Non-operated JVs
DOES YOUR ASSET TEAM HAVE THE RIGHT PROFILE?
JAMES BAMFORD, JOSHUA KWICINSKI, AND MARTIN MOGSTAD, WATER STREET PARTNERS, WASHINGTON, D.C.
HOW NON-OPERATING partners in joint ventures ( JVs) structure their asset teams – size, composition, reporting, location,
and other factors – will have an enormous bearing on the company’s ability to influence the Operator. In our experience, high
performing non-operated asset teams can easily have a 5%-20%
impact on asset performance and serve as a foundational backstop to material risks. And since non-operated ventures routinely
represent 10%-50% of company production, revenues, or capital
investment volumes across petroleum, mining, power, and other
natural resource companies, opportunities for impact abound.
Unfortunately, an analysis shows few companies have a
well-defined or consistent way to think about designing their
non-operated asset teams. As a result, companies don’t position
themselves to optimize influence in this critical asset class. At
the same time, asset teams are less able to adequately defend
themselves against corporate pressures – such as asset team
headcount reductions, or re-organizing asset-level functions
into centralized corporate groups – which often further under-
mine influence.
As such, companies need a better way to think about non-op-
erated asset team structure and performance. Based on years
of experience assisting hundreds of asset teams, we’ve developed
Standards for Non-Operated Asset Management Excellence,
designed to help companies assess their JV structures, practices,
and contractual terms – and to compare themselves to a set of
objective standards. In doing so, companies can diminish the
gap-to-potential and pinpoint improvement areas. Specifically,
the broader assessment framework includes 15 Standards related
to how an individual company organizes itself internally to
manage a non-operated venture (Table 1). Each Standard includes
specific tests to evaluate excellence, which then can be translated
into a score, and benchmarked relative to other non-operated
asset teams.
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