factor. Key partnership areas include:

• Offshore drilling contractors
• Subsea construction and installation contractors
• Pipeline companies and midstream providers
• Supply boat and support vessel operators

Marketing Programs

Our key marketing initiatives will focus on building brand awareness and establishing TX Energy as a trusted and preferred supplier to Gulf Coast off-takers:

• Investor marketing/participation at industry conferences and events
• Working interest/royalty owner marketing of upcoming development projects
• Direct outreach to commercial teams at potential customers
• Development of professional digital marketing materials

Operations Plan

Oil & gas leases.

Our lease acquisition strategy will initially target offshore shelf properties with the following characteristics:

• Water depths < 600 feet
• Located near existing infrastructure to minimize upfront capital costs
• Proven undeveloped reserves between 10-50 million BOE
• Technically reasonable development plan via subsea tiebacks or platform drilling

We have already identified a pipeline of potential acquisition targets fitting this criteria. Once leases are acquired, we will conduct geologic and reservoir studies to high-grade the most attractive drilling opportunities.

Drilling & Completion Activities

We will utilize jack-up and submersible rig types commonly used on the shelf For relatively shallow drilling targets. We will use the best available techniques and technologies to drill all wells and to ensure maximum production rates and recoverable reserves.

Production, Facilities & Maintenance

Depending on the size and scope of each project, we will utilize either:

• Subsea tiebacks to existing third-party infrastructure
• New-build production platforms designed for unmanned operations

Environmental & Regulatory

We are committed to operating at the highest level of environmental, safety, and regulatory standards in offshore space. This includes comprehensive SEMS programs, oil spill prevention and response plans, and other mandatory policies/procedures.

Key regulatory bodies overseeing our operations include:

• Bureau of Safety and Environmental Enforcement (BSEE)
• Bureau of Ocean Energy Management (BOEM)
• U.S. Coast Guard
• Environmental Protection Agency

Organization & Management Team

TX Energy has assembled a world-class team with unmatched technical and regional expertise in the offshore Gulf of Mexico:

• John Watson, Chief Executive Officer –  John has 30+ years of offshore engineering and operations experience. He is a former VP of offshore at a major energy company with expertise in subsea tieback developments and shelf production.
• Jane Litt, VP of Exploration –  Jane has 25 years of experience in offshore Gulf exploration. She was previously a senior exploration advisor at a large independent oil company. She holds a Ph.D. in Petroleum Geology from Rice University.

Additional key hires planned for Year 1 include:

• Drilling Manager
• Production Engineer
• HSE/Regulatory Specialist
• Land/Legal Counsel
• Accounting/Finance support

As we grow, certain additional functions like HR, IT, and engineering teams may be built out internally rather than fully outsourced.

Financial Plan

Based on our phased development plan and production ramp-up schedule, we are seeking $75 million in equity financing to fund TX Energy’s start-up and growth over the initial 5 years period:

Use of Funds

• Offshore lease acquisitions: $25M
• Capital expenditures (drilling/facilities): $30M
• Operating expenditures: $15M
• General working capital: $5M

Projected Profit & Loss Statement

Projected Balance Sheet

Projected Cash Flow Statement

Overall, these projections in the  coal mining business plan  illustrate TX Energy’s ability to rapidly grow production, revenue, and cash flow in a capital-efficient manner and achieve strong economic returns for investors.

Partner With OGSCapital for a Professional Oil and Gas Business Plan

Over at OGSCapital, we understand just how crucial it is for independent oil and gas outfits to have a really solid, well-polished business plan. Whether you need to win over investors or secure financing from lenders, our team has got your back.

With more than 15 years of expertise in aiding both startups and established businesses in crafting thorough and persuasive business plans such as the  renewable energy business plan  and  logistics business plan , we’re well-equipped to assist.

Contact us today to learn more about our business plan consulting services and how we can help you.

Download Oil and Gas Business Plan Sample in pdf

Frequently Asked Questions

Is oil and gas a good business?

Yes, because the oil and gas industry is one of the largest sectors in the world, generating over trillion in global revenue as of 2022. In 2024, the industry is expected to have solid growth.

How to start your own oil and gas company?

Starting an oil and gas company involves several steps:

Step 1:  Do market research.

Step 2:  Decide your geographical location.

Step 3:  Build a team.

Step 4:  Create an oil and petroleum business plan.

Step 5:  Set up a legal entity (LLC, Corporation, etc.)

Step 6:  Seek funding.

Step 7:  Get the equipment.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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How to Start an Oil and Gas Company – Sample Business Plan Template

By: Author Tony Martins Ajaero

Home » Business ideas » Oil & Gas Industry

Are you interested in starting an oil and gas company? Do you need a sample oil and gas business plan template? Do you live in an oil rich region like Nigeria, Angola, Kuwait, United States, Saudi Arabia, Iraq, etc; and you want to legally tap into the lucrative business opportunities in the oil and gas industry ? If you answered YES to any of the questions above, then I advice you read on with keen interest.

The oil and gas industry is one of the most lucrative industries in any economy. In fact, it has created more billionaires in the world than any other industry. However, tapping into this money-spinning market requires huge startup costs, and this is why many entrepreneurs balk whenever they think about taking a plunge.

The process of starting an oil and gas company is more complicated than starting most other types of companies as the industry is strictly regulated locally and internationally. And getting the required startup funding could take time.

Oil and gas production is serious business, so you need to invest lots of money, time, and effort to succeed in the long term. This article explains some basic concepts in the oil and gas industry as well the steps involved in starting an oil and gas company.

Over the years, the oil and gas business has undergone various changes, and now, it has become a much-organized business. It comprises three sectors:

• The upstream sector
• The midstream sector
• The downstream sector

All the sectors are very lucrative, and each has its own fair share of market players. Are you wondering what these sectors mean? Here’s an explanation…

• The upstream sector entails oil prospecting and exploration, drilling for oil, and drawing it out of the ground. These activities are the earliest stages of oil production.
• The midstream sector entails transportation, storage, and wholesale marketing or crude or refined petroleum products. Activities in this sector are aimed at moving crude oil from the site where it is drawn to refineries where it will be processed into the various petroleum products.
• The downstream sector entails storage of petroleum products as well as transportation, marketing, and everything else that happens until the products finally get to consumers.

Although several products are made from crude oil, only four of them are in huge demand. These are:

• Petrol or gas (also called gasoline or PMS—premium motor spirit)
• Diesel (also called AGO–automotive gas oil)
• Kerosene (also called paraffin or DPK—dual-purpose kerosene)
• Cooking gas (also called LPG—liquefied petroleum gas).

The demand for these four products is high because they are widely used for everyday activities such as transport, domestic cooking, and so on. With the above in mind, let’s now look at the steps involved in starting an oil and gas company.

Starting an Oil and Gas Company – Sample Business Plan Template

1. define your business model.

You need to be clear from the outset as to whether you will be operating within the upstream, midstream, or downstream sector. To make a well-informed decision, you might need to gather more information about the requirements as well as the pros and cons of each and figure out which seems most suitable for you.

2. Market research

There is much more to learn and understand about the oil and gas industry than meets the eye. And since you are planning to join this market as a new player, you need to conduct extensive research to understand the intricacies of the market and pitfalls or challenges that new entrants are likely to encounter.

In addition, an extensive research of the market will help you know the required startup costs, required equipment, competition, strategies for success and other relevant information about the business.

3. Write your business plan

Every business needs a business plan. In fact, oil and gas businesses need it even more as it helps you plan the various phases of the business and increases your chances of success. Although developing your business plan is no guarantee of your business’s success, not having one is the recipe for failure.

Your business plan includes the goals and objectives of your business, required startup costs, operation plan and cost, market analysis and competition, projected income over the first few years, marketing strategy, unique selling point, exit strategy, and other vital information about your business.

Not only will your business plan guide you through the processes of starting and growing your business, but it will also come in handy when you need to procure startup funding from investors , venture capitalists, and loan-issuing institutions.

4. Fulfill the required paperwork

Starting an oil and gas business requires registering the business and obtaining business licenses and permits. These vary by state and country, so you need to contact the appropriate local agencies to find out what applies in your state or country. Other paperwork includes requesting a tax ID and obtaining insurance.

5. Find a good location

6. Buy and install the necessary equipment

7. Hire employees

8. Market your oil and gas business

We did not go into specific details regarding choosing a location, buying equipment, hiring employees, and marketing your business because how you will implement each of these steps depends on the sector of the oil and gas industry you have chosen to operate in.

For example, the ideal location, required equipment, and suitable employees for a company operating in the upstream sector will differ from those of a company operating within the downstream sector. Yet, this article is meant to be a brief guide, not a comprehensive resource on the topic.

To find out about the ideal location and required equipment for a company in your chosen sector, you will definitely need to consult other resources or contact an expert with years of experience in that sector.

Related Posts:

• 50 Best Oil and Gas Business ideas You Can Start Today
• How to Start a Kerosene Retail & Supply Company – Sample Business Plan Template
• How to Start a Crude Oil Brokerage Company – Sample Business Plan Template
• 5 Best Marketing Strategies for an Oil and Gas Company
• How to Start Diesel Supply Company – Sample Business Plan Template

Sample Oil and Gas Business Plan Template PDF

This article will be providing you with an oil and gas business plan guide or template.

The energy sector of every economy is huge and offers enormous investment opportunities. Whatever your niche area or interests are, starting a business can be very challenging.

However, having a plan makes the process a lot less difficult and helps with better coordination.

Here, we aim to help entrepreneurs who, though being experienced in the oil and gas sector have no idea how to launch their business operations.

OIL AND GAS BUSINESS PLAN SAMPLE

To better organize your plan, there are basic sections that cannot be left out. They touch on the different aspects of running a successful oil and gas business.

They include the executive summary, the company description, and the products & services sections.

Other crucial sections include the market analysis section, strategy & implementation, organization & management team as well as the financial plan & projections sections.

So, how do you develop each of these sections? You’ll want to read on to find out.

i. Executive Summary

As the introductory section of your plan, the executive summary gives a concise overview of your oil and gas business plan. What you should seek to do with this section is make and keep your audience interested by learning about your business.

The basics about your company should be known here.

The executive section always appears first in a plan. While this is true, it should be written last. The reason is this; it should capture all the key aspects of the business plan.

Consider adding certain sections like your business name & location, your services & products as well as your mission & vision statements. Also, the specific purpose of your plan should be added.

Business Name & Location

One of the first things you’ll need to include in your business name as well as its location. Introducing your business is paramount and gives your reader or a starting point on what the business is about.

How does your location positively impact your operations?

Services & Products

Here, you’ll need to give a breakdown of your oil and gas products and services . What specific niche area you involved with and how are your products and services beneficial to your clients.

People only pay for value and you should briefly discuss what value your services offer to your clients.

Mission & Vision Statements

The mission and vision statements of your oil and gas business should shed light on your company’s purposes, goals and values. Your mission statement should tell about why the business exists as well as the purpose it serves.

Also include information on what your business offers.

You should focus on what you seek to ultimately achieve with your oil and gas business for the mission statement. In a nutshell, the vision statement gives purpose to the existence of your business.

It’s important when writing this statement to never leave anything open to interpretation.

Specific Purpose

Every serious business has a purpose. What’s yours about? By clarifying your purpose or aims, your chances of achieving your goals are increased.

ii. Company Description

The company description section seeks to further reveal details about your oil and gas business. Basically, you want to explain who you are, your mode of operation as well as the goals you wish to achieve.

Details to be included are the legal structure of the company, as well as its brief history.

Being an oil & gas business, you’ll have to provide details on the needs or demands you intend to fill or meet.

The company description should give an overview of your services & products while also identifying your target market and your suppliers.

Also, include a summary of company growth backed by financial or market highlights.

Of course, this won’t be complete without a summary of your long and short-term goals including how you intend to make a profit.

iii. Products & Services

While this was covered in the executive summary section, only a summary of it was given.

This section takes a more detailed look at the products and services being offered by your oil & gas business with a focus on the benefits being derived by customers.

Here, you’ll also need to explain the market role of such products & services.

What edge or competitive advantages do your products & services have over those from competitors. Are there new products in the works? Provide information on such.

Here is a sample plan on crude oil refining .

iv. Market Analysis

A lot of work in the form of research is required to demonstrate your understanding of the oil and gas industry.

Your research should provide a detailed sketch of your target market with a focus on key aspects such as its size and demographics.

Have an industry description and outlook with statistics serving as proof. What more? There should be historical, current, and projected marketing data for your oil and gas business.

Also, include an evaluation of your competitors with a special focus on their weaknesses and strengths.

v. Strategy & Implementation

Strategy and implementation have a lot to do with sales and marketing. This is basically an operating plan on how you wish to sell and distribute your oil & gas products and services.

It focuses on market entry, pricing, costs, promotion, and distribution details.

What are your operational plans in regards to the operational cycle of the business? You also want to include information on labor sources as well as the number of employees you’ll need.

vi. Organization & Management Team

The organization & management team section discusses the organizational structure of the oil and gas business.

You want to provide a description of key departments as well as employees by providing an organizational chart.

There should be information about the owners, their level of involvement as well as percentage ownership. Also, profiles of your management team will be necessary.

vii. Financial Plan & Projections

Under the financial plan & projections section, you’ll need some expert help. The services of a professional accountant will suffice.

The key areas analyzed under this section include the historical financial data, realistic prospective financial information, and brief analysis of financial data.

With these points covered, your oil and gas business plan should be ready for implementation. You also stand the chance of getting the much-deserved financing required.

1 thought on “Sample Oil and Gas Business Plan Template PDF”

Hi dear , Iam from Papua New Guinea,Alotau Milne Bay Province. Papua New Guinea. Iam a Tradesmen, Heavy Diesel Fitter and Maintenance Fitter Machinist. Former Mechanical Maintenance Engineer for BHP STEEL and Ok Tedi Mining LTD Mill Maintenance Rebuildshop. Iam urgently seeking for any mechanical Fitter jobs in Australian Oil Rig Drilling companies and Mining. Any other farming jobs suits my qualifications. Thank you very much for your time and kind assistance. I wait patiently to hear from you soon.

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Oil and Gas Business Plan with Wise Business Plans

Corporate oil & gas business plan development.

The Oil and Gas Business Planning industry continues to make new strides in the United States in the oil and gas companies, and many small business owners are finding ways to leverage the booming industry to create their own success stories. However, it takes more than a smart idea to start your engine and race toward success in this competitive field of petroleum.

Post-Pandemic Recovery

During May 2020, the amount of gasoline supplied to the market increased to nearly 5.9 million barrels a day, up from 5.1 million in the first week of April but well below the typically more than 9 million before the pandemic. On the other hand, gasoline saw a normalizing demand at around 55%, which improved by 64% during mid-2020. Industry experts expect a slow but steady recovery during 2021, giving hope to the industry operators.

Key Components of Petroleum Business:

• The clarity in Products and Services- The COVID-19 crisis accelerates what was already shaping up to be one of the industry’s most transformative moments. The Wise Business Plans professionals take time to find out which pain point the product or service will be addressing and develop a business plan that accurately communicates it.
• Costing Strategy- The costs associated with embarking upon a business in the Oil and Gas business industry can be challenging, especially in the post-pandemic era.  On its current course and speed, the industry could now be entering an era defined by intense competition, technology-led rapid supply response, flat to declining demand, investor skepticism, and increasing public and government pressure regarding the impact on climate and the environment. However, under most scenarios, oil and gas will remain a multi-trillion-dollar market for decades. Given its role in supplying affordable energy, it is too important to fail. The question of how to create value in the next normal is therefore fundamental.
• Trends- Trends are major in all segments of the economy but especially in those that directly impact the atmosphere.  “Clients operating in this industry have to be aware of regulations, laws, and standards that are enacted by governing bodies.  Without this type of information their business models could suffer significant losses”, says Mr. Ferriolo.  “We do exhaustive, real-time research that protects the client and places them in the best possible position to succeed”, says Mr. Ferriolo.
• Innovation- The industry will need to dig deep and tap its proud history of bold structural moves, innovation, and safe and profitable operations in the toughest conditions to change the current paradigm. The winners will be those that use this crisis to boldly reposition their portfolios and transform their operating models. Companies that don’t will restructure or inevitably atrophy.

How To Get Into The Oil Business

In the oil and gas sector, starting your own company requires a lot of capital, time, and expertise. Even so, as this industry produces multi-millionaires and yields a higher ROI than in any other industry, all your troubles and efforts will be worthwhile.

You should focus on these things if you have previous experience in this area and want to know how to start an oil company.

1. Decide Where to Invest

You can have a filling station or you can drill your wells in the oil and gas industry. One can choose from a variety of options: a service company, a product company, or a company that cleans up oil spills.

It is important to determine your motivations and strengths before making any detrimental moves in this field. Getting a sense of the amount of capital needed can help you make the right choice.

2. Make an Oil and Gas Business Plan

You need to make a detailed oil & gas business plan and list all your resources and liabilities after deciding what you want to focus on. It is imperative to include all the projected operating expenses in your petroleum business plans, such as insurance, permits, licenses, salaries, and ongoing expenses.

A business plan for an oil and gas company will serve as a blueprint for your business. Your business plan will be a valuable tool if you are considering applying for a loan or wish to attract investors. In case you have no prior experience creating business plans , In case you have no prior experience creating business plans, you can hire us to assist you.

Do You Need Help in Creating a Business Plan?

If you need a business plan writer , you no longer have to worry about the complexities of writing a professional business plan. Our MBA-qualified business plan writers have written over 15000+ business plans for over 400 industries in over a decade.

Let our professional business plan writers help you get funding

3. Identify Your Investors

Once you’ve decided what type of oil business is right for you and calculated the loans and funding you’ll need, the next step is to make sure you can get a fair loan.

To run any company in this field, you will need a fair amount of capital from the very beginning, so you may have to consider finding investors. Don’t worry about the capital Here are 7 ways to raise capital for getting into the oil business:

• Self-Funding: If you look around, you may find the capital you need right in your own home. It may come from your already existing assets or savings. You retain full control of the business by providing the initial capital yourself. Angel investors and even single investors can influence the direction of a company.
• Crowdfunding: A method of raising money from a large number of people. Several people pool their small investments to raise the capital needed to launch a company or project. It’s a win-win situation for you. Currently, U.S. oil is the most popular commodity in the world.
• Angel Investor: Private or seed investors (also called angel investors) are high-net-worth individuals who provide financial support to small businesses in exchange for ownership equity. Furthermore, investors can also offer business advice. Particularly if they have oil and gas industry experience, this may be beneficial.
• Friends and Family: Friends and families are the second-largest sources of business capital in the U.S. A family member will be aware of your work history or management experience. It’s likely that they already know about the potential of your gas or oil share, and may even have helped to acquire it.
• Bank Loan: Getting a bank loan is probably the most traditional way to obtain start-up capital. As the bank wants to ensure that you can pay back the loan, you will likely be required to submit a lot of information during your initial application. Our experienced team has helped our clients raise millions in funding through banks (debt financing) and investors (debt/equity financing).
• Small Business Administration (SBA): Despite its long history, the SBA is still a useful source of funding . They offer federally guaranteed loans of up to $5 million to “small” businesses. Furthermore, you will receive the funding you require without compromising your oil and gas business plan. The loan will also likely have light terms and interest rates. SBA’s goal is to boost the economy. A small business loan is one of the easiest ways to get cash. With decades of experience in business credit and lending, Wise Business Plans is uniquely suited to help you. You are just 4 steps away from getting a small business loan .

Pro Tip: Here is a step by step guide on 5 best places to find a venture capitalist

Wise Business Plans has decades of experience in early-stage investments, so we will help you get your first venture capital investment .

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4. check the regulations.

You should check all the relevant regulations, licenses, and permits , as well as your tax identification number, before starting an oil business. You may be aware of some of them from previous experience, but you should always consult a business or tax attorney when addressing legal issues.

Do You Need a License to operate an Oil and Gas Business?

Wise business plans have eased the process to obtain a business license, which is generally necessary to operate an oil and gas business.

Let Wise help you Get your License to operate an Oil and Gas Business

5. Form a Legal Entity

Those in the group will want to shield themselves from personal liability. You can form a limited liability company (LLC) or an S corporation. An LLC is a flexible entity with elements of both a partnership and a corporation. To simplify federal income tax matters, S corporations elect to pass income and losses on to shareholders.

Need to Register an Oil and Gas Business?

We at Wise Business Plans provide you with a wide range of business formation services for incorporating a company in a way that makes the process easy and allows you to stay focused on other important tasks. Our business formation services include

• Tax ID Number
• LLC Formation
• NonProfit Business Formation
• S Corporation Registration

You can form your business entity in just 4 Simple Steps with Wise Business Plans

Open a Business Bank and Get Credit Cards

Personal asset protection is enhanced when you open specialized business banking and credit accounts.

When your personal and professional accounts are mixed, your personal assets (your home, automobile, and other valuables) are vulnerable if your company is sued.

Furthermore, learning how to establish business credit may assist you in receiving credit cards and other financial resources in your company’s name (rather than yours), improved interest rates, greater lines of credit, and more.

6. Set up a Business Bank Account.

Apart from being a requirement when applying for business loans, establishing a business bank account has several benefits.

• Separates your personal belongings from your company’s assets, which is critical for personal asset protection.
• Makes tax preparation and accounting simple.
• It makes tracking expenses easier and more organized.

Recommended: To discover the greatest bank or credit union, read our Best Banks for Small Business review.

7. Open Net 30 Account

To establish and grow business credit, as well as improve company cash flow, net 30 payment terms are utilized. Businesses purchase products and pay off the whole amount within a 30-day period using a net 30 account.

Net 30 credit vendors are reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is the way businesses build business credit to qualify for credit cards and other lines of credit.

Recommended: Read our list of the top net 30 vendors guide to start getting business credit or simply open your net 30 account with wise business plans in seconds.

8. Get a Business Credit Card

It’s exciting to open a business credit card for your firm. A business credit card can assist you to establish credit, safeguard your company financially, access rewards (such as cashback), and simplify cash flow. It can also assist you to manage your expenditures.

Recommended: Learn more about the best business cards in our business credit card review.

9. Build a Great Team

When taking on such a venture, human capital plays a crucial role. You must determine how many employees you need to hire and whether they have enough experience and training to do their jobs well.

Here are some useful team-building tips which might help you in building your team.

10. Use Top-Notch Equipment

Make sure you use top-notch equipment to ensure and protect your business and investments. For those who work directly in the oil production sector, it is extremely important to ensure your piping, control, and measuring systems are all up-to-date.

If you plan to start a procurement and supply company, you should include quality general equipment, such as valves, pumps, and generators, along with personal safety equipment. By providing high-quality tubular to your customers, along with other drilling and wellhead equipment, you will stand out as a reliable and conscientious provider.

11. Choose an Exploration Site

Obtain county and/or state permits for drilling and land use. Execute a lease with the property owner and/or the owner of mineral rights once you determine which party owns the property and if there are no prior claims that might affect your exploration.

In case your seismic data indicates there could be a subsurface trap containing significant oil, drill multiple exploratory wells on the site. Provide all necessary supplies and equipment for well capping and storing oil in storage tanks prior to hiring a drilling company for this purpose. 

Ensure that you have a plan for containing and transporting any natural gas and oil that may be present in your site’s reservoirs. Roads may need to be built to access the site. Trailers or other structures are necessary for offices and living accommodations. Communication capabilities should also be available at the site.

Business Planning for the Oil & Gas Sector

Vigilance is more than ever needed in crafting a solid oil and gas business plan. Smart planning showing commitment and consistency in intentions will always win financiers’ confidence. As part of that strategy, we’ve identified several key components that every oil and gas startup business plan must address, including:

Luckily, a properly written oil and gas business plan is a key element to the process that can help your business raise the necessary capital to purchase equipment, hire staff, and cover operating expenses as you plan to enter the Oil and Gas industry .

Oil And Gas Business Plan Writing Services

Wise Business Plans has had the privilege and the opportunity to create oil and gas Companies that support business owners in this foundational industry, and we have worked hard to build up a knowledge base and the research skills needed to be the premier online provider of oil and gas business plans.

When you’re ready to jump into the action, we’d love to help you start strong and make a mark in the world of energy production, so contact us today to get started on planning your future success.

Download a sample oil and gas business plans template for FREE to get an idea of the basic elements of oil and gas startup business plan writing. Also, you can quickly check our FAQ page for some basic questions and answers.

Wise business plans also offer a net 30 account application . Net-30 accounts allow you 30 days to pay the bill in full after you have purchased products. Net 30 accounts can also make managing your business finances easier. Apply for your net 30 business accounts now

Need Nearest Business Plan Writing Services

Looking for a professional business plan writing services near me ? Contact us to achieve your company’s goals and get funded.

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BUSINESS CONTINUITY PLANS FOR OIL AND GAS COMPANIES: 6 COMMON BCP CHALLENGES

Jun 24, 2014

A well-developed Business Continuity Plan (BCP) can minimize escalating business disruptions, while safeguarding key business interests, relationships, and assets. Unfortunately, many companies do not acknowledge the value of a BCP and fail to prioritize sustainability. This many be especially true of highly regulated industries, such the oil and gas industry, that prioritize mandated compliance measures.

Below are common challenges in business continuity planning and possible countermeasures to offset these BCP hurdles.

Lack of Management Support

It is challenging to perform a cost-benefit analysis that measures the benefits of business continuity. There is a high degree of uncertainty associated with implementing BCP measures. Benefits resulting from BCP and mitigation efforts are dynamic in nature, and are not limited to a single structure, department, or operation.

The financial benefits from a BCP implementation must be viewed from the long-term perspective. A BCP can dramatically lessen the financial impact of future crises and promote operational sustainability and corporate viability. However, managers and corporate executives typically do not act based on “what if” scenarios unless regulations require implementation making it challenging to convince them to develop a BCP. Managerial actions are generally based on concrete financials that benefit departments, stockholders, and the bottom line.

Countermeasure: 2014 Global Risks Report by The World Economic Forum, makes a compelling case that may provoke and inspires leaders to implement continuity efforts.

Budget Restraints

Because companies are in the business of making a profit, business continuity planning budgets are often compromised for other priorities.

Countermeasure: It may be helpful to estimate the cost of implementation for each critical process in relation to the cost of a critical process breakdown. This exercise may highlight the need for a designated business continuity budget.

It may also be necessary to prioritize BCP implementation by each critical process with a step-by-step timeline for completion. Companies can identify and rank the most critical business processes, and implement BCP and mitigation measures based on those priorities. While most processes are intertwined, taking small steps to ensure process continuity is a step toward overall business continuity. Managers may be more likely to implement a BCP if it can be initiated over time.

Maintaining a Culture of Preparedness

Unless a company has experienced an eye-opening business continuity issue, the presence of a realistic, tangible threat may be the only protagonist to champion a culture of preparedness.

Countermeasure: Managers who emphasize, embrace, and enact safety and continuity measures, as part of standard operating procedures will create a work environment that reflects the guiding principles of preparedness. As preparedness measures and best practices are ingrained in operational processes, personnel will be more apt to embrace the culture.

Lack of Business Continuity Awareness + Training

When identifying company, operational, and process vulnerabilities, managers and employees frequently recognize the limits of their business continuity expertise. Oil and gas management and employees may have expertise in hazardous response planning measures and tactics, however their business continuity experience may be limited. The process of identifying business continuity mitigation opportunities, developing recovery processes, and training personnel in continuity roles and responsibilities often requires experience. Companies often disregard business continuity training and awareness as a result of ineptitude.

Countermeasure: If implementing continuity efforts are beyond the scope of managers, companies should consider hiring consultants who specialize in business continuity planning. External resources can address site-specific business continuity needs, detailed standard operating procedures for BCP activation, and personnel training. Training should convey procedural flexibility based on continuing assessment of disaster demands and provide options for each scenario. Companies can also assign a designated manager to become proficiently trained in business continuity in order to pass down preparedness guidelines and best practices.

Identifying Critical Processes

Many mid to large-sized companies often operate with separate, independent business units (or departments). Each critical business process within each unit must be identified and quantified in order to determine its role in the business continuity planning process. Most business unit processes are often intertwined with other critical functions, contributing to the overall profitability of a company. When critical business processes are not functional, a company’s ability to operate and reputation may be in jeopardy.

Countermeasures: Overall resilience capabilities should be prioritized to mitigate any interruption. Understanding response procedures, the interconnected structure of processes between units, and the intricacies of a “Plan B” can make the difference between corporate survival or failure. Crisis and disaster situations usually result in the loss or temporary disruption of one or more of the following necessary key business resources:

• Infrastructure
• IT Applications/Systems
• Supply Chain

Un identified Threats + Vulnerabilities

Threats and vulnerabilities must be identified in order for potential impacts to be analyzed and countermeasures to be implemented. The continually evolving nature of potential threats and vulnerabilities poses a challenge in business continuity planning. Threats and vulnerabilities can stem from both external and internal actions. New technologies, best practices, and risk mitigation efforts can often minimize threats. However, as operations evolve and new concepts are introduced, additional threats and vulnerabilities can emerge.

Countermeasures: An annual risk and hazard analysis can identify potential undiscovered threats and vulnerabilities relating to business continuity. This analysis indicates the likeliness that specific threats that could occur, considering existing site-specific factors, capabilities, mitigation measures, and history. Companies should analyze potential continuity threats from typical weather patterns, geographical influences, security efforts, inherent operational hazards, as well as facility design and potential maintenance issues.

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Oil And Gas Business Planning

The oil and gas industry is a complex and ever-changing business. As an owner or operator in this industry, it’s important to have a solid business plan in place. This Oil And Gas Business Planning should include your company’s mission statement, financial goals, and strategies for success. It can be difficult to know where to start when creating a business plan , but there are some key components that every plan should include. The first step is to clearly state your company’s mission statement. This will help you focus your plans and ensure that everyone in your organization is on the same page. Next, you’ll need to set financial goals. These can be short-term objectives like increasing revenue by 10% in the next year or long-term goals like becoming the most profitable company in your sector. Once you have your financial goals laid out, you can start developing strategies to achieve them. Finally, no business plan would be complete without a marketing strategy. This includes identifying your target market and developing a promotional strategy that will reach them.

The oil and gas industry is a volatile one, with prices constantly fluctuating. This makes it all the more important for companies in this sector to have a solid business plan in place. A good business plan will help you to map out your short- and long-term goals, and will give you a roadmap to follow as you navigate the often choppy waters of the oil and gas industry. When putting together your business plan , there are a few key things to keep in mind. First, you need to have a clear understanding of your target market. Who are your potential customers? What do they need or want from your product or service? Once you know who you’re targeting, you can start to develop a marketing strategy that will reach them. Next, you need to think about your financial goals. How much money do you need to bring in each month or year to keep your business afloat? What are your expansion plans? Will you be looking for investors down the line? Your answers to these questions will help you determine what pricing strategy makes sense for your business. Finally, don’t forget to include a contingency plan in your business planning. The oil and gas industry is unpredictable, so it’s important to have a Plan B (and even C) in place in case something goes wrong.

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Table of Contents

What is Planning in Oil And Gas?

Planning in oil and gas is the process of creating a plan that outlines the steps necessary to explore, develop and produce hydrocarbons. It includes everything from choosing the right location for exploration to deciding how to get the oil or gas out of the ground once it is found. The planning process begins with an assessment of the potential resources in an area. Geologists and geophysicists use seismic surveys and other techniques to identify areas that are likely to contain hydrocarbons. Once a promising area is identified, a more detailed exploration can be conducted. If enough hydrocarbons are present, then development can begin. This involves designing and constructing facilities to extract, process and transport the hydrocarbons. The final step is production, which is when hydrocarbons are actually extracted from the ground and made available for sale. Each step in this process requires careful planning in order to ensure that operations run smoothly and safely. Oil and gas companies must also consider environmental factors when making their plans. With proper planning, oil and gas companies can maximize their chances of success while minimizing risks.

How Profitable is Oil And Gas Industry?

The oil and gas industry is a very profitable one. In fact, it is one of the most profitable industries in the world. The reason for this is that oil and gas are two of the most essential commodities in the world. Without them, the world would grind to a halt. Demand for oil and gas will always be high because they are needed to power the world’s economies. This means that prices for these commodities will always be high, making profits for companies involved in their extraction, production and sale very good indeed. The oil and gas industry is also a very capital-intensive one. This means that there is a lot of money required to get started in this business but once you have made your initial investment , the potential profits are huge. So overall, the oil and gas industry is an extremely profitable one with good prospects for future growth. If you are thinking about getting involved in this business then you should definitely do so as you could make a lot of money from it.

What are the Three Major Segments of the Oil And Gas Industry?

The oil and gas industry comprises three major segments: upstream, midstream and downstream. Upstream activities involve the exploration and production of crude oil and natural gas. This segment also includes the marketing and trading of these commodities, as well as the transportation of crude oil to refineries. Midstream activities include the processing, storage and transportation of crude oil and natural gas. This segment also includes the marketing and trading of refined products such as gasoline, diesel fuel and propane. Downstream activities involve the refining of crude oil into finished products such as gasoline, diesel fuel, heating oil, jet fuel, propane and chemicals. These products are then sold to wholesalers or retail outlets for use by consumers.

What are the Key Success Factors for the Oil And Gas Industry?

The oil and gas industry is a complex and ever-changing sector. To be successful, companies in this industry must be able to adapt to new technologies, understand the geopolitical landscape, and manage risk. Here are some of the key success factors for the oil and gas industry: 1. Technology The oil and gas industry is highly dependent on technology. From exploration and production to refining and marketing, new technologies are constantly being developed and adopted to improve efficiency and productivity. Companies that can successfully adopt new technologies will have a competitive advantage in this increasingly complex sector.

2. Geopolitical understanding The oil and gas sector is also highly sensitive to geopolitical developments around the world. With operations in often unstable or hostile regions, companies must be able to navigate shifting political landscapes while managing risk appropriately. A deep understanding of geopolitics is essential for success in this industry.

3. Risk management: Risk management is critical in the oil and gas industry due to the volatile nature of commodity prices and the potential for catastrophic accidents (such as offshore spills). Companies must have robust risk management processes in place to identify, assess, and mitigate risks associated with their operations.

Business Plans for Oil and Gas Companies

Oil and gas business plan pdf.

An oil and gas business plan is a document that outlines the key components of your oil and gas business. It should include information on your company’s organizational structure, management team, financial projections, and operating procedures. Your business plan should be tailored to the specific needs of your company and the oil and gas industry. Your business plan should start with an executive summary that provides a brief overview of your company and its plans for the future. The executive summary should be followed by a section on your company’s history, including any previous experience in the oil and gas industry. Next, you’ll need to provide an overview of the oil and gas industry itself. This section should discuss market trends, major players in the industry, and opportunities for growth. After the general background information, you’ll get into the specifics of your own business plan. First, you’ll need to describe your company’s core competencies or areas of expertise. Then, you’ll want to lay out your plans for exploring and developing natural resources. This will include information on your proposed drilling sites, estimated costs, timelines, etc. Finally, you’ll need to detail how you intend to finance your operations and what return on investment (ROI) you expect to achieve. Oil and gas are volatile industries so it’s important to have a solid business plan in place before moving forward with any projects.

Business planning is critical for any business, but especially so in the oil and gas industry. The volatile nature of prices and the need for large up-front investments make a well-thought-out plan essential. Here are some tips on what to consider when creating a business plan for an oil and gas company. First, it’s important to have a clear understanding of the costs associated with exploration, production, and refining. This includes not only the cost of buying or leasing land, but also the cost of drilling wells, building pipelines, and constructing processing facilities. It’s also important to factor in the cost of environmental compliance, which can be significant in this industry. Once you have a good handle on your costs, you need to develop realistic price projections. This requires an understanding of both current market conditions and how those conditions are likely to change in the future. For example, if you’re planning to drill in an area that hasn’t been explored before, you’ll need to account for the risk that there may not be any oil or gas present. Conversely, if you’re drilling in an area that has already been developed, you’ll need to account for the possibility that new technology could make your reserves obsolete. After developing realistic price projections, you need to create a financial model that shows how much money you’ll need to get started and how much profit you can expect to generate over time. This model should take into account your initial investment as well as all ongoing expenses such as operating costs, taxes, and interest payments on loans used to finance your project. It should also include estimates for depreciation expense and future capital expenditures such as exploration or expansion projects. Once you’ve created your financial model, it’s time to start thinking about marketing your product.

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• Resources for Entrepreneurs > Starting a Business > Startup How to Guides

Opening an Oil & Gas Company

Startup How to Guides

Find out what successful entrepreneurs have to say about starting and operating a business. This all-in-one resource on starting an oil and gas company offers crucial how-to information you just can't find anywhere else.

Wondering how to start an oil and gas company? We take you step-by-step from start to success.

Tips for Creating a Great Oil & Gas Company Business Plan

A business plan is the skeletal framework for your oil and gas company's mission, goals and strategic vision.

In contemporary business culture, business plans are also litmus tests used by external interests to assess real world viability and marketability.

Early in the process, it's worth your time to learn how to write the market analysis section of a business plan . As you prepare the market analysis section, be careful to rely on substantiated market research rather than your hopes for your oil and gas company.

Look Over the Competition

Well in advance of opening an oil and gas company in your area, it's a smart move to see how strong the competition is. We've provided the link below to help you generate a list of competitors nearby. Just enter your city, state and zip code to get a list of oil and gas companies in your community.

• Search for Oil & Gas Companies Near You

Before you open up shop, make sure you know what you will offer to your customers that provides a significant advantage over your competition's offering.

Learning More About the Industry

Once you've finished assessing the competion, it's essential that you talk to somebody who is already in the business. If you think owners of nearby oil and gas companies will give you advice, think again. It'd be crazy for them to teach you the business.

But, a person who owns an oil and gas company on the other side of the country will be much more likely to talk with you, after they realize you reside far away from them and won't be stealing their local customers. In that case, the business owner may be more than happy to discuss the industry with you. If you are persistent, you can find a business mentor who is willing to help you out.

How would you find an oil and gas company manager on the other side of the country to talk to?

Easy. Find them using our link below and start calling until you are successful.

• Get In Touch With Oil & Gas Company Owners

Getting Started in Oil & Gas Company Ownership

Would-be oil and gas company business owners can either launch a new business or acquire an existing operation.

Startup oil and gas companies can be attractive because they allow the entrepreneur to have more control and greater influence. Yet startups are also more difficult to finance because their nature is inherently risky.

Acquired oil and gas companies are known quantities - and are less risky for lenders. On the whole, buying a business minimizes uncertainty as well as many of the objections lenders use to disqualify startup entrepreneurs from financing.

Don't Rule Out Franchising

Your odds of doing well in business are substantially improved if you become a franchisee rather than going it alone.

If you planning on starting an oil and gas company, you would be wise to assess whether purchasing a franchise might be the right move for you.

The link below gives you access to our franchise directory so you can see if there's a franchise opportunity for you. You might even find something that points you in a completely different direction.

• How to Find a Good Franchising Opportunity

Other Useful Articles for Startup Entrepreneurs

These additional resources regarding starting a business may be of interest to you.

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We help oil and gas companies develop strategies to pursue growth and create value in an uncertain and volatile environment.

To prevail in current markets, successful businesses treat strategy development as a dynamic process. Commodity-price fundamentals are challenging in the short term, requiring executive teams to constantly reevaluate mid- to long-term expectations. As a result, companies in the oil and gas industry are confronting significant strategic challenges and complex decisions, daily.

To help our clients manage this complexity, we bring distinctive propositions to our advisory work, ranging from tools that target short-term cash and performance enhancements, to levers for enabling operating-model evolution, to proprietary market models that provide granular, rigorous supply-and-demand scenarios to support strategy planning and development. Our clients have access to more than 400 consultants with extensive experience in oil and gas strategy, a global network of industry experts and external advisers, and broad cross-sector expertise from our Strategy & Corporate Finance Practice .

Examples of our work

Employing our exploration portfolio tool, supporting production growth, identifying new energy segments, developing a gas master plan, providing perspectives on regulatory change, featured capabilities.

We invest heavily in developing proprietary tools, databases, and methods, including:

• numerous proprietary market models, including our Global Gas Model , Global Downstream Model , and Offshore Drilling Model —all of which provide clients with highly granular fundamentals data, customizable scenario-development capabilities, and deeply integrated supply and demand perspectives
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Navigating Oil and Gas Business Development: Proven Strategies for Success

Nov 14, 2023

Matt Bertram

Today, let’s explore the intricate realm of the oil and gas industry and uncover the tried-and-true strategies for effective business development . But first, let’s clarify the distinction between business development and sales—a crucial understanding for a holistic approach to growth.

Understanding Business Development

Oil and gas business development is the strategic process of identifying, pursuing, and acquiring new opportunities and partnerships within the oil and gas industry. It involves activities aimed at fostering growth, creating valuable relationships, and expanding the reach of businesses operating in the oil and gas sector such as hour hours, industry lunchins and conferences. This multifaceted approach goes beyond traditional sales by encompassing elements such as social selling, and now online research and market analysis, identifying potential clients on LinkedIn or other methods, crafting unique value propositions, and adapting to the ever-evolving landscape of the oil and gas industry. Successful oil and gas business development strategies often include a combination of innovation, targeted outreach on social media and by phone, and a deep understanding of the challenges and opportunities within the energy sector to you can articulate to your prospects that you product or service solves their problem.

At its core, business development strategically pursues new business, while sales executes on revenue generation. Ideally, the business development function integrates sales, marketing, and product development for a comprehensive growth strategy for B2B . I would even say that Account Based Selling ( ABS ) fits into this here.

Proven Strategies for Oil and Gas Business Development

Now, let’s delve into the key strategies that can elevate your business development efforts in the dynamic landscape of oil and gas.

Identifying and Solving Core Problems:

Your product or solution addresses specific problems. A thorough understanding of these problems lays the foundation for effective business development.

Imagine there’s a challenge with detecting leaks in pipelines. Leaks not only lead to environmental concerns but can also be super costly for companies. So, a nifty solution could be a smart sensor technology designed specifically for pipelines.

These sensors could be placed strategically along the pipeline route to constantly monitor for any signs of leaks or abnormalities. They might use advanced algorithms to analyze data in real-time, instantly flagging any potential issues to operators.

Now, imagine this system is equipped with predictive analytics. It doesn’t just detect leaks when they happen, but it can also predict when a leak might occur based on various factors like pressure fluctuations or temperature changes.

This predictive capability allows operators to take proactive measures, like scheduling maintenance before a leak even happens, saving both time and money while preventing environmental harm.

Plus, these sensors could be integrated with cloud-based platforms, allowing operators to monitor their entire pipeline network remotely from anywhere in the world. It’s like having eyes and ears all along the pipeline, even in the most remote locations.

So, by leveraging smart sensor technology with predictive analytics and remote monitoring, this solution addresses the critical issue of pipeline leaks head-on, making the oil and gas industry safer, more efficient, and more environmentally friendly.

Pinpointing Your Target Audience:

In the oil and gas sector , identifying those experiencing the identified problem is crucial. Knowing the titles and roles of impacted individuals allows for precise outreach.

Let’s say you’ve developed a groundbreaking solution aimed at optimizing offshore drilling operations. To make a real impact, you need to identify the key players within oil and gas companies who are directly involved in offshore drilling.

These could include drilling engineers responsible for planning and executing operations, operations managers overseeing day-to-day activities, procurement managers handling equipment purchases, health, safety, and environment (HSE) managers ensuring compliance, and C-suite executives steering strategic decisions.

By tailoring your messaging to resonate with each of these stakeholders, highlighting how your solution addresses their specific concerns and contributes to their objectives, you can effectively communicate its value proposition and drive adoption within the industry.

Crafting Unique Value Propositions:

Every problem solved has a distinct value proposition. Whether enhancing shareholder value or improving operational efficiency, tailor your narrative to resonate with your specific audience.

For instance, innovative drilling technologies promise to revolutionize operations by significantly reducing costs and boosting efficiency. Meanwhile, a growing emphasis on environmental sustainability has spurred the development of clean energy solutions tailored to oil and gas operations, offering substantial emissions reductions without sacrificing performance.

Additionally, advancements in safety equipment and protocols aim to mitigate risks inherent in offshore operations, ensuring the well-being of personnel and regulatory compliance. Furthermore, the integration of data-driven analytics enables companies to make informed decisions, optimizing production processes and maximizing profitability.

Lastly, manufacturers offering reliable and high-performance equipment contribute to operational reliability, minimizing downtime and maximizing output. These diverse value propositions address critical pain points within the industry, offering tailored solutions that promise tangible benefits such as cost savings, environmental stewardship, safety enhancements, data-driven insights, and operational efficiency.

Adaptable Narratives for Diverse Stakeholders:

Different stakeholders have different perspectives. Be adaptable, crafting stories and messages that align with the priorities of various target audiences.

magine you’re at the forefront of thought leadership in the oil and gas industry. You understand that stakeholders like investors, regulators, employees, and local communities all have unique perspectives and priorities. So, it’s crucial to be adaptable in your storytelling approach.

For investors, you might craft narratives focusing on innovation, cost-effectiveness, and long-term sustainability. Highlight how your company’s cutting-edge technologies or strategic partnerships are driving growth and delivering value to shareholders.

When it comes to regulators, emphasize compliance, safety, and environmental responsibility. Share stories about your proactive measures to exceed regulatory standards, safeguarding both people and the planet.

For employees, weave narratives that inspire pride and motivation. Celebrate their contributions to the company’s success, and share stories of career growth, training initiatives, and workplace safety measures that prioritize their well-being.

And let’s not forget about local communities. Tailor your storytelling to showcase your company’s commitment to social responsibility, community engagement, and economic development. Share stories of partnerships with local organizations, job creation initiatives, and environmental conservation efforts that benefit the communities where you operate.

By being adaptable and crafting narratives that resonate with the priorities of each stakeholder group, you can build trust, foster meaningful connections, and position your company as a thought leader driving positive change in the industry.

Measure, Analyze, and Optimize:

Implement metrics to measure the success of your business development initiatives. Identify strategies that yield significant results and focus your efforts on those that contribute 80% of the impact.

It’s all about keeping a close eye on what’s happening, figuring out what’s working like a charm, and then fine-tuning your efforts to make the most impact.

Let’s say you’re drilling for oil. You start by measuring key performance indicators like drilling efficiency and production rates. Then, you dive into the data, analyzing everything from drilling techniques to reservoir performance. And here’s the cool part—you use those insights to optimize your approach. Maybe you discover that a certain drilling method leads to higher production rates with lower costs. Boom! You focus your efforts there, maximizing your returns and minimizing expenses.

Now, let’s talk supply chain. You’re measuring stuff like inventory turnover and transportation costs, right? Then, you crunch the numbers, looking for any bottlenecks or inefficiencies. And when you find them, you’re all about optimization. Maybe you streamline your inventory management or find a more efficient way to transport materials. The result? Smoother operations, lower costs, and happier stakeholders.

And hey, safety’s always a top priority. You’re measuring safety metrics like injury rates and regulatory compliance. Then, you’re digging into the data, trying to spot any trends or areas for improvement. Once you’ve got that figured out, it’s all about optimization. You beef up your safety training programs, tighten up procedures, and invest in tech that keeps everyone safe on the job.

And let’s not forget about asset maintenance. You’re measuring reliability, maintenance costs, and downtime rates. After analyzing the data, you’re tweaking your maintenance strategies, maybe shifting towards predictive maintenance to catch problems before they even happen.

So, whether you’re drilling for oil, managing the supply chain, ensuring safety, or maintaining assets, the “Measure, Analyze, and Optimize” approach is your secret sauce for success in the oil and gas game. It’s all about staying sharp, staying efficient, and making the most out of every opportunity that comes your way.

Establishing a Feedback Loop:

Create a feedback loop channeling insights from business development back to product development, sales, and marketing. Tailor your messaging and content based on the unique needs of various stakeholders.

Accelerate Success:

Once successful strategies are identified, allocate resources to accelerate those initiatives. This targeted approach ensures quicker revenue growth.

These proven strategies serve as a blueprint for our work with clients in the oil and gas industry. We comprehend the unique challenges and opportunities this sector presents, and by implementing these strategies, we’ve witnessed accelerated success.

Setup a call today with one of our oil and gas marketing consultants!

EWR Digital for your Oil and Gas Marketing

Trust us with your go-to-market strategy , and here’s why:

Industry Expertise:

With a deep understanding of the oil and gas sector, we bring unparalleled industry expertise to the table. Our team comprehensively grasps the challenges and opportunities unique to your business.

Proven Track Record:

EWR Digital boasts a track record of success, having propelled numerous oil and gas businesses to new heights. Our results-driven approach and client success stories speak volumes about our commitment to excellence.

Tailored Strategies:

We don’t believe in one-size-fits-all solutions. Your business is unique, and so is our approach. EWR Digital crafts tailored marketing strategies that align with your specific goals, ensuring maximum impact and ROI.

Digital Prowess:

In a rapidly evolving digital landscape, we stand out with our cutting-edge digital marketing strategies. From SEO and social media to content creation and data analytics, we leverage the latest tools to elevate your brand in the digital realm.

Customer-Centric Focus:

Your customers are at the heart of our strategy. EWR Digital places a strong emphasis on understanding your target audience, addressing their needs, and creating engaging content that builds lasting connections.

Adaptability and Innovation:

The oil and gas industry is dynamic, and so are we. EWR Digital embraces change, staying ahead of industry trends and technological advancements. Our adaptability ensures your marketing strategy remains relevant and effective.

Transparent Communication:

Communication is key to a successful partnership. EWR Digital prioritizes transparent communication, keeping you informed at every stage. We believe in collaboration and work closely with you to refine strategies for optimal results.

Measurable Results:

Our commitment to measurable results sets us apart. EWR Digital provides comprehensive analytics and regular reporting, giving you a clear understanding of the impact of our marketing efforts on your business objectives.

In the fiercely competitive realm of oil and gas, rely on EWR Digital not merely as a marketing agency but as your dedicated strategic ally, committed to steering you towards unparalleled success. Join us on this collaborative journey as we elevate your brand to unprecedented heights within the industry.

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Oil Company Business Plan and SWOT Analysis

Oil Company Business Plan, Marketing Plan, How To Guide, and Funding Directory

The Oil Company Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Oil Company business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

Your Business Planning Package will be available for download after your purchase.

Product Specifications (please see images below):

• Bank/Investor Ready!
• Complete Industry Research
• 3 Year Excel Financial Model
• Business Plan (26 to 30 pages)
• Loan Amortization and ROI Tools
• Three SWOT Analysis Templates
• Easy to Use Instructions
• All Documents Delivered in Word, Excel, and PDF Format
• Meets SBA Requirements

Over the next 20 years oil companies are expected to continue to operate profitably given the continued and ongoing demand for oil and petroleum products. One of the best aspects of owning and operating a oil company is that these businesses can often use a number of financial instruments in order to lock in their profits while they distribute their oil to homes, gas stations, and related entities. These businesses have substantial access to capital given the fact that a vast majority of the amount of money needed to start a new oil company is based intangible assets as well as highly digestible oil and petroleum products inventories. Depending on the type of oil company being developed, the price range as it relates to start up costs typically runs anywhere from $1 million to $5 million. Almost all financial institutions as well as private investors are willing to provide the necessary capital in order to develop these types of businesses given the economic stability, large tangible asset base, and continued in strong demand for petroleum related products. These businesses have very high barriers to entry given the large amount of capital needed coupled with the substantial amount of licensure required to operate these businesses on a intrastate as well as the interstate basis. The gross margins from petroleum product sales typically range anywhere from 10% to 20% depending on whether or not these inventories are being divested on a wholesale or retail basis.

An oil company business plan should be developed if the entrepreneur is looking to source capital from a private investor or from a financial institution. This business plan should feature a three-year profit and loss statement, capital analysis, balance sheet, breakeven analysis, and business ratios page. As it relates to the industry research portion, there are approximately 12,000 oil companies that operate within the United States and each of these businesses generate about $30 billion. The industry outlook at the moment is strong, but there are going to be some issues as it pertains to the continued rollout of alternative energy including solar power, hydroelectric power, wind energy, geothermal energy, and other forms of renewables that people are looking to use instead of traditional petroleum and fossil fuels. This should be noted heavily within the business plan, and a plan for how the business will respond to the continually changing energy grid should be included as well. A demographic analysis regarding the end-user should also be included within the business plan. A competitive analysis can also be included, but this can be done somewhat on the lighter side given the fact that oil companies operate in a heavy we commoditize market.

An oil company SWOT analysis should be produced as well. As it relates to strengths, oil companies can very quickly and always find customers for their inventories. As such, the risks associated with holding a large amount of oil on hand are not very high for this type of business. The gross margins are moderate, and the barriers to entry are very high.

For weaknesses, there is a time limit on oil companies these get days given the fact that more and more people are switching to renewable energy sources. However, it is going to be some time before oil companies start to become unprofitable. These businesses also have very high operating costs.

For opportunities, oil companies can readily expand by acquiring similar businesses that are already in operation while concurrently expanding their own internal infrastructures. As stated above, oil companies have tremendous access to capital given the fact that these businesses are highly economically secure.

For threats, there are going to be continued changes in regulations regarding the way that oil companies do business. Additionally, the rapidly growing market for renewable energy is causing a number of oil companies have to change their business models over a long run.

An oil company marketing plan should also be developed in order to ensure that people can continually place purchase orders for the oil and petroleum inventories carried by the business. This primarily includes developing ongoing relations with gas station chains, independent gas station owners, heating oil delivery companies, and any other entity in which the oil company can deliver wholesale inventories of specific petroleum products. A presence on the Internet is important, but this can be somewhat on a minimal basis given the fact that oil companies typically do business more on a face-to-face basis. This includes having a small sales force that will directly work with buyers on an ongoing basis.

A number of people that typically start oil companies already have extensive contacts within this field and are able to effectively develop purchase order relationships prior to the onset of operations. Many oil companies will also maintain relationships with investment banks and commodities trading firms in order to ensure that they can lock in pricing through the use of spots, futures, options, and related financial instruments. These relationships can further increase the volume of oil sold by the business given that these companies often act as an intermediary between different types of petroleum related businesses.

Oil companies are still going to be one of the most important aspects of the US economy and the worldwide economy moving forward. Over the next 20 years, there’s going to be a continued change in the way that these businesses conduct their operations. However, at this time – there is still a significant enough demand for worldwide oil especially in fast-growing countries to warrant the development of this type of business as a profitable enterprise.

Oil And Gas Company Strategic Plan Template

• Great for beginners
• Ready-to-use, fully customizable Subcategory
• Get started in seconds

In the fast-paced and ever-changing world of the oil and gas industry, having a strategic plan is crucial for success. It's the roadmap that guides your company towards its goals and ensures that every decision is aligned with your vision. But creating a strategic plan from scratch can be overwhelming. That's where ClickUp's Oil and Gas Company Strategic Plan Template comes in.

With ClickUp's template, you can:

• Define clear goals and objectives to drive growth and profitability
• Identify key initiatives and allocate resources effectively
• Collaborate with your executive team and board of directors to make informed decisions

Whether you're an established player or a newcomer in the industry, ClickUp's Strategic Plan Template will help you stay ahead of the competition and navigate the complex world of oil and gas with confidence. Start planning for success today!

Benefits of Oil And Gas Company Strategic Plan Template

The Oil And Gas Company Strategic Plan Template provides numerous benefits to help oil and gas companies succeed in a challenging industry:

• Clearly defines the company's goals and objectives, ensuring everyone is on the same page
• Enables effective resource allocation, ensuring resources are allocated to priority initiatives
• Facilitates informed decision-making, providing a roadmap for key decisions
• Helps drive business growth by identifying strategic initiatives and opportunities
• Ensures alignment across teams and departments, fostering collaboration and synergy
• Allows for effective monitoring and tracking of progress towards goals and objectives

Main Elements of Oil And Gas Company Strategic Plan Template

To effectively manage your oil and gas company's strategic plan, ClickUp provides a comprehensive template with the following key elements:

• Custom Statuses: Track the progress of your strategic plan with 5 different statuses, including Cancelled, Complete, In Progress, On Hold, and To Do.
• Custom Fields: Utilize 8 custom fields such as Duration Days, Impact, Progress, Ease of Implementation, and more to capture vital information about each strategic initiative.
• Custom Views: Access 6 different views including Progress, Gantt, Workload, Timeline, Initiatives, and Getting Started Guide to visualize and manage your strategic plan in various formats.
• Project Management: Leverage ClickUp's robust project management features for efficient planning, collaboration, and execution of your strategic initiatives. This includes assigning team members, setting project leads, and tracking progress with the Gantt chart view.

How to Use Strategic Plan for Oil And Gas Company

Developing a strategic plan for an oil and gas company is crucial for long-term success in a highly competitive industry. Follow these steps to effectively use the Oil and Gas Company Strategic Plan Template in ClickUp:

1. Set your objectives

Start by clearly defining your company's objectives and goals. What do you want to achieve in the short and long term? Are you looking to expand into new markets, increase production, or optimize operations? Identifying your objectives will help guide your strategic planning process.

Use the Goals feature in ClickUp to set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) objectives for your oil and gas company.

2. Analyze the industry and market

Next, conduct a thorough analysis of the oil and gas industry and the market in which your company operates. Identify key trends, competitors, and potential risks. Understanding the industry landscape will help you make informed decisions and develop strategies that align with market dynamics.

Utilize the Gantt chart feature in ClickUp to create a timeline for your analysis and track progress.

3. Define strategic initiatives

Based on your objectives and industry analysis, determine the strategic initiatives that will drive your company's success. These initiatives could include investing in new technology, improving safety measures, implementing sustainable practices, or diversifying your energy portfolio. Each initiative should be aligned with your objectives and have clear action steps.

Create tasks in ClickUp to outline the specific actions required for each strategic initiative and assign responsibilities to team members.

4. Monitor and adjust

Regularly monitor the progress of your strategic plan and make adjustments as needed. Track key performance indicators (KPIs) to measure the effectiveness of your initiatives and identify areas for improvement. Adapt your strategy based on changing market conditions or internal factors to ensure your oil and gas company remains competitive and resilient.

Use the Dashboards feature in ClickUp to visualize and track your KPIs in real-time, allowing for better decision-making and performance monitoring.

By following these steps and leveraging the features in ClickUp, you can effectively utilize the Oil and Gas Company Strategic Plan Template to drive success and navigate the dynamic oil and gas industry.

Get Started with ClickUp’s Oil And Gas Company Strategic Plan Template

The Oil And Gas Company Strategic Plan Template is designed specifically for the executive team and board of directors in the oil and gas industry. It helps them outline and track the company's strategic goals and initiatives.

To get started with this template:

Click on "Add Template" to sign up for ClickUp and add the template to your Workspace. Make sure you specify the Space or location in your Workspace where you want to apply the template.

Invite relevant team members and stakeholders to your Workspace to start collaborating on the strategic plan.

Now, leverage the full potential of this template to create a comprehensive strategic plan:

• Use the Progress View to track the progress of each strategic initiative and ensure alignment with company goals.
• The Gantt View allows you to visualize the timeline and dependencies of each initiative, ensuring efficient resource allocation.
• Utilize the Workload View to balance workloads across your team and allocate resources effectively.
• The Timeline View provides a high-level overview of the strategic plan, allowing you to identify critical milestones and deadlines.
• Use the Initiatives View to track and manage individual initiatives within the strategic plan.
• Refer to the Getting Started Guide View to get acquainted with the template and its features.

Organize your initiatives into five different statuses: Cancelled, Complete, In Progress, On Hold, and To Do, to easily track their progress.

Update the status of each initiative as it progresses to keep stakeholders informed.

Monitor and analyze the initiatives to ensure the successful execution of your strategic plan and drive business growth in the oil and gas industry.

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Sorry, there are no results matching your search., transition planning for oil and gas companies.

As pressures increase for oil and gas companies to move toward renewables, we offer some advice for creating a practical transition plan.

By: Andrew McHardy, Partner and National Leader of the KPMG Decarbonization Hub, KPMG in Canada, Javier Mundo, Head if Energy and Natural Resources, KPMG in Mexico, Zachary Schwartz, Director, Infrastructure & Climate Advisory, KPMG in the US

As the world moves towards meeting net zero carbon emissions, many industry leaders, consumers and stakeholders are looking to the oil and gas industry to play a significant role to meet these targets. Despite renewable energy growth, the proportion of fossil fuels in global primary consumption has remained relatively stable and as of 2022 was 82%. 1

How will the oil and gas industry influence the continued demand for energy while ensuring energy security, affordability, and sustainability are met?

Oil and gas companies can take a number of steps to support the energy transition beyond solely transitioning from fossil fuels. For example, measures to reduce carbon emissions can include eliminating non-emergency flaring, electrifying upstream facilities with low-emissions electricity, equipping oil and gas processes with carbon capture, utilization and storage (CCUS) technologies, and expanding the use of blue hydrogen.

In many cases, energy transition involves diversifying company portfolios with various assets related to sustainable energy sources and innovative technology. (see Drilling Down Third edition, “Oil and gas opportunities in balanced portfolios.”)

This means using revenues from today’s businesses to create future business models and revenue streams.

While still in the earlier stages of deployment, AI’s ability to digest massive amounts of complex, unstructured data and deliver interpretations and predictions makes it an important tool in determining how to reduce our carbon footprint. It’s already helping companies make more informed decisions in the transition to lower carbon operations, including moving the dial on measuring, tracking and forecasting greenhouse gas (GHG) emissions reductions.

Andrew McHardy

Partner and National Leader of the KPMG Decarbonization

Bringing the plan together

A checklist for a successful transition plan can include the following items:

• We have a clear understanding of where our Scope 1 and 2 emissions are as a business.
• We know where the biggest climate and sustainability-related risks and opportunities lie and have a plan to respond.
• We have clear plans on what levers are available to us and which ones we will pull in the short, medium and long term to reduce our emissions.
• We are confident that we know the financing opportunities open to us for sustainable investments and the impact our transition will have on our balance sheet.
• We are regularly engaged with our supply chain, customers, and investors on climate and sustainability.
• We have an operating model and corporate structure which will maximize our flexibility in a net-zero world.
• We have clear roles and responsibilities on delivering, tracking, and reporting in our business on our climate and sustainability progress.
• We have climate and sustainability embedded into all of our finance systems, operations, and ways of thinking and investing.
• We have reliable and accessible data on our carbon emissions as well as other metrics to track our biggest risks and opportunities.
• We know what it takes to transition our business to hit our climate and sustainability ambitions and how to show that we are proactively taking action.

Key factors in creating a transition plan

Knowing when and where to invest is not easy. Indeed, most oil and gas companies today need help to develop their transition plans and articulate their positions to their stakeholders. Leaders can start by considering the following factors:

What: Knowing what new models or technologies to invest in can be challenging. We are seeing significant investment flow into various options such as CCUS, renewables, hydrogen, electric vehicle charging, biogases, and biofuels. We are also seeing some oil and gas companies look at new opportunities that leverage their embedded capabilities or play into future growth areas, such as the mining and processing of battery minerals. Every company’s list of opportunities will be prioritized slightly differently depending on their ambition, objectives and strengths.

When: The timing of investments is also a big challenge. Oil and gas companies are developing new energy capital assets using a phased approach instead of committing to the large capital project up front. Large projects can be broken into smaller phases to limit their exposure to market volatility at any given time. Oil and gas companies will only expand given the market economics makes sense. Ideally, you want to scale up as demand rises. However, demand for alternative sources has yet to materialize in some markets. That means that oil and gas companies should start building partnerships and ecosystems of customers, providers and generators that can work together to raise demand and supply in tandem. The good news is that there are incentives and funding mechanisms available that could help reduce the demand risk and make funding more viable.

Where: The financial incentives and business confidence created by the US Inflation Reduction Act (IRA) have helped the US emerge as a key competitor for alternative energy investment. Yet other markets are also developing attractive incentives for investors in key energy sectors. The trick is in knowing where to invest to maximize value globally. There could be a unique role to play in helping shape and address the energy agenda in developing and emerging markets where oil and gas companies have existing relationships. Local supply chain capabilities and available skills will also influence where oil and gas companies choose to invest.

How: There are many avenues of entry and expansion depending on the sector or technology. Options include investing in technologies, funding start-ups, or snapping up key value chain players. We believe that every avenue will require oil and gas companies to develop ecosystems and partnerships to execute their transition plans – whether to drive demand, create secure supply chains, embrace innovation or create new business models. Again, the available incentives could affect how those partnerships are formed and structured.

Case in point: Leveraging carbon offsets to support emission reductions goals

Client challenge

A leading multinational pipeline and energy company needed to develop and implement a carbon offsets program to support their emissions reductions goals beyond 2030.

Program requirements included:

• Understanding how carbon offsets are used both globally and among their industry peers
• Identifying criteria for the evaluation of incoming risks and opportunities
• Developing and implementing a carbon offsets strategy in alignment with corporate priorities.

How KPMG helped

To support this program, KPMG professionals began with a current state, market, and peer analysis that involved interviewing internal stakeholders to understand operational preferences and public commitments. They identified offset leading practices at the global and industry-sector levels and reviewed compliance requirements, market trends, risks and opportunities. They also developed guidance for offset use.

The next step was to conduct an evaluation workshop that identified seven foundational offset principles and seven criteria for the evaluation of quality offsets. The KPMG team also provided educational sessions on factors affecting offset prices and conducted exercises involving criteria threshold-selections, criteria prioritizations, and case study evaluations.

Results of the workshop were incorporated into an evaluation tool that enabled a user to assign a grade for each potential offset project to a specific evaluation criteria. Output was ranked according to potential offset opportunities in alignment with corporate priorities established in the workshop.

With the support and guidance of KPMG, the client was able to develop a strategic pathway to the implementation of carbon offsets. This included a number of transaction opportunities involving:

• Co-benefits aligned to existing decarbonization and abatement plans
• Options for internal offset use and value chain partnerships
• A voluntary-versus-compliance usage approach.
• Moving forward with confidence

In the coming years, the goal is to strike a balance between reducing carbon emissions and ensuring energy security. KPMG oil and gas professionals work with companies across the energy sector to develop and execute their portfolio transition plans. Based on this experience, we suggest that oil and gas executives consider the following objectives as they work to balance and shape their portfolios:

• Set a clear plan. Markets and regulators want to see ambition in your transition plan, but they also want to see certainty. Be clear about your strategy, develop clear and measurable objectives and then focus on delivering on them.
• Make smart deals. Whether you want to recycle capital to fund new projects or snap up a value chain partner to improve vertical integration within a new sector, striking smart deals and partnerships will be key to success.
• Articulate your narrative. Tell the markets where you want to invest and what role you expect to play in the transition. But also be clear about your plans and expectations for the conventional energy side of the business.

Becoming ESG assurance-ready

Energy companies are under growing pressure for environmental, social, and governance (ESG) assurance, particularly from shareholder activists and investors, and from regulators looking to hold them accountable and curtail the prevalence of greenwashing.

In a recent report by ThoughtLabs sponsored by KPMG, 3 these companies were found to surpass other industry sectors in ESG reporting:

• 64 percent of energy and natural resources companies report ESG disclosures in the public domain versus 56 percent of all companies.
• 17 percent of energy and natural resources companies reporting in the public domain provide reasonable assurances regarding ESG disclosures versus 14 percent of all industries.

More than half of leading companies in energy and natural resources agree that digital tools are key to achieving ESG assurance. 4 All leaders have largely or fully implemented digital solutions to collate ESG and other non-financial information, an area where energy and resources firms are well ahead of other industries.

Advanced technologies used for non-financial data capture/analysis

*Top 25th percentile of five area (governance, skills, data management, digital technology and value chain)

Source: "Becoming ESG Assurance Ready: energy and natural resources sector, a report for KPMG, "ThoughtLabs, August, 2023

Case in point: acquiring esg assurance.

Client Challenge

A major oil and gas producer was seeking third-party assurance regarding Scope 1 and Scope 2 carbon emissions, as well as multiple other ESG metrics such as water usage and workforce diversity. The assurance was also needed to validate baseline data to be used in target setting and for projections used in scenario analysis.

KPMG professionals completed a risk assessment focused on gaining an understanding of the reporting and control environment, determining materiality thresholds, and understanding target-setting exercises. Team members planned various assurance procedures such as remote site visits and reconciling source data to obtain sufficient and appropriate assurance evidence. The KPMG team also identified significant risks and material issues.

KPMG professionals helped the client:

• Revise various assumptions that were based on outdated factors
• Align the definition and calculation methodology of metrics across different geographies
• Publish a detailed assurance statement along with a sustainability report provided to stakeholders such as investors.

1 Source: Energy Institute, in association with KPMG International and Kearney. “2023 Statistical Review of World Energy.” 2023.

2 The Globe and Mail, October 25, 2023

3, 4 Becoming ESG Assurance Ready: energy and natural resources sector, a report for KPMG by ThoughtLab,” August, 2023

Explore more

Capitalizing on energy policies and regulations

Governments are becoming more active in supporting their national energy transition goals.

Oil and gas opportunities in balanced portfolios

Companies are approaching the energy transition differently but optimizing a portfolio can be an essential part of their strategy.

Proving environmental performance in natural gas markets

If you want to make your 2050 energy transition goals, you need to be able to measure your progress.

Drilling down

Challenges and opportunities of the energy transition

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The oil industry is booming. This West Texas small business worries it’s been left behind.

Before the pandemic, Ben Bilbrey worked with some of the largest oil companies. Now he’s waiting for the phone to ring.

Subscribe to The Y’all — a weekly dispatch about the people, places and policies defining Texas, produced by Texas Tribune journalists living in communities across the state.

GOLDSMITH — It’s Friday, which means it’s hamburger day at Benro Pump and Supply.

Employees of this family-owned company gather around the grill outside the garage. In the background are endless rows of pipes, tools and other equipment that help lift the vast oil supply in the Permian Basin.

A year ago, the shop that makes custom oil pumps was busy. So while owner Ben Bilbrey, his wife Corinna, and their team, enjoyed the peaceful afternoon in July, anxiety loomed.

It's not usually this quiet.

“It’s been an unusual year,” Bilbrey said. “You do get a little nervous, but you just gotta get through it.”

In his lifetime, Bilbrey has seen the ups and downs of the oil and gas industry. And yet, while the industry is mounting record profits, there are fewer locally-owned and family-operated companies like his in West Texas.

The bustling industry is both changing and contracting. Corporate mergers mean fewer customers for oil equipment companies like Bilbrey’s. And technological advances also allow big oil to do more with fewer people and less equipment.

To be sure, the 10-person company established in 1984 is still making a profit: 40% last year. But the phone isn’t ringing like it used to.

Six years ago, Bilbrey installed and serviced pumps for big names like Apache Corporation, Blackbeard Operating, and Conoco Philips. He lost their business during the early days of the pandemic when oil production briefly paused. Bilbrey has tried unsuccessfully to convince them to use his services. He hopes to lock in a deal soon.

When the phone does ring, companies bargain for lower prices. They want Bilbrey to meet the cost of a wholesale pump. Those lower prices are not realistic, he said, if he wants to keep the company afloat. And his pumps are expensive because they are meant to last as long as the industry does.

Corinna stays positive.

“We're in it for the long haul, and we know the life of that pump,” she said. Even when there is a downturn in the market — and there is none in sight — “Pumps are still pumping.”

Earlier in the day, one of Bilbrey’s employees, Benny Ford, drove out to an abandoned lot. Scraps of a pumpjack and old pipes were strewn all over the place. A ditch was filled with a rank chemical liquid.

A customer’s well had dried up after four years. The company had no other use for it. Ford was sent there to collect the 24-foot pump.

Days before Ford arrived, a crew of rig hands dug out the pump. The workers, employed by a well-servicing company, came with a truck with a rig mounted on its bed. Inside the rig, a long frame called the derrick lifted the steel tower until it is stood upright above the wellhead.

The workers used large tongs to pull up the pump and other equipment from underground.

One excavation can take hours. Once the pump is out, the company must seal the well. By the time Ford drove up to the site, all he needed to do was retrieve the pump.

The 25-year-old assistant foreman clipped the pump onto hooks on the passenger side of his truck and began the 15-minute drive back to the office.

Ford was hired at Benro Pump in 2019. In his previous job, the Oklahoma native helped build electrical substations in the oil fields. It was a good-paying gig, he said. But the 14-hour shifts with no holidays were terrible.

After a year on the job, he took a break. When it was time to go back to work, he saw a job listing at Benro Pump. Ford knew nothing about pumps when he was interviewed but said he was a quick study.

Much like Ford, Bilbrey, the company’s founder, didn’t know much about pumps when he started working the oil fields.

Bilbrey was 19 when he started his first job in the oil fields, manufacturing, delivering and servicing pumps that draw fossil fuels from thousands of feet underground. Like his father before him, he learned the trade.

In 1984, he decided he had enough experience to open a business. To fund the idea, he took on $300,000 in debt, which he used to buy the materials and equipment and hire employees. He named it Benro, an amalgam of his name and the name of his ex-wife, Rodine.

The name stuck. So has the business, despite the winding economic downturns in the oil and gas industry that followed.

The company’s custom-made pumps are a simple yet fool-proof method that oil companies rely on to continue accumulating oil from a well that was drilled years ago. Where there are drilling rigs, a pump follows.

Bilbrey retired in 2014, but during his retirement, he said management issues festered. He returned five years later and recruited his wife, Corinna, to sort out the company’s books. His daughter manages the federal workforce guidelines. By 2021, it was a full-fledged family business.

Together they oversee a team of laborers who build pumps that can withstand the heaving pressure from lifting the fossil fuels thousands of feet below the ground for years.

Bilbrey prides himself on the quality of the pumps. The company builds different models, which range dramatically in price. A so-called Cadillac pump, built with high-grade metals and parts, which can go deeper, can cost up to $17,000. These pumps last up to 20 years. His team will also service the equipment and replace parts quickly.

Bilbrey does sell a more generic pump, which costs between $4,000 and $6,000 and is expected to last about a year.

Bilbrey’s overhead is about $200,000, he said. Costs add up quick. And this year, the company also will spend roughly $170,000 on insurance, almost double what they spent in 2022. That’s because larger oil companies require more expensive liability protections. They are bracing for an additional increase next month in insurance costs.

“It's hard for us because we don't sell the lowest price thing, we sell the best service and we sell high quality,” said Corinna. “And that's hard when your customers are driven by numbers.”

Despite changes in drilling, companies will still need pumps to collect oil from wells. Bilbrey said companies need to be persuaded to spend that kind of money on a quality pump when they can get it cheaper from a wholesaler, whose pumps sell for 10-15% less. Though it is not much of a difference, Bilbrey said larger companies — of which there are more than 30 in the area — don’t offer the continued dedicated service that Benro Pump does.

The industry is changing how it drills. Companies are drilling with fewer rotary rigs, the towers of steel that crews mount to drill. Fewer rigs mean fewer holes in the ground and, over time, less demand for pumps.

The change is due in part to horizontal fracking, a practice that allows companies to reach further distances in the layers of rock containing fossil fuels without having to drill deeper. Longer wells call for less of them.

Data shows the number of wells is declining. According to Baker Hughes, which has tracked rig counts for decades, there were 370 rigs in Texas operated by oil companies in March 2023. That number fell to 294 in March of 2024.

The number of exploration and production companies that find and drill for oil is also decreasing. There are 16% fewer producers than in 2021 — approximately 116 companies have been purchased or merged into larger ones, according to data provided by Rystad Energy.

Thomas Jacob, senior vice president of oil field services and data research at Rystad Energy, said mergers contribute to fewer rigs. He said companies don’t always add up their rigs.

At least six companies merged or absorbed others in 2023, according to the Energy Information Administration. The companies, which included Chevron, Occidental Petroleum Corporation and Diamondback Energy, spent $234 billion on mergers and acquisitions.

Jacob said that mergers affect the way big oil companies do business. Larger companies may prefer to work with vendors and contractors whose business is as large as theirs. This disparately impacts smaller oil companies that must compete with wholesalers who carry much more product, charge less and employ more people. Smaller companies also can’t always afford the expenses that come with working for a big company, like higher insurance costs.

“We are seeing these smaller companies lose work, they've had to significantly slash prices to see if they can keep going,” he said. “A few of them have started to declare bankruptcy.”

The drive south from the lease roads to the shop took Ford about 15 minutes. There, he debriefed his coworkers.

Benro Pump waits for the phone to ring. Echoing through the normally loud and rowdy shop is the creak of swiveling chairs and the searing meat. The grilling cools their nerves.

The workers can’t help but think about what the future of the oil and gas industry holds. Or how the presidential election in November will affect production — and whether the consequences will impact their business.

Ben Bilbrey has seen the industry in its highs and lows. He is used to the instability.

Ford, on the other hand, hasn't.

“It scares me sometimes."

Disclosure: Apache Corporation and Cadillac have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here .

TribFest Keynotes Announced! Be there when Michigan Gov. Gretchen Whitmer and Virginia Gov. Glenn Youngkin take the keynote stage at The Texas Tribune Festival ! Whitmer will talk with Texas Tribune co-founder Evan Smith about her memoir, her key victories in Michigan and the importance of every vote. Youngkin and Smith will close out TribFest with a conversation about his record, the state of his party and a conservative policy agenda for America. Explore the full program of 300+ speakers and 100+ events . Get tickets today.

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Information about the authors

Carlos Nogueras Ramos

Permian basin reporter.

[email protected]

@criacuervosvibe

Learn about The Texas Tribune’s policies , including our partnership with The Trust Project to increase transparency in news.

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• Commodities

Guide to Investing in Oil Markets

• Search Search Please fill out this field.
• Quality & Location

Speculation

Oil market investment options, the bottom line.

Diane Costagliola is a researcher, librarian, instructor, and writer who has published articles on personal finance, home buying, and foreclosure.

• Guide to Investing in Oil Markets CURRENT ARTICLE
• How to Invest in Oil
• Making a Profit in Crude Oil
• Risks of Oil Investing
• How the Oil Industry Works
• Effect of Crude Inventories
• How to Buy Oil Options
• Understanding Oil Firms
• What Determines Oil Prices?
• Factors That Affect the Price of Oil
• OPEC vs. the US
• OPEC's Influence on Global Oil Prices
• Oil and Natural Gas Prices Correlation
• Oil Prices and Inflation
• Oil Prices and the US Economy
• United States Oil Fund
• Oil Prices and the Stock Market
• Economic Indicators for Oil Investors
• Especially Important Economic Indicators

The oil market can be very confusing to both professional and individual investors, with large price fluctuations sometimes occurring on a daily basis.

This article gives a broad overview of the forces driving the oil market and how to have a financial stake in oil in your investment portfolio.

Key Takeaways

• As a commodity, the price of oil in the market depends on supply and demand, but its supply is somewhat controlled by the OPEC cartel.
• Different grades of oil trade under different markets such as West Texas Intermediate (WTI) or Brent. It may also be "light" or "sweet" in nature.
• Oil is sometimes seen as a portfolio diversifier and a hedge against inflation.
• Buying and selling physical oil is not an option for most investors, but liquid markets that track oil prices can be found via futures, options, ETFs, or oil company stocks.

Oil is a global commodity. The U.S. Energy Information Administration (EIA) estimates the world's demand for oil at more than 101 million barrels per day in 2023, an all-time high. Projections for 2024 and 2025 show an annual increase.

When the price of oil rises, it tends to lower the demand in developed countries, but demand from growing emerging market economies is expected to increase as these countries industrialize regardless of the price of oil.

Some emerging market economies have fuel subsidies for consumers. However, subsidies are not always beneficial to a country's economy, because although they tend to spur demand in the country, they may also cause the country's oil producers to sell at a loss.

As such, removing subsidies can allow a country to increase oil production, thus increasing supply and lowering prices. In addition, cutting subsidies can decrease any shortage of refined products, since higher oil prices give refineries an incentive to produce products such as diesel and gasoline.

On the supply side , in 2023, approximately 101 million barrels of oil will be produced each day, another new record. Investment in upstream global oil and gas was expected to increase by 11% in 2023; however, upstream investment plans are still 47% lower when compared to 2014.

Efficiency gains, cost-control measures, and capital discipline have decreased certain investment costs but the tightening monetary policy and labor-cost shortages erode these gains.

In OPEC , most countries cannot pump out much more oil. Saudi Arabia, the one exception, keeps an estimated spare capacity of 1.5 to 2 million barrels of oil per day.

Oil companies report their oil reserves in their financial statements using one of two available methods. They can use the full cost or the successful efforts method in their accounting.

In the spring of 2020, oil prices collapsed amid the economic slowdown. OPEC and its allies agreed to historic production cuts to stabilize prices, but they dropped to 20-year lows. Markets, however, quickly recovered and the price of oil rose. In 2022, when Russia invaded Ukraine, the disruption to oil markets, economic sanctions, and rising inflation led to oil trading at about $115 per barrel.

Quality and Location

One of the major problems the oil market faces is the lack of high-quality sweet crude , the type of low-sulfur oil that many refineries need to meet stringent environmental requirements, particularly in the United States. This is why, despite the rising production of oil in the United States, it must still import oil.

Each country has a different refining capacity. For instance, the United States produces a sizable amount of light crude oil that it can export. Meanwhile, it imports other types of oil to maximize its production based on refining capacity.

There are also differences in terms of where oil is produced for sale. For example, the major difference between the crude oils Brent Crude and West Texas Intermediate is that Brent Crude originates from oil fields in the North Sea between the Shetland Islands and Norway, while West Texas Intermediate is sourced from U.S. oil fields, primarily in Texas, Louisiana, and North Dakota. Both Brent Crude and West Texas Intermediate are light and sweet, making them ideal for refining into gasoline.

Aside from supply and demand factors, another force driving oil prices has been investors and speculators bidding on oil futures contracts . Many major institutional investors now involved in the oil markets, such as pension and endowment funds, hold commodity-linked investments as part of a long-term asset-allocation strategy.

Others, including Wall Street speculators, trade oil futures for very short periods of time to reap quick profits. Some observers attribute wide short-term swings in oil prices to these speculators, while others believe their influence is minimal.

Regardless of the underlying reasons for changes in oil prices, investors who want to invest in oil markets and capitalize on energy price fluctuations have many options. The bulk of oil trading takes place in derivatives markets, utilizing futures and options contracts. These may be out of reach for many individual investors, but there are several other routes to add oil to your portfolio.

One simple way for the average person to invest in oil is through stocks of oil drilling and service companies. In addition, investors can gain indirect exposure to oil through the purchase of energy-sector ETFs.

Several sector mutual funds that invest mainly in energy-related stocks are available like the iShares Global Energy Sector Index Fund ( IXC ), and energy-sector mutual funds, like the T. Rowe Price New Era Fund (PRNEX). These energy-specific ETFs and mutual funds invest solely in the stocks of oil and oil services companies and come with lower risk.

Investors can gain more direct exposure to the price of oil through an exchange-traded fund (ETF) or exchange-traded note (ETN) , which typically invests in oil futures contracts rather than energy stocks. Because oil prices are largely uncorrelated to stock market returns or the direction of the U.S. dollar, these products follow the price of oil more closely than energy stocks and can serve as a hedge and a portfolio diversifier.

How Can Ordinary Investors Start Trading Oil?

There are many choices for investors, including a number of ETF and ETN options to choose from, such as a single-commodity ETF (e.g., oil only) or a multi-commodity ETF that will cover a variety of energy commodities (oil, natural gas, gasoline, and heating oil). Investors can also look to oil company stocks or ETFs that track companies in the oil sector.

How Much Crude Oil Is There Left in the Ground?

As of mid-2024, there are estimated to be around 1.361 trillion barrels of oil left to be drilled. At current rates of consumption, that is estimated to last just 47 more years.

Which Country Produces the Most Oil?

As of 2023, the United States has become the world's largest producer of oil , in part due to extraction from shale oil deposits. The U.S. is followed by Saudi Arabia, Russia, Canada, and China.

Investing in oil markets means investors have a diverse array of options. From indirect exposure via an energy-related stock to more direct investment in a commodity-linked ETF, the energy sector has something for almost everyone. As with all investments, investors should do their own research or consult an investment professional. 

U.S. Energy Information Administration. " Short Term Energy Outlook: Global Liquid Fuels ."

IEA. " Oil 2023 ," Page 47.

U.S. Energy Information Administration. " What Drives Crude Oil Prices: Supply OPEC ."

U.S. Energy Information Administration. " OPEC+ Agreement to Reduce Production Contributes to Global Oil Market Rebalancing ."

U.S. Bureau of Labor Statistics. " From the Barrel to the Pump: The Impact of the COVID-19 Pandemic on Prices for Petroleum Products ."

U.S. Energy Information Administration. “ Petroleum & Other Liquids: West Texas Intermediate First Purchase Price (Dollars per Barrel) .”

U.S. Energy Information Administration. " Crude Oils Have Different Quality Characteristics ."

U.S. Energy Information Administration. " Weekly Supply Estimates ."

IG. " Brent Crude Oil vs WTI Oil: What are the Key Differences? "

Worldometer. " Oil ."

U.S. Energy Information Administration. " What Countries Are the Top Producers and Consumers of Oil? "

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Commonwealth Bank stops lending to fossil fuel companies without genuine emissions plan

Topic: Banking

The Commonwealth Bank has made a major leap in its climate policy, blacklisting fossil fuel companies without genuine emissions plans from its client list. ( ABC News: Margaret Burin )

Australia's largest mortgage lender is no longer offering money to fossil fuel companies that are not aligned with the Paris Agreement.

The bank announced the new direction in its latest climate report, published on the same day it posted close to $10 billion in full-year net profit.

What's next?

The spotlight is now on the other big banks with a finance deal of about $750 million for oil and gas giant Santos on the table.

The Commonwealth Bank of Australia (CBA), the country's largest mortgage lender, is the first major Australian bank to start walking away from funding fossil fuel companies without genuine emissions plans.

In its latest climate report, released on the same day it posted close to $10 billion in full-year net profit, the bank stated that it had already been ditching clients not aligned with the Paris Agreement.

The real-world effects of the bank's new policy could be put to the test as soon as next week, with a major gas loan reportedly being signed off without CBA at the table.

Last year, the bank announced from 2025 it would not provide loans to any coal, oil, or gas companies that did not have a transition plan in line with the Paris goals to avoid dangerous warming. This week's report shows that it is applying that policy early.

Companies' emissions transition plans will be scrutinised by an independent assessor to loan money from CBA. ( ABC News: Michael Barnett )

CBA's loans to fossil fuels decreased by 92 per cent from 2018 to 2022, from $4 billion to $267 million, according to analysis from Market Forces, a group that campaigns against investments in environmentally destructive projects.

The bank also halved its exposure to oil and gas companies in the past two years from $3.3 billion in 2022 down to $1.7 billion.

Exposure represents the money the bank is set to lose if the investment fails.

The bank's new lending rules are a major win for the climate movement and groups such as Market Forces, which have targeted the bankrollers of fossil fuels for years.

"This announcement is massive for the domestic banking sector," Morgan Pickett, a bank analyst at Market Forces, said.

"CommBank is the biggest bank in Australia. "They're the biggest company on the ASX [Australian Stock Exchange]. 

"For them to say we're not banking companies that aren't compatible with a safe climate, this will be a really big signal to the rest of the market, not just the banks."

Court cases, policies, protests, and shareholder climate activism have been ratcheting up the pressure on banks for years.

If a bank commits to the Paris Agreement, but keeps investing in fossil fuels, it exposes itself to legal action.

The Paris Agreement is a legally binding international treaty signed in 2016 by nearly 200 countries to keep global temperature increases below 1.5 degrees Celsius. ( ABC News: Lisa Millar )

CBA was sued twice by the same two shareholders over its climate risk and investment in fossil fuels.

Climate change also presents a major risk for banks. As climate-related disasters increase, they are exposed through the homes covered by their mortgages.

"To help us effectively manage our climate risks, we monitor the impact of weather events and natural disasters on our business and customers, including in our home lending portfolio," CBA's climate report stated.

It calculated that it has about $30 billion in home loans exposed to high physical risks like cyclones, floods, and fires.

And, as Cassandra Williams from Monash University’s Climateworks Centre points out, the world is moving away from fossil fuels, so they are increasingly uncertain investments.

"Climate brings with it both risks from a stranded asset point of view, but also tremendous opportunities that can have a bottom line effect on both your company and your investment returns," she said.

"The writing's on the wall. Companies that move the quickest and approach climate as an opportunity, future-proof themselves for a net zero economy, and will stand to gain.

"This just makes good commercial sense," she said.

"What we've seen now is one of the big four making the move. CBA is leading the charge, and we're really excited to see the other banks, ANZ, Westpac, NAB and Macquarie, what they'll do next."

Transition plans under scrutiny

At the core of CBA's climate strategy are what are known in the corporate world as transition plans.

These comprehensive documents outline exactly how a business is going to bring down its emissions in line with what science says is needed to avert the worst effects of climate change.

According to the International Energy Agency's analysis, the world must not approve any new oil, coal and gas projects to keep within those goals.

"The science is clear. There's enough fossil fuel infrastructure already in existence," Market Forces' Mr Pickett said.

Cassandra Williams is the sustainable finance lead at Climateworks. ( Supplied: Climateworks. )

Commonwealth Bank uses independent assessors to check the transition plans of its fossil fuel clients, and if they do not meet the bank's criteria, it will not loan to them.

Ms Williams says working out what's considered a robust transition plan is becoming a global issue and is turning the heat up on companies.

"Making sure that transition plans are credible will be critical in this piece, and particularly from a 'greenwashing' and a 'greenhushing' perspective," she said.

"This ups the ante for banks, but also for companies … because otherwise your funding, your capital lifeline might be cut off."

Another part of a company's transition plan that will come under scrutiny is the emissions that it covers.

CBA required scope three emissions to be included in the reports. These are the emissions that come from the products the company produces, such as the emissions from gas that is exported and burnt offshore.

Gas giant Woodside's transition plan was rejected by its own shareholders earlier this year , highlighting the increased scrutiny that companies are under.

CBA has put itself ahead of the other major banks in Australia but there is movement in this space.

Westpac has asked clients to have a credible transition plan in place by September 2025.

ANZ told the ABC it is "supporting the energy sector to transition to net zero".

It said its financed emissions for "oil and gas and thermal coal sectors, have reduced by 25 per cent, 30 per cent and 96 per cent respectively, between 2020 and 2023."

The bank also said it wasn't surprised to be included in the analysis by Market Forces as the largest domestic lender to Australia's energy sector .

The National Australia Bank (NAB) released a statement this week saying it capped its oil and gas exposure at US$2.28 billion ($3.48 billion) and no longer loans money to thermal coal, the kind used for electricity.

Its climate report, however, only says that NAB "intends to require a transition plan" from fossil fuel clients by October 2025 and makes no commitment about what will happen if the transition plan doesn't hold up to scrutiny.

"Every dollar that goes into the fossil fuel industry and enables expansion is one dollar that could be going towards a green energy transition," Picket said

"If you're providing a fossil fuel expander with money, even if it's not clearly outlined that it's for [an] expansion project, it still frees up capital within that business to deploy on new and expanded projects which aren't compatible with the safe climate."

Santos deal in the spotlight

Next week gas giant Santos is expected to finalise a deal for about $750 million for its operations, according to Market Forces.

CBA will not be providing financing, however, Market Forces claims NAB, Westpac, and ANZ are in negotiations.

"While CommBank hasn't been explicit that they've dropped Santos as a client, they're not on this deal, from what we can see, the arrangers are ANZ, NAB and Westpac," Mr Pickett told the ABC.

In response to questions about the loan, ANZ and NAB told the ABC it would not comment on any of their customers. 

The ABC has also contacted Santos, CBA and Westpac regarding the loan.

Minnesota’s Northern Oil and Gas makes over $5B in deals as North Dakota boom wanes

The Minnetonka-based company has made 14 acquisition deals from Texas and New Mexico to Utah and Ohio.

By Patrick Kennedy

Northern Oil and Gas grew with the North Dakota oil boom, buying interests in oil-producing properties and contracting with other companies to operate them.

Now, as North Dakota’s output has slowed, the Minnetonka-based company over the past five years has successfully diversified its holdings by making 14 deals worth $5.3 billion from Texas and New Mexico to Ohio and Utah.

As a result, Northern Oil and Gas (NOG) is now the largest publicly traded nonoperating oil and gas company in the continental U.S. It’s also a unicorn — an oil and gas company amid corporate neighbors that are industry giants in health care, retail, financial services and manufacturing.

“ Right now, I’m super happy, because financially, the company is now at the point where we can pay for all of our growth with internally generated cash flow,” said Bahram Akradi, NOG’s board chair since 2018.

Akradi deserves some credit for NOG’s growth, but he’s also quick to credit the management team led since 2020 by Chief Executive Nick O’Grady.

Under O’Grady, a New Jersey native and former energy industry analyst, Northern Oil has outperformed the S&P Oil and Gas Exploration and Production ETF fund. The total return during that time was 78%, compared with the fund’s 59%.

That wasn’t always the case.

The current history of NOG started in March 2007, when the company starting taking advantage of previously inaccessible oil and gas reserves in Montana and the Dakotas. The company concentrated in buying properties — or interests in properties — in the Bakken and Three Forks portions of the Williston Basin.

From 2009 to 2012, it was a high-flying stock as production in the region boomed. The stock peaked at over $300 a share, but by late 2017 it was under $10 a share and the finances were a mess. Bondholders were ready to take over the company.

The company was also enmeshed with a securities fraud scandal , involving its then-CEO and president, that was largely centered around a different public company, Dakota Plains.

It was clear the company needed a new plan.

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Akradi, who also is the CEO and founder of Lifetime Group Holdings, was an investor in NOG at the time and eventually became one of its largest shareholders.

By January 2018, Akradi basically forced his way onto the board. Akradi then used his connections and relationships to assure bondholders, raise additional capital and straighten out the finances.

“It was pretty much dead,” Akradi said. “There really was nothing left of it.”

NOG is a nonoperating oil and gas company, meaning its workers don’t do the actual drilling. Instead, it buys fractional interests in various oil- and gas-producing properties and helps provide financing for the exploration and drilling done by the more than 100 operators they partner with.

It is because of the nonoperational model that NOG had the second highest median employee compensation among Minnesota public companies, at $239,308. NOG has 47 employees from data scientists, geologists and real estate professionals to petroleum engineers.

All of them rely on the company’s secret sauce, a proprietary database named Drakkar after Viking long ships, that has information on over 10,000 wells.

That rich database helps to fuel the acquisition strategy for deals that involve complex ownership structures. The company’s financial and investment experts also mine the database to create hedging strategies the NOG has used when the price for a barrel of oil has dropped.

“The best thing we have got, the best thing we always had going for us, even at our darkest days, was that we had the data,” said O’Grady.

O’Grady and his team have used a portfolio approach to building NOG’s interests. But instead of acquiring shares of various companies like a mutual fund manager might do, NOG partners with the best operators in a variety of oil and gas regions.

Size is important to a nonoperator. With scale and geographic diversity comes the ability to control how capital is deployed among its operating partners.

With production in the Bakken region at its peak, in order to grow it became essential that Northern Oil and Gas expand into other areas.

“When you are a small company in the Bakken that is a nonoperator, having no scale — no diversity becomes a challenging business model,” said Scott Hanold, an energy analyst with RBC Capital Markets who has been covering the industry for 25 years.

Since 2020, NOG has used its data to execute the 14 acquisitions, with each deal is seemingly bigger than the last. The largest, which was a $2.55 billion deal announced in June , expanded NOG into energy-producing regions in Utah. That deal is expected to close by the end of the year.

Other recent deals have added more geographic diversity including a major push into the Permian Basin. The company now has ownership interests in all the major oil and gas production regions of the contiguous U.S.

As of March 31, 41% of NOG’s oil production came from the Williston Basin and 45% came from the Permian Basin in Texas and New Mexico. Another 14% of their production came from the Appalachia region in Ohio and Pennsylvania.

The acquisition and diversification strategy has worked. Analysts covering NOG expect it to report annual revenue for 2024 of $2.2 billion and adjusted net income of $594 million. Since 2018 that’s a compound annual growth of 22% and 27% respectively. With the growth NOG now produces enough free cash flows to reward shareholders with one of the higher dividend rates in the sector. They recently raised their quarterly dividend to 42 cents a share, up 11% from a year ago.

Another good thing about the nonoperator model is it could conceivably work with other energy markets. The greening of the U.S. energy system is still a long ways a way and natural gas may prove to be a bridge of sorts, but new markets are also developing.

“We really are getting to this point in U.S. energy, which is that inventory is becoming a problem. So the Permian Basin is 60 to 70 percent drilled at this point,” O’Grady said.

O’Grady says that operators are doing amazing things in the Williston to keep production going, “but it is in the eighth inning of its life.”

O’Grady says a lot of those emerging technologies from an investment perspective are still in the early stages and NOG has been more of a late-stage entrant. Still, it is studying those markets.

“We’ve looked at almost everything under the sun,” O’Grady said. “We could own a nonoperated interest in everything. ... I would say this, that as a company, you know, over time, I think we’ll invest in whatever the future is.”

about the writer

Patrick kennedy.

Business reporter Patrick Kennedy covers executive compensation and public companies. He has reported on the Minnesota business community for more than 20 years.

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Consol and Arch to combine, forming a $5 billion coal producer based in Pennsylvania

FILE - In this Aug. 18, 2010, file photo, the CONSOL Energy Center is reflected in Pittsburgh. (AP Photo/Keith Srakocic, file)

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Arch Resources and Consol Energy are combining to form a single coal producer valued at more than $5 billion, the companies announced Wednesday, the latest consolidation in a deal-happy energy sector .

Arch shareholders will get 1.326 shares of Consol common stock for each share of Arch they own. Consol shareholders will own about 55% of the new company — to be called Core Natural Resources — and Arch shareholders will own about 45%.

Cole Natural Resources will be based in Canonsburg, Pa., just southwest of Pittsburgh, which is the current headquarters of Consol Energy. Arch is based in St. Louis.

Consol Energy CEO and chairman Jimmy Brock will be the company’s executive chairman and Arch CEO Paul Lang will be its chief executive.

If approved by shareholders and regulators, the deal is expected to close in the first quarter of 2025.

Shares of Arch rose 5.9% Wednesday, while shares of Consol rose 7.9%.

The use of coal in the United States has fallen almost every year since 2005 as energy plants switch over to natural gas. The U.S. consumed about 426 million short tons of coal last year. Annual coal use in 2005 was more than a billion short tons. That has led to mine closures and job cuts across the sector.

Coal companies that have survived need to lower costs and that can be achieved both through new technology, and mergers like the one announced by Consol and Arch Wednesday.

Arch and Consol said that Core Natural Resources will benefit from between $110 million and $140 million of annual cost and operational synergies within 18 months of the deal’s closing.

Arch had revenue of $3.1 billion in 2023, while Consol brought in $2.5 billion in that same year.

“Our assets are highly complementary, resulting in increased diversification across coal types, end uses, and geographies,” said Brock of Consol Energy.

There has been a surge in big energy takeovers this year, though mostly in the oil and gas sector.

The oil and gas sector thrived in the wake of Russia’s invasion of Ukraine in 2022, and while oil prices have slipped, there has been a surge in mergers between energy companies flush with cash in recent years.

In May, ConocoPhillips said it was buying Marathon Oil in an all-stock deal valued at approximately $17.1 billion. That came just weeks after Exxon closed its $60 billion acquisition of Pioneer Natural Resources. In July of last year, Exxon announced that it would pay $4.9 billion for oil and gas producer Denbury Resources.

Chevron’s proposed $53 billion acquisition of Hess is still waiting for regulatory review.

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Ey analysis: us oil and gas sector defies price plunge; production and profits soar in 2023.

Despite lower commodity prices, US oil and gas production soared to a record high in 2023, while costs fell 6%.

Producers recorded revenues of $244.4 billion , the second-highest level in the last five years and shifted more capital toward exploration and development and merger and acquisition activity in 2023.

Eighty percent of the studied companies reported Scope 1 and 2 emissions, up from 72% in 2022 and 64% in 2021.

NEW YORK , Aug. 20, 2024 /PRNewswire/ -- The EY US oil and gas reserves, production, and ESG benchmarking study reveals an industry demonstrating remarkable resilience and financial performance, despite facing a challenging economic landscape in 2023. The study, which examines the 50 largest publicly traded exploration and production (E&P) companies, highlights the industry's ability to navigate price fluctuations and maintain a trajectory of growth and profitability.

"The health of the US oil and gas sector is not solely dependent on high commodity prices, as our study indicates," said Herb Listen , lead author of the study and Oil & Gas Assurance Partner at Ernst & Young LLP. "The studied companies not only boosted production to an all-time high but also effectively managed costs, rewarded shareholders and invested toward growth."

The combined revenue of the studied companies remained the second highest in the five-year study period, falling 26% from a 2022 high to $244.4 billion , while recording a 6% decrease in production costs on a per-barrel-of-oil equivalent (BOE) basis. The industry also reported pretax profits of $83.9 billion , aligning with the profits observed in 2021 and showcasing the sector's sustained financial health.

Capital expenditures in exploration and development hit a five-year peak at $93.1 billion — a 28% increase from the previous year. This rise in spending reflects the industry's robust financial position following record profits in 2022 and a strategic deployment of capital into core operations. Notably, acquisitions climbed by 57% year over year, indicating a strong appetite for strategic dealmaking. Furthermore, independent producers refocused capital on growing production while also delivering higher returns to investors.

"The commercial fundamentals of the US oil and gas sector remains strong," said Bruce On , Partner, Strategy and Transactions, Ernst & Young LLP. "Major deals are redefining the playing field, as top companies streamline operations and bring cutting-edge technology to the forefront. They're strategically positioning their assets, anticipating an enduring need for oil and gas even amid energy transition."

Despite a marginal decline in total US oil and gas reserves, the industry sustained a production replacement ratio above 100% through extensions and discoveries. Oil reserves dropped to 33.3 billion barrels and combined gas reserves to 186.1 trillion cubic feet, a 1% and 4% decrease, respectively, compared with 2022.

As the sector progresses, the emphasis on sustainability and carbon emission reductions is intensifying. Eighty percent of the studied companies voluntarily reported Scope 1 and Scope 2 greenhouse gas emissions, with 42% of the companies obtaining external assurance over this reporting. More than half of the companies (64%) reported a climate-related target or goal as part of their voluntary disclosures.

"The oil and gas sector remains a cornerstone of the US economy and global energy security," said Pat Jelinek , EY Americas Oil & Gas and Chemicals Leader. "As the sector and energy systems decarbonize, leading companies are transforming their businesses through strategic investments and innovation to drive both profits and sustainability, simultaneously, while also providing the world scaled alternatives for affordable energy."

About the study The  EY US oil and gas reserves, production, and ESG benchmarking study  is a compilation and analysis of US oil and gas reserve and production information reported by publicly traded companies to the SEC and an analysis of certain publicly reported ESG disclosures, as applicable. It presents results for the five-year period from 2019 to 2023 for the 50 largest companies based on 2023 end-of-year US oil and gas reserve estimates. These companies represent approximately 42% of the US combined oil and gas production for 2023 and serve as a bellwether of industry trends.

EY | Building a better working world EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.

Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.

This news release has been issued by Ernst & Young LLP, an EY member firm serving clients in the US.

© 2024 Ernst & Young LLP. All Rights Reserved.

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Saturday, August 24, 2024

Egypt plans to return oil, gas production to normal from 2025, PM says

Egyptian Prime Minister Mostafa Madbouly. File photo: Mohamed Abd El Ghany Reuters

Published Aug 23, 2024

Egypt plans to return oil and gas production to normal levels from 2025 with the help of international partners, Prime Minister Mostafa Madbouly said in a press conference on Thursday.

The North African country had aimed to become a regional hub for liquefied natural gas after a string of recent discoveries, including the giant Zohr offshore gas field with an estimated 30 trillion cubic feet of gas.

Its hopes were cut short by a scarcity of foreign currency that led to an accumulation of arrears.

“There is a very clear plan to bring the volume of production of oil and natural gas with foreign partners back to previous levels, and to also increase it in the coming period,” Madbouly said.

The government said in March it had started paying off dues owed to foreign companies working on petroleum projects in the country.

A payment plan for 20% of the arrears has begun, the government said, adding the remainder would be paid off through a scheduled plan.

During the summer, Egypt resorted to load shedding to keep its power grid functioning, saying it needed to import about $1.18 billion (R21bn) worth of natural gas and mazut fuel oil to end long-running electricity cuts.

The country generates most of its electricity from burning natural gas.

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Indonesia approves development plan for Eni’s Geng North gas project

• The development of the two fields will create a new production hub called the Northern Hub, Italy's Eni said. PHOTO: REUTERS

INDONESIA has approved a development plan for the first phase of the Geng North gas field operated by Italy’s Eni in the Makassar Strait, the upstream oil and gas regulator SKK Migas said in a statement on Friday (Aug 23).

The approval also covered the development of the nearby Gehem field, SKK Migas said, part of the Indonesia Deepwater Development gas project Eni acquired from Chevron last year.

The development of the two fields will create a new production hub called the Northern Hub, Eni said in a separate statement, which will develop the five trillion cubic feet of gas and 400 million barrels of condensates discovered in Geng North and the 1.6 tcf discovery at nearby Gehem.

It will also involve a floating vessel with capacity to handle about one billion cubic feet of gas and 80,000 barrels of condensates per day, plus a storage capacity of one million barrels, it added.

The project is expected to bring in US$17.49 billion in investment and operational spending, SKK Migas said.

Indonesia is keen to accelerate a number of gas projects following major discoveries, before the energy transition away from fossil fuels affects both funding and demand.

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SKK Migas spokesperson Hudi Suryodipuro said all parties must commit to avoiding delays in the project. “If possible it can even be accelerated, so that its production can strengthen our oil and gas supplies,” he said.

Indonesia has also approved a new development plan for the Gendalo and Gandang fields, another portion of the Indonesia Deepwater Development project, which have two tcf in gas reserves, Eni said.

The company has also secured a 20-year extension for the production sharing contracts for the Indonesia Deepwater Development projects.

Energy firms boost gas exploration in South-east Asia to meet growing demand

“This grants us today strong leadership in a world-class basin, close to existing facilities and to very important markets,” Eni CEO Claudio Descalzi said in the statement.

The Gendalo and Gandang portion of the Indonesia Deepwater Development will be linked to Eni’s existing Jangkrik gas facility and extend its gas production plateau by at least 15 years, the company said in the statement.

Gas from the Northern Hub’s floating facility will be piped onshore to the East Kalimantan pipeline network, and will also be partially liquefied at Indonesia’s Bontang plant.

Eni plans to conduct a drilling campaign near its existing operations in the next four to five years. REUTERS

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Harris Goes Light on Climate Policy. Green Leaders Are OK With That.

President Biden made climate change a cornerstone of his agenda. Vice President Kamala Harris has yet to detail her own plan.

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By Lisa Friedman

• Aug. 21, 2024

In the 2020 presidential election, climate activists demanded that Democratic candidates explain, in detail, how they planned to tackle the planet’s greatest environmental threat.

But in the weeks since Vice President Kamala Harris ascended the 2024 Democratic ticket, she has mentioned climate change only in passing, and offered no specifics on how she would curb dangerous levels of warming. Climate leaders say they are fine with that.

“I am not concerned,” said Jay Inslee, the Democratic governor of Washington, who made climate change the centerpiece of his own 2019 bid for the presidency. Mr. Inslee said he believes it is more important for Ms. Harris to draw a distinction between her and her Republican rival, former President Donald J. Trump, than to drill down on policy nitty-gritty.

“I am totally confident that when she is in a position to effect positive change, she will,” Gov. Inslee said.

As Ms. Harris prepares to address the nation on Thursday at the Democratic National Convention, she faces the challenge of energizing party loyalists while also reaching out to disaffected Republicans and moderate voters. So far Ms. Harris and her running mate Tim Walz, the governor of Minnesota, have embraced a pragmatic agenda, calling for things like a minimum-wage increase and child-care funding.

While President Biden has made climate change a signature issue, signing into law the largest clean energy investments in American history, Ms. Harris has yet to detail for voters her climate or clean-energy positions. Some analysts chalked that up to strategy and said new promises to slash greenhouse gas emissions or rein in fossil fuels could alienate voters particularly in the energy-rich swing state of Pennsylvania.

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