| STAKEHOLDER
| STAKEHOLDERS’ NEEDS
| ALIGNED/CONFLICTING NEEDS
|
| Parent Company
| · Profit/cash flow/growth in value of share-holding, depending upon requirements/strategy
· Information and reporting
| · Company will be aligned with group’s financial needs. It will want to achieve growth and pace capital expenditure
· The management of capital spend by parent might mean company is operating within constrained Capex, which could affect company’s ability to grow and make the right investment decisions
|
| Shareholders
| · Acceptable return on investment combining dividend (constant or growing) and capital growth
| · Aligned – company also will wish to achieve growth
|
| Banks/External finance companies
· Project funding based on field economics
| · Security over assets/satisfy bank covenants
· Information and reporting
· Capacity to generate cash
· Maintenance of credit rating
| · Potential conflict over balance of sharing risks and rewards
|
| Partners
· Project-risk sharing with partners is fundamental
| From an operator’s point of view:
· Prompt payment of cash calls
· Budget approval/AFE adherence
From another partner’s point of view:
· Influence
· Efficient operators
· Timely and accurate reporting
· Expect certain technical, operational, and safety standards
· Perception of company’s treatment of partners will vary from partner to partner
· Good working capital management
| · Partners reduce the key business risks (exploration, technical, price, and commercial) to company
· There might be conflict between company and its partners over project take
· Company might have to compromise its interests due to partners’ needs
· Uncertainties might be more difficult to manage, particularly in emerging markets or where company is not the operator
|
| STAKEHOLDER
| STAKEHOLDERS’ NEEDS
| ALIGNED/CONFLICTING NEEDS
|
| Parent Company
| · Profit/cash flow/growth in value of share-holding, depending upon requirements/strategy
· Information and reporting
| · Company will be aligned with group’s financial needs. It will want to achieve growth and pace capital expenditure
· The management of capital spend by parent might mean company is operating within constrained Capex, which could affect company’s ability to grow and make the right investment decisions
|
| Shareholders
| · Acceptable return on investment combining dividend (constant or growing) and capital growth
| · Aligned – company also will wish to achieve growth
|
| Banks/External finance companies
· Project funding based on field economics
| · Security over assets/satisfy bank covenants
· Information and reporting
· Capacity to generate cash
· Maintenance of credit rating
| · Potential conflict over balance of sharing risks and rewards
|
| Partners
· Project-risk sharing with partners is fundamental
| From an operator’s point of view:
· Prompt payment of cash calls
· Budget approval/AFE adherence
From another partner’s point of view:
· Influence
· Efficient operators
· Timely and accurate reporting
· Expect certain technical, operational, and safety standards
· Perception of company’s treatment of partners will vary from partner to partner
· Good working capital management
| · Partners reduce the key business risks (exploration, technical, price, and commercial) to company
· There might be conflict between company and its partners over project take
· Company might have to compromise its interests due to partners’ needs
· Uncertainties might be more difficult to manage, particularly in emerging markets or where company is not the operator
|
| Regulators/government
· Covers the whole range of contracts (including granting of licenses and development consent), operational supervision, safety and environmental, and taxation
| · Tax revenues
· Efficient use of resources
· Solvability of E&P companies
· Employment and training
· Compliance with law and regulations
· Timely and accurate reporting
· Compliance with license terms (within acceptable time frame)
· Local economy
· HSE management
| · Might be conflicting needs with company and supplier/subcontractor chain over share of take (contract/license terms and tax regime)
· Conflict might exist between company and its suppliers/subcontractors over safety and environmental needs (different cost-benefit perspective)
· Company’s standards should be aligned with regulatory requirements
|
| Public/local communities/environmental organizations
· Could include “whistle-blowers” from inside company
· Decommissioning, pollution, and so on
| · Watchdog over activities
· Information and reporting
· Influence
· HSE management
| · Conflict most likely – public opinion might want action at any cost
|
| Executive Committee
| · Control over the business – understanding of each business units performance (existing and future) and issues faced
· Accurate and timely information
· Open channels with business units
· Maintenance of strong internal control
· Information and reporting
· Individual executive needs
· Reputation
· Reward
· Risk management
· Recognition
· Career development and progression
· Security
· HSE management
· Open internal communication
| · Needs of executive committee should be aligned with those of the company it manages
· Potential conflict depending upon motivations of individual executives
|
| · Control over the business – understanding of each business units performance (existing and future) and issues faced
· Accurate and timely information
· Open channels with business units
· Maintenance of strong internal control
· Information and reporting
· Individual executive needs
· Reputation
· Reward
· Risk management
· Recognition
· Career development and progression
· Security
· HSE management
· Open internal communication
| · Needs of executive committee should be aligned with those of the company it manages
· Potential conflict depending upon motivations of individual executives
|
| · Reward
· Professional experience and career
· Security
· Safety
· Information and reporting
| · Changes in company’s business could affect morale
|
| · Competitive prices
· Reliable quality of product
· Security of supply (dependant on market openness)
· Information and reporting
· Flexibility of supply
· Ability to renegotiate contract terms (especially gas supply contracts)
| · Prices – although generally set by the market
|
| · Business from Company above a certain minimum rate of return
· Might be dependant on the company for business
· Preferred status
· Long-term relationship
· Reliability of payment
· Realistic demands
| · Value of company’s business could lead to corruption
· Suppliers might not comply with quality/safety/environmental standards due to cost and/or time pressures. Suppliers might reduce the standard of their work over time to maintain/increase margins
· The development of “partnering” arrangements could lead to over dependence on certain suppliers and loss of flexibility (financial impact of key long-term supplier going out of business?). In the long run, this could reduce competition and company’s ability to control costs. In addition, it could lead to a loss of technological innovation due to the smaller, innovative players.
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