Analysis by A. T Kearney, a management consultancy firm, claims that specialist oil, gas and refining companies have the potential to create more shareholder value than conventional integrated companies.
Almost 50% higher outcomes were observed for both specialist downstream and upstream companies, according to A. T Kearney’s study.
“Oil multinationals are facing a unique mix of challenges including changing supply and demand models, pricings variations, clean energy demands and other business pressures,” said Louis Besland, partner, A.T. Kearney Middle East, in a company release. “These challenges lead to a need to review business models, partnerships and best-in-class approaches in the oil & gas industry. This will fundamentally affect the way companies invest the billions of dollars needed to ensure oil and gas companies thrive in future”.
The study assessed returns on shareholder investment and stakeholder expectations across integrated and pure upstream/downstream players. According to the study, specialized oil multinational players consistently generated better returns than traditional integrated players.
A.T. Kearney belives that, to sustain long-term and sustainable future growth, international oil companies will have to rethink the conventional wisdom that ‘integrated is best’.
ConocoPhillips has become the latest energy giant to seek to break itself up, announcing recently that it will spin off its refining business to shareholders as a separate publicly traded company.
