Global Energy Company
This independent energy company is engaged in worldwide oil and gas exploration and production. Core operations are onshore in the US and offshore in the Gulf of Mexico, the Eastern Mediterranean, and West Africa.
The chairman and CEO had a vision to transform the company from a mid-major with $2.3 billion in revenue to operate as a world-class company at a much larger scale. They were one of the best exploration companies in the world, but had limited experience producing the assets they discovered. The CEO wanted to change the company’s growth trajectory by becoming a diversified exploration and production company. As a result, he led the executive team to set unprecedented annual production and safety goals.
The Challenge: Industry Disaster Threatened to Stop Growth in its Tracks
In 2010, an explosion on the Deepwater Horizon Macondo oil well drilling platform set off the largest marine oil spill in US history. Close to five million barrels of oil were released into the Gulf of Mexico. Affecting every company in the industry, total damages from the BP oil spill were estimated at $62 billion.
This industry disaster triggered a deepwater drilling moratorium in the Gulf of Mexico. While figuring out how to grow dramatically as a best-in-class exploration and production company, executives had to make tough decisions about whether to continue exploration and drilling in the Gulf of Mexico when the moratorium was eventually lifted.
The Mindset Shift: Standing for a Strong Future
After several intense meetings about the future, the CEO led the executive team to align on seemingly impossible outcomes. First, despite the drilling moratorium, they remained steadfast in their commitment to deliver their extraordinary production goals for the year. Second, they took a stand that the company would be better off after the Gulf oil spill than before.
Achieving these commitments was a huge challenge that required a transformation in the company’s leadership, organizational mindset, and ways of operating the business.
The Solution: Leading an Innovative Response
The CEO’s aspirations to grow as an industry-leading company created an environment for executives and engineers to take the lead role in resolving the issues that led to the moratorium. Rather than waiting for the largest companies to take charge, the CEO and his leadership team took the lead. As a result, the company achieved breakthroughs in three areas.
The first breakthrough happened when competitors abandoned drilling operations in the region and the executives decided to stay. They utilized the downtime to locate the optimal drilling sites and to be ready to resume drilling the moment they were permitted. This innovative practice has since become commonplace.
The second breakthrough occurred when an engineer from the company convened and led a team of regulators and engineers from several oil companies to invent a new system to prevent future spills. At the same time, several large companies were working on a spill-prevention proposal that would take two to three years and $1.5 billion to develop. With ingenuity and creativity, the company-led innovative solution was designed in three months at a much lower cost.
The third breakthrough was in how the midsize company formed partnerships with key stakeholders to find new ways to protect the environment and allow for industrial development. In contrast to historic tension between oil and gas companies and government regulators, the company’s executives forged strong relationships with regulators based on transparency and collaboration. Because of these strong partnerships, federal regulatory agencies accepted the innovative solution to prevent future spills. Even more impressive, the company received the first permits to resume drilling operations in the Gulf of Mexico.
The Results: Growing “Their Way” Through Industry Leadership
According to the CEO’s successor, the company was proud to lead the industry back to drilling in the deepwater Gulf. By building strong relationships with the EPA and other regulators, the company became known as an industry leader in efficient production, safety, and environmental protection. Their new capabilities and reputation accelerated their growth and expansion.
During a challenging period for the industry, the company sustained exceptional performance by thinking and operating in new ways. As envisioned by the CEO, they expanded their exploration capabilities and became known as an industry leader that produces large, complex projects around the world—safely, on-time, and on-budget. Changing how they approached outsourcing resulted in significant growth and profitability as a best-in-class lead operator with diversified assets.
While achieving breakthrough growth and performance, executives maintained their prized entrepreneurial spirit and values-driven, caring culture that had been at the core of the company’s long-term success.