Protiviti helps global energy conglomerate complete a complex integration of an E&P target
Rising energy prices and the resulting profitability typically generate a flurry of merger and acquisition (M&A) activity in the oil and gas sector. The deals frequently target organisations that are independent and entrepreneurial in spirit — companies that have amassed a significant but often underdeveloped asset base and whose processes generally have not kept up with the growth of the company. The integration of these “wild west” companies into a larger entity can be a challenge, but the introduction of more structure and standardisation are necessary to achieve the growth expected from the acquisition.
That was the situation in which one global energy conglomerate found itself shortly after it acquired an exploration and production (E&P) company with roughly $12 billion in assets. To begin with, the E&P firm lacked formal procurement, accounts payable (AP) and supply chain procedures. There was very little control over spend, long delays in invoice processing and poor visibility into inventory movements and balances — findings confirmed by an internal audit conducted by the parent company. Immediate action was required.
Keys to Success
Integrate a newly acquired exploration and production (E&P) company with an entrepreneurial culture and immature processes into a global energy enterprise
Stand up procurement, accounts payable and materials management functions within the acquired E&P firm to facilitate integration and align with corporate standards
Implementation of defined roles, disciplined processes and supporting technology, resulting in improved performance, enhanced controls and a successful integration
Protiviti worked with the AP department to analyse AP transaction data and build a dashboard that management could use to identify, prioritise and resolve issues and uncover the root causes driving invoice processing delays and creating the invoice backlog.
While centralisation and a category management structure were present within the supply chain function, more formality and rigor were needed to optimise performance. The company asked Protiviti to leverage industry best practices to design a more mature, effective and global category management framework and organisation structure.