Oil and gas giants BP, Exxon Mobil and Chevron are focused on digital and process transformation efforts as they aim to become more efficient and fund new business models.
All three companies talked about process excellence across operating units on their respective earnings conference calls. Here's the recap.
Murray Auchincloss, CFO of BP, said the company is focusing on downstream efficiency improvements after seeing good results in its upstream business. BP has an upstream business that extracts oil and gas out of the ground, a refining business that sells products (downstream) and another that sells hydrocarbon-based products.
"We spent 5 years streamlining to one financial system inside the upstream, enables us to now deep dive and task mine and knock 30% to 40% efficiency or dis-efficiency out of the upstream. We'll have a 5-year program to go invest in the downstream now, synthesizing the back office, getting onto a single system, put task money on top of it," he said.
Auchincloss added that BP will maintain a "relentless focus on cost efficiency, investment in digital and agile ways of working." BP is expecting to deliver cash cost savings from its reinvent BP transformation program of $3 billion to $4 billion by 2023 relative to 2019.
Darren Woods, CEO of Exxon Mobil, said the company is bringing together its process excellence knowhow across multiple businesses. A focus on safety processes years ago highlighted how Exxon Mobil could aggregate the experts across the company, said Woods.
Woods added that Exxon Mobil was bringing together centers to tackle everything from maintenance to workflows to technology. The approach improves performance and efficiency. He added that the same approach is being directed at costs. "There's this opportunity to consolidate expertise and then leverage that across all of our operating companies," said Woods.
He also outlined how Exxon Mobil would expand its process improvement at scale approach.
"We have technology functions within each of our companies. We're bringing those things together, same with engineering. And we, again, expect to end up doing things much more cost efficiently for much more effect. The savings that we see going forward are really the result of a lot of different things being applied across a huge scale of our operations to significantly reduce cost.
There are other opportunities in the future. Think about supply chain, think about some of the financial transactions as we've, over the course of 2018 and 2019, realigned our businesses and work processes so that now, as you look across our different businesses, we're conducting businesses in a very similar back-office approach. That gives us an opportunity to capture the synergies that exist between those.
We kind of open the doors between the different businesses across our corporation, take the best that each has to offer, bring those together and come up with an answer that's better than any one on its own."
Chevron CEO Michael Wirth said on the company's fourth quarter earnings conference call that the company is capturing margin across its operations. Wirth said:
“We're working across the value chain to capture more margin. That's both in the downstream and in the upstream, a lot of self-help initiatives in the downstream. Finding ways to improve efficiency and productivity across all of our operations is what is driving the improvement. And it's really rolling up your sleeves and doing this the old-fashioned way. And it's a lot of little things that you stay very focused on.”