F2: ASSET TEAM SIZE BY OPERATING MODEL
Partner-operated JV OPCOs
Source: Water Street Partners Non-Operated Asset Team Database
asset team size would engage in a process that begins with benchmarking—but then goes further, in search of the context and nuance
necessary to differentiate assets other wise similar on paper, and to
enable companies to identify situations where greater resourcing
might generate real value—or where no amount of expertise will
ever shift the operator’s path. We believe this calls for a greater focus
on three things that provide a more holistic understanding of the
asset and the implications of more or less resourcing: value, risk,
NO VALUE, NO TEAM
Value is the sine qua non for an asset team—no value, no team.
That value can be quantified across multiple dimensions, including
the well-known financial metrics like Net Present Value (NPV) and
Free Cash Flow (FCF) that drive daily decision-making across the
But pure statistics are only the starting point. Consider two assets
with similar NPV on paper. One asset is mature and focused on
managing the decline curve using proven approaches, while the
other is months away from the Final Investment Decision (FID) on
its initial development plan featuring $500 million company share.
Despite the same NPV, more value in the near-term is in play for
the second asset. Meanwhile, an asset may have a relatively small
carrying value or limited near-term spend. But an asset may be
worth investing resources in due to the strategic benefits—like
gaining favor with a National Oil Company (NOC) in the future by
over-investing in providing technical support today in an asset the
YIELD INFLUENCE, ACHIEVE DESIRED OUTCOMES
The third factor is the company’s level of influence on the operator.
On occasion, non-operators have extremely strong formal rights—
like veto, information access, audit, and other rights in the Joint
Operational Area (JOA)—that can be leveraged to achieve desired
outcomes. More often, the ability to influence an operator is a
product of more informal levers—like grudging respect earned
through demonstrated technical competence, relationships built
over the long-term, or the ability to offer a valuable carrot in trade.
Understanding the level of influence is a critical input into an
asset’s team size. All else being equal, more resources should be
placed on the asset where the company has greater influence—and
more ability to impact value and risk. On the other hand, a company
with no influence and significant risk ought to be staffing just enough
to provide assurance—while asking whether it should remain in
the asset at all.
TEAM SIZE IS STILL ONE OF MANY FACTORS
Looking at value, risk, and influence provides a thoughtful way to
have a conversation about resource allocations, and enables cross-as-set comparisons, identification of assets whose resourcing seems
disconnected from key factors, and a framework and language to
defend headcount against executives challenging from afar without
Make no mistake, team size is just one factor determining non-op-erating partner success. Asset team composition, seniority, dedication, structure, and several other factors also matter. Size is the
easiest to change, and possibly the most impactful in the near term.
In the end, size does matter.
ABOUT THE AUTHORS
Jim Bamford is a co-founder of Water Street Partners
based in Washington, DC, where he serves a global
client base across industries on joint venture issues.
He has supported more than 200 JV transactions and
restructurings during his career and has worked extensively on JV governance, organizational, and commercial matters.
Prior to Water Street, he co-led the JV practice at McKinsey &
Joshua Kwicinski is a senior director at Water Street
Partners where he advises clients on structuring emerging market joint ventures.
Martin Mogstad is a senior consultant with Water
Street Partners. His recent experience includes working
with oil and gas operators, service companies, and
heavy industry manufacturers in North and South
America, Europe, and the Middle East. He joined Water
Street Partners from Schlumberger, where he worked in business