Cash in the barrel 2013

Working capital performance improved in 2012

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Our review of global oil and gas companies’ WC performance showed their C2C was down 3%, after a similar drop the year before.

But these results mask significant variations between segments and companies.

Only one of the four segments in the industry — and only half of the companies analyzed in the study — reported improved results for the year. There were also major variations in the WC trends seen in different companies within each segment and in the degree of change they achieved during the year. Significantly, the top performing companies posted a reduction of 15% in cash-to-cash (C2C), while the worst showed an increase of 11%.

These overall results were achieved against an industry background in which oil prices remained almost unchanged in 2012 compared with 2011, but they were down 6% in the final quarter of 2012 compared with the same period of 2011.

Table 1. Change in WC metrics, Q412 vs. Q411

Industry Q412 Change Q412 vs. Q411
DSO 37 -5%
DIO 29 1%
DPO 37 -2%
C2C 29 -3%

Table 2. Change in C2C by segment, Q412 vs. Q411

C2C Q412 Change Q412 vs. Q411
Integrated 25 -9%
Independent E&P 2.7 up 2.5 days
Independent R&M 27 1%
Oilfield services 106 11%
Industry 29 -3%

Note: DSO (days sales outstanding), DIO (days inventory outstanding, based on FIFO), DPO (days payable outstanding) and C2C (cash-to-cash), with metrics calculated on a sales-weighted basis

Source: EY analysis, based on Q4 publicly available financial statements

Variations in the industry’s capital expenditure have also played a part, with companies reacting quickly to changing conditions in the oil market by accelerating, slowing or deferring various projects and programs.

Figure 1. Change in the industry’s C2C and oil prices, Q407–Q412

EY - Change in the industry’s C2C and oil prices, Q407–Q412

Source: EY analysis, based on publicly available financial statements