Organization Design for an Exploration and Production Company
An exploration and production (“E&P”) company with assets in one of the leading onshore basins in the United States underwent a change of leadership. The company had been through a restructuring and multiple portfolio changes in the prior year. In light of these changes, the company engaged Carnrite Group to help validate the corporate strategy, design a new organization structure, and align remaining components of the company’s “Operating Model” to the new strategy and organization structure.
First, we partnered with leadership to validate the corporate strategy. We did this by interviewing each of the senior leaders and other key stakeholders to solicit their perspectives about the company’s strengths, weaknesses, opportunities, and threats. We also explored each leader’s ambitions and priorities for the company. In parallel, we objectively assessed strategy work completed prior to our engagement. Our team facilitated a series of leadership workshops to discuss the business, portfolio, and organization, then align on one vision and strategy. Workshop outputs were used to build a strategic roadmap outlining the imperatives required to communicate and operationalize the strategy.
Once the strategy was validated, we established and partnered with small working teams to design the organization structure and align the operating model. Key activities included:
- Reviewing the existing organization structure
- Designing the new “boxes and wires”, building on options designed previously
- Defining roles, responsibilities, and decision rights for each team in the structure
- Documenting interfaces and handoffs between teams
- Documenting key, cross-functional work processes
- Identifying new capability needs and writing job descriptions for open positions
- Onboarding teams to new and modified positions and roles
- Defining a stakeholder management plan to inform change management needs
- Developing an ESG strategy and writing EHS and ESG policy documents
- Developing materials to communicate changes to the workforce
Additionally, we designed and deployed a culture survey to ensure alignment between the company’s culture and values and the new strategy, structure, and operating model. The results of the survey informed targeted changes to the stated culture and values.
The company’s market valuation has increased nearly 40% since our initial engagement. Following the strategy validation exercise, the company merged its midstream assets into another company, creating substantial shareholder value. It also sold non-core assets in a different U.S. onshore basin, further improving balance sheet strength. The organizational changes resulted in a >35% reduction to cash G&A, while process improvement efforts contributed to a ~10% reduction in lease operating expenses.