ogdcl strategy planning

Oil and Gas

Development Co. LtdTerm PresentationManagerial Policy

Presented ByAbdulBaseer

TokhiGR # 112003

Agenda Introduction Current Strategic Direction

External Assessment Internal Assessment Financial Performance Long Term Objectives SWOT Analysis BCG Matrix I-E Matrix QSP Matrix Strategy Implementation

Intro

duct

io n National Oil & Gas Co. of Pakistan. Flagship of the country’s E&P sector. Market leader in terms of reserves,

production and acreage. Listed on four stock exchanges:

Karachi Stock Exchange (KSE) Lahore Stock Exchange (LSE) Islamabad Stock Exchange (ISE) London Stock Exchange (LSE)

Registered OfficeOGDCL House, Plot No.3, F-6 / G-6,Jinnah Avenue, Blue Area, Islamabad.

Head

Offi

ce

Build

ing

Membership PIP (Petroleum Institute of Pakistan) PPEPCA (Pakistan Petroleum Exploration and Production Companies

Association) MAP (Management Association of Pakistan) SPE (Society of Petroleum Engineers) PAPG (Pakistan Association of Petroleum Geoscientist) WWF (World Wild Fund) WEC (World Energy Council)

Awards 30th Corporate Excellence Award 2014. 29th Corporate Excellence Certificate (Map) 2013. CSR Business Excellence Award 2013. Environment Excellence Award 2008-2013. Best Corporate Reports Award 2007-2012.

www.ogdcl.com/UploadFolder/financial/32.DirectorsReport.pdf

http://www.ogdcl.com/UploadFolder/financial/32.DirectorsReport.pdf




Curre

nt S

trate

gic D

irect

ion Vision

To be a leading multinational exploration and production company. MissionTo become the leading provider of oil and gas to the country by increasing exploration and production both domestically and internationally, utilizing all options including strategic alliances. To continuously realign ourselves to meet the expectations of our stakeholders through best management practices, the use of latest technology, and innovation for sustainable growth, while being socially responsible.http://

www.ogdcl.com/ContentPage?id=9Dpk%2bgUmFnmrPxq7ZKqqJA%3d%3d

http://www.ogdcl.com/ContentPage?id=9Dpk+gUmFnmrPxq7ZKqqJA==



Net gas production from 1,173 MMscfd in FY 2014 to 1,311 MMscfd in FY 2015.

Net oil production from 41,330 bpd in FY 2014 to 44,732 bpd in FY 2015.

Increase the number of rigs that we contract from third parties.

Expect to achieve total average production of 283,096 boepd in FY 2015.

Added 29 new licenses to our exploration portfolio.

For FY 2015 19 exploration and appraisal wells, and 16 development wells are targeted.

Plan to increase our 2D and 3D onshore seismic surveys in FY 2015 to 2,745 L. km and 2,075 sq. km.Cu

rrent

Stra

tegi

c Dire

ctio

n

http://www.ogdcl.com/ContentPage?id=9Dpk%2bgUmFnmrPxq7ZKqqJA%3d%3d




Key

Com

petit

ors OGDCL's key competitors in

the exploration business include:BP Plc (BP.L)Pakistan Petroleum Ltd.

(PPL.KA)Pakistan Oilfields

(PKOL.KA) Italy's ENI (ENI.MI).

http://www.ogdcl.com/ContentPage?id=9Dpk%2bgUmFnmrPxq7ZKqqJA%3d%3d




Sour

ces &

Util

izatio

n Of

Inco

me






Expl

orat

ion

Perc

enta

ge






Com

pone

nts o

f Miss

ion

Stat

emen

tComponent Yes/No

Customer NoProduct YesMarket YesTechnology YesSurvival Growth YesPhilosophy YesSelf-Concept YesPublic Image YesEmployees Yes

9 Co

mpo

nent

s of M

issio

n St

atem

ent Products/services: oil and gas Markets: to the country Technology: the use of latest technology Survival Growth: To continuously realign

ourselves to meet the expectations of our stakeholders

Philosophy: use of latest technology, and innovation

Self-Concept: To become the leading provider of oil and gas to the country

Public image: while being socially responsible.

Employees: best management practices

Modi

fied

Miss

ion

Stat

emen

tTo become the leading provider of oil and gas to the firms and individuals of the country by increasing exploration and production both domestically and internationally, utilizing all options including strategic alliances. To continuously realign ourselves to meet the expectations of our stakeholders through best management practices, the use of latest technology, and innovation for sustainable growth, while being socially responsible.

Exte

rnal

Th

reat

s Economic ForcesCrude Oil Prices, Exchange rate Social, Cultural, Demographic and NE

Forces Political, Governmental, and Legal

ForcesLegislation, Law and Order Technological Forces Competitive ForcesBP.L Pakistan Petroleum Ltd Pakistan OilfieldsItaly's ENI

External Assessment

Competitive Profile Matrix

Critical Success Factor

Weight Rating Score

Quality 0.15 3 0.45

Financial Position 0.25 4 1

Market Share 0.30 3 0.9

Management 0.20 3 0.6

Global Expansion 0.10 2 0.2

Total 1.00 3.15

Weight

Rating

Score

0.12 3 0.36

0.22 2 0.44

0.29 2 0.58

0.27 4 1.08

0.11 1 0.11

1.00 2.57

OGDCL NR

External Factor Evaluation Matrix

Opportunities Weight Rating ScoreMergers or strategic alliances 0.10 2 0.20Market vacated by an ineffective competitor

0.13 3 0.39

Workshops for training and development

0.16 2 0.32

Support of the Ministry of Petroleum & NR.

0.12 3 0.36

Threats Weight Rating ScorePrice wars with competitors 0.09 3 0.27Tuff Competition 0.12 2 0.24Globalization that bring strong companies in PK

0.20 3 0.60

Competitors have superior access to channels of distribution

.08 2 0.16

Total 1.00 2.54

Inte

rnal

Stre

ngth

s &

Wea

knes

ses

STRENGTHS ARE: Largest Oil and gas company in the

Pakistan. Monopoly of the company and having

confidence due to government support. Dynamic & Strong Financial Position due to

the 45 years’ experience. A new, Exploration and innovative of Wells. Best location of business which is choosing

after long process. Quality processes and procedures. Large number of field of oil and gas. Experienced and Technical Staff involving

no. of expert Geologist. Confidence of the Customers.

Internal Assessment

WEAKNESSESS ARE: Lack of marketing expertise. Undifferentiated products (i.e. in

relation to the competitors) Lack of coordination of operations. Government Influence. Untrained Staff. Slow promotion process which

reduces the performance. Lack of Check and balance. Weak quality products (can be

only one of more than one).

Inte

rnal

Stre

ngth

s &

Wea

knes

ses

Internal Assessment

Internal Factor Evaluation Matrix

Strengths Weight Rating Score

Monopoly of the company 0.18 4 0.72Dynamic & Strong Financial Position 0.16 3 0.48

Quality processes and procedures 0.13 3 0.39

Confidence of the Customers 0.12 2 0.24

Weaknesses Weight Rating Score

Undifferentiated products 0.10 3 0.30Slow promotion process 0.12 3 0.36Government Influence 0.10 2 0.20Lack of coordination of operations. 0.09 2 0.18

Total 1.00 2.87

Financial Performance

Crude Oil Thousand barrels

13,20013,40013,60013,80014,00014,20014,40014,60014,800

13,713

14,183

14,734

2011-122012-132013-14

Sale

s of C

rude

Oi

l






Sale

s of G

as

Gas MMcf365,000370,000375,000380,000385,000390,000395,000400,000405,000410,000415,000

381,863

392,513

414,786

2011-122012-132013-14







Sale

s of

LPG

LPG MMcf0

10,00020,00030,00040,00050,00060,00070,00080,000 75,005

41,003

64,088

2011-122012-132013-14







Sale

s of

Sulp

hur

Sulphur Tons0

5,000

10,000

15,000

20,000

25,000

30,000

21,400

14,493

27,707

2011-122012-132013-14







Financial Performance www.ogdcl.com/UploadFolder/financial/32.DirectorsReport.pdf





Profitability Ratios

Gross Profit Margin

67%68%69%70%71% 70%

71%

69%2011-122012-132013-14

Net Profit Margin

36%40%44%48%

49%

41%

48%

2011-122012-132013-14

DuPont Analysis0%

10%20%30%40%50% 42%

32%35%2011-122012-132013-14







Liquidity Ratios

Current Ratio01234567 6.67

2.34.04

2011-122012-132013-14

Acid Test Ratio0

2

4

66.26

2.013.65 2011-12

2012-132013-14

CFO to Sales0%

20%40%60%80%

100%120%140%

59%

125%

63% 2011-122012-132013-14







Activity/Turnover Ratios

Debtor Turnover in Days

0

40

80

120

160

200200

158

1112011-122012-132013-14

Total Assets Turnover Ra-

tio

50%

54%

58%

62%

66%66%

59%

56% 2011-122012-132013-14







Investment/Market Ratios

Price Earning Ratio

0

4

8

127.12

10.789.07

2011-122012-132013-14

Dividend Yield Ratio

0%1%2%3%4%5%

5%4% 4%

2011-122012-132013-14

Dividend Coverage Ratio

0123

3.112.57

3.11

2011-122012-132013-14







Long

Term

Ob

ject

ives

To enhance its reserves and production profile and ultimately maximize value for shareholders up to 2018.

To improve reliability and efficiency of supply to the customer.

Maintain Low Cost Operations by 2020. To excel in exploration, development

and commercialization. Pursue Selective International

Expansion. To improve internal business decision

making and strategic planning through state of art MIS by 2017.

To build strategic reserves for future growth / expansion by 2019.

Accelerate Production Growth.

www.ogdcl.com/about-us/Strategy.htmwww.ogdcl.com/UploadFolder/financial/MDRevwt2011.pdfwww.ogdcl.com/UploadFolder/financial/32.DirectorsReport.pdf

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SWOT Analysis is conducted to identify the organizational strengths (S), organizational weaknesses (W), environmental opportunities (O), and environmental threats (T). Each analysis helps to know that how these elements influence organizational performance.

SWO

T An

alys

is

SWOT Analysis with Actions

Strengths

• Highly Skilled Professionals

• Vast Experience

• Joint Ventures with Foreign Oil Companies Working in Pakistan

• High market cap and revenue

Weaknesses

• Political Influences

• Limited Customer

• Limited Marketing Opportunity

• Inadequate Financing for off-shore drilling

Opportunities

• Expansion towards a multinational Company

• Expansion towards Exploration & drilling Activities

• Marketing Opportunity for LPG & Sulphur

• Off-shore drilling

Maximize strengths to take advantage of opportunities

• Strong Marketing campaign through distributors to make people aware of LPG

• It should go for countries such as Mexico, Saudi Arabia, and Russia where there is a room for O&G Co.

• Bring new finance through bonds for expansion of drilling activities

Resolve weakness, take advantage of opportunities

• Find new markets such as Mexico, Saudi Arabia, and Russia. There are too many customers

• Marketing of the products should be done appropriately

• New stocks should be brought in to finance the off-shore drilling

Threats

• Latest Technology

• Unproductive wells

• World Market

• Safety Issues / Tribal Issues

Maximize the strengths to mitigate threats

• Have proper safety system for the workers on site

• Joint venture with foreign companies to make wells productive

• Improve the public image to have more options for financing new technology

Minimize weaknesses to reduce threats

• Reduce the political influences on the mgt

• Acquire new technology for drilling purpose.

• Remove political influences to concentrate on world market

Bost

on C

onsu

lting

Gr

oup

Matri

xIt aims to identify high-growth prospects by categorizing the company's products according to growth rate and market share. By optimizing positive cash flows in high-potential products, a company can capitalize on market-share growth opportunities.

Crude Oil

LPG

Gas

SulphurBo

ston

Con

sulti

ng

Grou

p Ma

trix

(BCG

)

Inte

rnal-

Exte

rnal

(IE)

Ma

trix

The Internal-External (IE) matrix is another strategic management tool used to analyze working conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based on an analysis of internal and external business factors which are combined into one suggestive model.

I-E M

atrix

EFE = 2.54IFE = 2.87

Quan

titat

ive S

trate

gic

Plan

ning

Mat

rixIt is a high-level strategic management approach for evaluating possible strategies. Quantitative Strategic Planning Matrix (QSPM) provides an analytical method for comparing feasible alternative actions. The QSPM method falls within so-called stage 3 of the strategy formulation analytical framework.

Strategy Selection

QSP Matrix Weight

Attractiveness Score

Total Attractivene

ss Score

Attractiveness Score

Total Attractivene

ss Score

Strengths• Monopoly of the company • Dynamic & Strong Financial Position • Quality processes and procedures• Confidence of the Customers

0.180.160.130.12

3423

0.540.640.260.36

2343

0.360.480.520.36

Weaknesses• Undifferentiated products• Slow promotion process• Government Influence• Lack of coordination of operations.

0.100.120.100.09

2341

0.200.360.400.09

3321

0.300.360.200.09

Opportunities• Mergers or strategic alliances• Market vacated by an ineffective

competitor• Workshops for training and development• Support of the Ministry of Petroleum &

NR.

0.100.130.160.12

3422

0.300.520.320.24

2223

0.200.260.320.36

Threats• Price wars with competitors• Tuff Competition• Globalization that bring strong companies • Competitors have superior access to

channels of distribution

0.090.120.200.08

3224

0.270.240.400.32

3243

0.270.240.800.24

Sum Of Total Attractiveness Score 2.00 5.46 5.36

Market Development

Market Penetration

Requ

ired

For M

arke

t De

velo

pmen

t Strategic Alliance agreement can be

made with:Pemex in MexicoAldress in Saudi ArabiaNorthgas in Russia Global Business Management System

(expansion in ERP) Capital Expansion through Retained

Earnings and Issuance of Corporate Bonds

Strong infrastructure for communication purpose

Expatriate Management (hiring for this purpose)

Strategy Implementation

Thank You