Overview of Portfolio Analysis for Oil and Gas Companies

Key takeaways

• Strategic Optimization: Portfolio analysis in oil and gas involves evaluating assets and projects to optimize investment decisions and manage risks.
• Better Decision Making: It provides both strategic and tactical visibility, aiding in resource utilization predictions and identifying non-contributing resources.
• Risk Management: Effective portfolio analysis minimizes exposure to various risks, ensuring compliance and reducing financial missteps.
• Resource Maximization: Helps in reducing exploration costs, monitoring demand, and efficiently allocating resources.
• Stakeholder Value: Enhances transparency and stakeholder confidence by providing relevant data and demonstrating project value.
• Adaptability: Utilizes advanced tools to navigate market challenges, such as fluctuating commodity prices and environmental regulations.
• Competitive Advantage: Empowers companies to build resilient portfolios, improving financial performance and driving strategic growth.

What is Oil and Gas Portfolio Analysis?

Portfolio analysis in the oil and gas industry is the systematic evaluation of a company’s collection of assets and projects to optimize investment decisions, manage risk, and achieve strategic objectives. This process involves assessing the performance, potential, and risks associated with various assets, including exploration and production projects, to ensure a balanced and profitable portfolio.

Introduction: Oil and gas portfolio analysis

Balancing production, investments, and returns in today’s lower-for-longer oil price environment are critical challenges for oil and gas companies. Top oil and gas companies continue striving for the right balance of geographies and resource types. An important question is what portfolio of resources can deliver the optimum results across a range of price scenarios?

In an era of higher shareholder expectations and uncertain oil prices, an effective business portfolio analysis is likely to be the priority for oil and gas companies. However, with the availability of innumerable narratives and tools in the marketplace, this is easier said than done. Therefore, oil and gas companies need to do a better business portfolio analysis. With the help of a comprehensive portfolio analysis tool, oil and gas companies can not only optimize their portfolio but also be in sync with the way markets evaluate portfolios in this period of uncertainty.

At SpendEdge, we understand the impact that an effective portfolio analysis can have on your business. And to help companies thrive in the competitive marketplace, our team of experts has highlighted four significant benefits of portfolio analysis that can help in maximizing ROI and deal with competitive pressure.

Is your company looking to use portfolio analysis to gain a competitive advantage? Speak to our experts to gain an overview of the solutions that could best suit your business.  

Major Benefits of an Effective Oil and Gas Portfolio Analysis

Benefit #1: Better decision making

The first benefit of better portfolio management is its ability to drive better business decisions. Business portfolio analysis helps oil and gas companies to gain visibility both from a strategic, top-down perspective and from a tactical bottom-up perspective. A good handle on past project metrics makes it much easier for oil and gas companies to predict future factors like utilisation of resources. Also, portfolio management helps companies to identify resources that are not contributing towards their business objectives. 

Benefit #2: Minimize risks and maximize profits

The second benefit of business portfolio analysis is that it helps you to reduce or avoid your exposure to risks. There are several categories of risks, including governance, financial, misdirected efforts, and resource utilization. On the financial side, a good portfolio analysis can help oil and gas companies to identify projects that are not contributing to business objectives. The sooner such wayward projects are identified, the sooner risks are reduced. Furthermore, project portfolio analysis can help in building an accountability framework that ensures that the right level of compliance is followed through every product lifecycle. Thus, effective risk management is one of the significant benefits companies fetch from business portfolio analysis.

Managing risks is a daunting task to do for companies. An effective business portfolio analysis can help. Want to know how? Request a free proposal now.

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Benefit #3: Helps in maximizing resources

Business portfolio analysis can help oil and gas companies to maximize their resources. It can also help in reducing exploration costs. An effective portfolio analysis can also facilitate oil and gas companies to monitor the demand and redeploy resources accordingly. Portfolio management also help companies to keep skills profiles up to date, quickly find the right resource for each project, and then manage the demand of the resource, capability, and allocations.

Benefit #4: Prove the value to stakeholders

If there is one factor that separates the super successful portfolio analysis from the rest, it is the ability to prove its value to the stakeholders. Proper portfolio management can allow stakeholders to have access to relevant data without bogging them down with sorting through reams of data that is confusing and irrelevant. The net outcome of this greater degree of transparency is that stakeholders in oil and gas companies gain a much greater appreciation and comfort level what is done, both in terms of project execution and results.

SpendEdge Services

At SpendEdge, we help you with the procurement of portfolio analysis and give you details on every vendor who carries out portfolio analysis. You may examine the vendor’s historical performance and the technology they employ to carry out the research with the help of our reports. With the aid of our supplier intelligence, you may evaluate supplier capabilities in accordance with performance and quality standards and get in-depth details about supplier market changes.

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With a plethora of portfolio analysis tools and risk assessment strategies in place, there is no looking back for oil and gas companies. Request a free demo below to know more.

Conclusion

Portfolio analysis stands as a cornerstone for success in the dynamic landscape of the oil and gas industry. By systematically evaluating assets and projects, companies can optimize investment decisions, mitigate risks, and align strategies with market fluctuations. It enables better decision-making, minimizes risks, maximizes resource utilization, and proves value to stakeholders. With the aid of advanced tools like optimization engines and dashboards, companies can navigate challenges such as fluctuating commodity prices, CO2 emissions, and the transition towards a green economy. Ultimately, portfolio analysis empowers companies to build resilient portfolios, enhance financial performance, and drive strategic growth in the oil and gas sector.