Canadian oil and gas reorganizations
From surviving to thriving in challenging times
Have recent reorganizations in the oil and gas sector achieved their desired results?
In December 2016, EY, in association with the University of Calgary’s Haskayne School of Business — Executive Education, conducted a survey of more than 70 organizations in Canada’s oil and gas industry to gain insight into how those organizations responded to continued low commodity prices.
Globally, more than 350,000 people have lost their jobs in oil and gas since prices began to slump in mid-2014.1 In Alberta alone, the industry has seen job cuts of nearly 30,000 since the fourth quarter of 2014.2
With the boom and bust cycles of Canada’s oil and gas patch, most people today have been through some kind of reorganization involving restructuring and/or headcount reductions. If these events are mismanaged, they can be confusing and miserable experiences for those involved and impacted.
Of our survey respondents, whose organizations come from a wide range of sizes from across the sector, 80% have reduced headcount over the last two years. Of those, 64% took the opportunity to restructure their companies — shifting work, streamlining processes or consolidating areas, functions or business units.
Many respondents reacted with a focus on short-term survival, which isn’t surprising given the intense pressures to manage costs. While the majority of respondents reported high levels of success with their reorganizations, many indicated that there are further changes to come.
With two years of low oil prices behind us, now is an appropriate time to take stock of what has worked, what hasn’t worked and what energy organizations see as the best way to thrive in the future. Whether oil prices continue to recover or downward pressure on oil prices prevails, the lessons learned from the past two years of reorganizations can be applied to any future changes organizations will have to make.
EY is excited to build upon our previous work with the Haskayne School of Business in the innovation space, leveraging the advanced insights our association can provide. In this report, we’ve summarized the findings from our survey responses and identified trends and common success factors by breaking responses down by not only company size and industry sector, but also by self-assessed levels of reorganization success.
- Industry response
- Structured approaches
- Tough decisions
- Our methodology
1 “Global Oil And Gas Job Losses: 350,000 And Counting,” Oilprice.com website, http://oilprice.com/Latest- Energy-News/World-News/Global-Oil-And-Gas-Job-Losses-350000-And-Counting.html, 12 May 2016
2 ”Labour Market Bulletin - Alberta: December 2015,” Government of Canada website, http://www.jobbank.gc.ca/content_pieces-eng.do?cid=8704, December 2015