Asset managers of non-operated joint ventures (NOJVs) in the oil and gas sector are under the microscope in today’s environment and struggling to prove their teams’ value to their corporate bosses and shareholders. The precipitous drop in oil prices is forcing the supermajors like ExxonMobil, Chevron, and BP to put tremendous focus on extracting value from their NOJVs. Since 30 to 70% of most oil and gas companies’ upstream production volume comes from NOJVs, there is simply too much at stake to assume the operator is doing all it can to extract the asset’s full value.

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Asset Team Time Allocation and Activity Costing
(ATAVA)
Company Report for Major Oil Co’s GBC Asset
Prepared for John Smith (Asset Manager)
Report for Major Oil Company’s GBC asset
May 12, 2016
Major Oil
Company

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Current Contact
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Time Allocation and Activity Costing
• Team invests ~75% of its total time and ~56% of its costs on its 4 core KFAs.
• The largest single investment against a KFA goes toward near-term cost reduction, which
seems appropriate in this low price environment.
• Could investment against the PSA renegotiation KFA be reduced by farming this out to
another non-operating partner, given that it is not a core competency of the asset team?
• Team only invests ~18% of its time and ~15% of its costs into long-term planning. Should
this be increased? Many asset teams underinvest here.
• Team spends 19% of its time or over $500,000 on internal reporting – much of it on
translating data into parent company formats. Can this be reduced?
• Team spends 19% of its time interacting with the Operator and partners – much of this
through committee meetings. This seems appropriate.
SUMMARY: INSIGHTS AND OPPORTUNITIES FOR GBC ASSET TEAM
Asset Profile and Posture
• Asset Manager losing 20% of an FTE when comparing presumed asset team time
dedication to self-reported time dedication. Does this have budget implications?
• Perception of asset performance differs materially across team, but generally positive. In
this price environment, is that the right mindset?
• Asset team confident it can drive change via the Operator, but very different views of value
at stake. This suggests confusion around size of opportunity.
• Some want to increase team’s involvement posture and level of activism, but given small
ownership stake, number of other participating IOCs, and team staffing level, a more active
posture is probably not appropriate.
Network Analysis
• Team relies heavily on Asset Manager – significant contact today yet still desires more.
May need to reset expectations of autonomy.
• Team desires more access to Mike Lee (Operator)], Brandon Jones (Operator), Reg
Moore (IOC3), and Jane Park (NOC) – only has limited access. Possibly an opportunity to
improve influence and drive change?
• Team has sparse network of contacts in Operator and partners. It may be worth
developing more relationships to avoid single of point contact failures.
Near-term cost
reduction
Prioritization of new
investments
PSA renegotiation
Updates to life of field plan
Other goals
Unaccounted for
time
CONFIDENTIAL
DISGUISED REPORT: MAJOR OIL COMPANY
Value at Stake
Abilitytodrivechange

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ATAVA
Asset Profile and
Posture
Time Allocation and
Activity Costing
Network Analysis
3
4
3
3
2
6
5
1
1
5
1
2
4
3
5
5
1
1
1
Overall performance of the asset
HSE performance (e.g., injury rates, environmental incidents)
Financial and cost performance
Operational performance (e.g., production levels, uptime)
Project delivery performance
Assurance and risk management performance
Commercial performance
Distribution of asset team responsesPerformance metrics
PERCEPTION OF ASSET PERFORMANCE
Ratings of performance on key metrics
Source: Water Street Partner
CONFIDENTIAL
DISGUISED REPORT: MAJOR OIL COMPANY
Key takeaways: Perception of asset performance differs noticeably
across team. Overall, perception of performance is generally good
with exception of project delivery. In this difficult environment, is this
the right mindset?
Substantially exceeded
Moderately exceeded
Met
Moderately underperformed
Substantially underperformed
Asset Manager

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ATAVA
Asset Profile and
Posture
Time Allocation and
Activity Costing
Network Analysis
Asset team assessment of itself and Operator
Average of responses
Asset team self-assessment
Individual responses
PARTNERING HEALTH ASSESSMENT
Evaluation of asset team and Operator on key JV health attributes
Source: Water Street Partner
CONFIDENTIAL
DISGUISED REPORT: MAJOR OIL COMPANY
Key takeaways: Team views itself as performing better on all joint
venture health attributes than the Operator. This could be
symptomatic of an unhealthy relationship. You may want to consider
performing a governance self-assessment to address this.
Excellent
Good
Mixed
Poor
Terrible
Asset Team
Operator
Excellent
Good
Mixed
Poor
Terrible
Clarity of intent
Long-sighted
view
Alignment
Cultural
sensitivity
Transparency
Reasonableness
and fairness
Accountability
Speed
Engagement
Creativity
Trustworthiness
Resource
efficiency
1
1
2
2
2
2
1
1
1
4
2
1
2
4
4
4
6
7
5
5
4
5
4
7
3
2
2
2
2
2
3
1
2
Clarity of intent
Long-sighted view
Alignment
Cultural sensitivity
Transparency
Reasonableness and fairness
Accountability
Speed
Engagement
Creativity
Trustworthiness
Resource efficiency

5. © Water Street Partners. All rights reserved 4
ATAVA
Asset Profile and
Posture
Time Allocation and
Activity Costing
Network Analysis
TEAM MEMBER TIME AND COST BY GOAL
Goal specific time and cost by team member
Source: Water Street Partner
CONFIDENTIAL
DISGUISED REPORT: MAJOR OIL COMPANY
Key takeaways: Significant investment in cost reduction makes
sense in this price environment. On the other hand, the PSA
renegotiation is costly to pursue, but not one of GBC’s strongest
capabilities. Can this goal be farmed out to partner asset teams?
Total Hours
Total Cost
Accounted
for time
Unaccounted
for time
Today’s Focus
Percent of time on each goal: Near-term cost
reduction
Prioritization of new
investments
PSA renegotiation Updates to life of
field plan
Other goals
Asset Manager 7% 10% 15% 1% 67%
Technical Manager 10% 20% 10% 25% 35%
Senior Drilling Engineer 20% 5% 0 20% 55%
Facilities Engineer 30% 50% 0% 20% 0%
Principle Commercial 55% 0% 15% 15% 15%
Operations Manager 20% 30% 0% 10% 40%
Economic Anyst 0% 0% 80% 20% 0%
Performance Management 10% 0% 0% 0% 90%
Result’s of Interest
2,716
$500K
$300K
$350K
$400K
$350K
1,719
1,736 1,938 1,871