The global recession has impacted many small and mid-size natural gas and oil companies, but larger well capitalized companies "are busy preparing for the upturn," according to a survey published earlier this month by Ernst & Young.
Nearly half of the 569 C-suite and board-level executives surveyed said their businesses have been less severely impacted by the economic downturn than other sectors, and many of the respondents reported business improvements since the downturn. More than half of those polled worked for companies with an annual global revenue of more than $1 billion, primarily representing major international oil and gas firms, "which were well capitalized before the downturn," said Ernst & Young, which conducted the oil and gas survey snapshot in June with its Economist Intelligence Unit.
"These findings are consistent with what we're observing in our day-to-day work with some of the top oil and gas companies in the world," said Ernst & Young's Marcela Donadio, the consultant's Americas Leader of Oil and Gas. "Compared to the last major collapse in the 1980s, today's oil and gas industry is leaner, more efficient and better-positioned to weather market turmoil and take advantage of opportunities in the recovery."
Oil and gas executives are more optimistic than other respondents about the economic outlook, the survey found. Fewer oil and gas executives also said the economic downturn had impacted their business more than they expected, 45% versus 56% of all respondents.
Eighty-eight percent said they had been "very responsive" or "responsive" to cost management issues over the past 12 months, compared with 76% of executives from all industries. Most of those taking the survey also reported that their company had been "effective" or "very effective" at achieving overall cost savings over the past 12 months, particularly in the areas of internal control and supply chain effectiveness.
Oil and gas respondents "were significantly more likely than respondents from all sectors to report that they have scrutinized their relationships with customers and suppliers more closely over the past 12 months, and negotiated contracts with suppliers over the last six months (60% of oil and gas respondents versus 43% of overall respondents)," the Ernst & Young survey found.
""To emerge from the economic crisis ahead of the competition, oil and gas companies are focused on transactions," said the survey. "When asked what actions they would take to emerge stronger than competitors, respondents' top four picks all involved acquisitions (55%), divestitures (36%) and strategic alliances (40%) -- all at higher percentages than overall responses, which were 34%, 29% and 33% respectively."
The results from "Opportunities in adversity" are available at www.ey.com/oilandgas.
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