A Quantitative Study into the Project Effectiveness of Independent E&P Operators
How to Be Effective in a High Cost Escalation Environment

IPA has begun a study to quantify the project effectiveness of Independent E&P operators in terms of capital project execution. This study will:

1. Measure the reliability of the sanction forecasts made by Independents for production rates, cost, and schedule
2. Quantify the effect of recent cost escalation on Independents as a class of operators
3. Identify and quantify the effect of key performance drivers that set Independents apart from the Majors
4. Identify opportunities for improvement for Independents as a class of operators.

Study completion is targeted for November 2008. To meet this date, we ask interested companies to join by May 31, 2008. For more information, contact Rolando Gachter (+1 703-726-5324).

Background

We frequently receive questions such as:

• What are the differences in the approach to and performance of projects executed by Independents and Majors?
• What are the practices that drive the performance of the Independents?
• What are their opportunities for improvement?
• How has high escalation affected the performance of projects executed by Independents and Majors alike?
• Is either group better at forecasting cost?
• Are Independents paying a penalty when they cannot leverage their size with contractors, vendors, and suppliers?
• Are Independents truly faster at executing projects than the Majors? If so, how are they achieving their results?

This study will address these and other related questions. Understanding what sets you apart from the Majors is key, especially in the current project environment.

How Will the Results of the Independents Study Help You?

As a result of the study, you will be able to leverage an extensive database of projects to:

• Understand how high escalation has affected the performance of your projects
• Compare your performance with contemporaneous industry performance
• Avoid paying too much for project speed
• Act on opportunities for improvement in areas in which the Independent’s performance lags Industry

Scope of Work and Timing (premised on sufficient interest)

Study Requirements

Provide project data for two recently (sanction after January 2004) completed asset developments:

• Preferably closeout evaluations, otherwise recently sanctioned
• Preferably whole-asset (wells and facilities) greenfield developments of at least $250 million in sanctioned scope
• Independents that have already contributed at least two recently completed developments can participate in the study at reduced cost

To streamline the data collection process, we will translate your generally available project documentation into our format:

• Need access to PM and facilities representation to understand facilities scope and performance (4-6 hrs)
• Need access to subsurface and well construction representation to understand subsurface/wells scope and performance (4-6 hrs)

The cost per company is available upon request.

Study completion is expected within 1 year.

Only study participants will have access to results.