Last updated on Sep 12, 2024

Here's how you can evaluate the performance of senior executives in Oil and Gas companies.

Evaluating the performance of senior executives in the oil and gas industry is crucial for the sustainability and profitability of companies within this sector. Given the industry's complexity and the significant impact of global markets, political factors, and environmental concerns, performance assessment goes beyond mere financial metrics. You, as a stakeholder or board member, must consider a wide range of factors to gauge whether leadership is effective and aligned with both short-term and long-term goals.

1 Financial Metrics

One of the primary ways to assess the performance of senior executives is through financial metrics. These include revenue, profit margins, return on investment (ROI), and cash flow management. In the oil and gas industry, where capital investments are significant and the market can be volatile, monitoring how executives manage financial health is key. You should look for a track record of prudent financial decisions that balance risk and reward, and an ability to navigate the cyclical nature of the industry while maintaining a strong balance sheet.

Add your perspective

Syed Fadzil Syed Mohamed

Fellow of The Institution of Engineers, Malaysia (FIEM)
Report contribution
I've discovered that judging top executives in the oil and gas industry necessitates a particular perspective. Engineering executives in this industry must combine technical expertise with strategic insight. They should encourage an innovative culture by encouraging teams to come up with cutting-edge solutions to complicated problems. Strong governance is also essential for adhering to safety standards and environmental requirements. The finest executives I've met motivate their technical teams to push the envelope while retaining the highest levels of integrity and operational excellence. Their leadership has a direct impact on our ability to create robust, efficient, and sustainable projects that will change the future of energy.

Like
Alex Parks

Managing Director at Prominence Energy Ltd
Report contribution
My tip for evaluating the commercial and economic viability of a deal. Many people apply a "low commodity" price scenario, and that is often a base level oil price ie $40/bbl or similar, but rarely does this run long term. At critical junctions in a project, for example the point of maximum CAPEX outlay or maximum debt draw down, just prior to first production, what happens to your project economics if there is a price crash and gradual (6 month) recovery?

Like
Sabit Ali

Terminal Incharge at Max Fuels Private Limited with expertise in Terminal Operations | IOSH Certified | PEC Registered Engineer | Technical Article Writer | Content Creator | Social Media Marketing Expert
Report contribution
Evaluate senior executives in Oil and Gas by assessing their leadership in achieving financial targets, driving operational efficiency, and managing risks. Consider their ability to innovate, navigate regulatory challenges, and maintain safety standards. Employee engagement, strategic decision-making, and stakeholder relations are also key indicators of their performance.

Like

2 Operational Excellence

Operational excellence is another critical area for evaluating executive performance. This involves looking at how well the company's operations are managed in terms of safety, efficiency, and productivity. In oil and gas, this means scrutinizing how executives handle drilling operations, resource extraction, and supply chain management. It's essential to consider their commitment to safety standards and environmental regulations, as these factors significantly affect the company's reputation and legal standing.

Add your perspective

Alex Parks

Managing Director at Prominence Energy Ltd
Report contribution
The cheapest and safest way to do oil and gas operations over the long run is to "do it right the first time". That means use the right equipment, the right people and the right well-thought-out plan.

Like

3 Strategic Vision

A senior executive's strategic vision for the company is a fundamental aspect of their performance evaluation. This includes their ability to identify growth opportunities, such as new markets or technologies, and to steer the company through industry downturns. You should assess how well they have prepared the company for future challenges and opportunities, including energy transition and sustainability initiatives, which are increasingly important in the oil and gas sector.

Add your perspective

4 Leadership and Governance

Leadership and governance are vital components of an executive's performance. This encompasses their ability to lead teams, inspire innovation, and uphold strong corporate governance practices. In the oil and gas industry, where operations can be spread across different regions and involve various stakeholders, effective communication and leadership are crucial. You should evaluate how executives foster a company culture that promotes ethical behavior, transparency, and accountability.

Add your perspective

5 Risk Management

Risk management is particularly important in the oil and gas industry due to the high stakes involved in exploration and production. Senior executives must demonstrate an ability to anticipate, mitigate, and manage risks effectively. This includes environmental risks, geopolitical instability, and market volatility. You should examine how executives have handled past crises and whether they have established robust risk management frameworks to protect the company's assets and reputation.

Add your perspective

6 Stakeholder Engagement

Finally, stakeholder engagement is a significant aspect of an executive's performance. This means evaluating how well they manage relationships with investors, governments, local communities, and employees. In the oil and gas industry, social license to operate can be as crucial as financial performance. You should consider how executives communicate with stakeholders, their responsiveness to concerns, and their ability to build trust and secure support for the company's operations.

Add your perspective

Alex Parks

Managing Director at Prominence Energy Ltd
Report contribution
See the bigger picture and reach the right solution in an innovative way. In a contractual dispute between the oil companiesâ€™ partnership and FPSO (Floating Production Storage and Offtake Vessel) provider, the FPSO provider was losing $60,000 per day in â€œday rateâ€ due to lack of performance. As a new company the FPSO provider was facing insolvency without the day rate. However, the oil companies were losing $1million a day in revenue through not flowing oil to the FPSO. My solution was to second my â€œbest FPSO manâ€ out to the vessel on a â€œno prejudiceâ€ basis for 6 weeks and pay the day rate. The FPSO started to perform, and the gaps in their operational procedures and HS&E performance were addressed. Win-Win

Like

Directory

Here's how you can evaluate the performance of senior executives in Oil and Gas companies.

1

2

3

4

5

6

1 Financial Metrics

2 Operational Excellence

3 Strategic Vision

4 Leadership and Governance

5 Risk Management

6 Stakeholder Engagement

Oil & Gas

Rate this article

Thanks for your feedback

More articles on Oil & Gas

More relevant reading