Cash in the barrel 2012

Working capital results by segment

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In general, our findings indicate that there is a direct relationship between movements in the oil price and changes in the oil and gas industry's C2C performance. However, the strength of this relationship varies between the different core segments.

Relative to 2010, independent R&M companies reported a significant reduction in C2C (down 23%).


For integrated companies, WC results for 2011 showed a slight improvement over 2010, with C2C dropping by 2%. This enhanced performance was driven by inventory (DIO down 5%), while DSO and DPO were up 1% and down 1%, respectively.

However, a minority of integrated companies (5 out of 12) reported lower C2C. Performance varied significantly, partly due to differences in companies' exposure to E&P, R&M and oilfield services.

Since 2003, integrated companies' C2C has increased by 14%, due to a combination of higher DIO (up 44%) and DSO (up 15%), partly offset by rising DPO (up 36%).

Independent Exploration & Production (E&P)

Independent E&P companies posted improved WC results in 2011, with C2C falling by 2.5 days to just 0.4 day. Progress came from both inventory and receivables, partly offset by weaker payables performance. Half of the independent E&P companies analyzed reported lower C2C.

Since 2003, independent E&P companies' C2C has decreased from 9.1 days to 0.4 day, driven by higher DPO (up 25 days, or 42%), partly offset by increased DSO (up 18 days, or 31%). DIO was down 13%, but with the size of the change exaggerated by the relatively low level of inventory inherent in the nature of the E&P business.

Independent Refining & Marketing (R&M)

Relative to 2010, independent R&M companies reported a significant reduction in C2C (down 23%), with two companies out of three posting improved results.

DIO was down 31%, probably reflecting lower levels of physical stocks on the back of deteriorating refining market conditions at year-end. The drop in DIO was partly offset by a corresponding decrease of 20% in DPO, while DSO was slightly lower.

With these latest results, the increase in C2C seen by independent R&M companies since 2003 was much reduced to 13%. DIO and DSO rose by 16% and 6%, respectively, while DPO was up by 11%.

Oilfield services

For oilfield services companies, WC performance improved slightly in 2011 compared with 2010, with C2C down 1%. Half of the companies in this segment reported improved results.

Measuring oilfield services providers' receivables and inventory performance (using DSO plus DIO as a measure) shows a decline of just 1%. These companies' limited year-over-year variation in receivables performance suggests that there was no material change in payment terms with suppliers against a backdrop of uneven pricing conditions for oilfield services. Payables performance remained unchanged.

Since 2003, C2C for oilfield services companies has increased by just 2%. DSO plus DIO gained 4%, while DPO rose by 13%.


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