Tag Archive for corporate restructuring

Prospering in oil’s tough times. A lesson even for rail managers

A Bloomberg special report on superior executives — Jun 10, 2015

Apache Corp. CEO John Christmann took charge of one of the world’s biggest shale producers in the dark days of the oil market crash in January.  He signed on to execute to a corporate makeover.

RESULTS:

He slashed cash costs — making the company much healthier during a period of over supply. There is a lesson for rail managers in this business story.

To read the entire article, go to http://bloom.bg/1FJLIpC

His leadership turned the company into a “ruthlessly efficient oil production machine”.

With the changes, Apachie’s competitive business can now thrive with $50-a-barrel oil prices. The company is now making more cash from operations than it is spending. That compares to the 2 years preceding the 2014 oil market crash were cash outlay significantly exceeded cash income. That was a poor strategic plan as global oil dropped from the $100+ a barrel range.

Apache reduced its operating drilling rigs initially by 70%

Apache’s service costs dropped 40%. Their competition had a goal of just 25%

Reduced breakeven price — with a 10% profit — to about $42 a barrel.

LESSONS for OTHER INDUSTRIES like railroads

Others like big rail companies need to execute similar changes in tough times. Like Stan Crane did as CEO & Chairman of Consolidated a Rail back in 1981. Mr Crane declined further government subsidies back then and he and his management team slashed their cost of doing business. Conrail thrived. From a million a day in losses, it turned around to earning $500 million in operating income on only half of the former projected business traffic.

CHALLENGE

Are rail companies like Vale rail, UBTZ, Transnet Rail, China Rail up to the challenge as rail mangers in tough times?