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Well delivery in 2020 and beyond

E&Ps increasingly need to spend capital more efficiently to win

Three key things have changed for unconventional operators in the past few years:

  • Oil and gas prices declined by ~40% and appear to be lower for longer (e.g. $60 oil)
  • Major land grabs and exploratory activity is over and operators are shifting to development of core acreage
  • Institutional investors are requesting higher dividends - and E&Ps are more pressured to not only generate free cash flow but adequately allocate earnings between development, share buy-backs, and dividends
    • Once capital is allocated, E&Ps must have more disciplined operations that lead to higher production and lower costs
    • Over the past few years, many E&Ps have taken action to minimize G&A or personnel costs
    • In 2020 and beyond, the focus needs to be on capital and LOE to maximize efficiency

Introducing the manufacturing model...

Elements of the manufacturing model

The goal of the manufacturing model is to make operations boring, driving costs lower and lower. In the manufacturing model, with its origins tied back to the days of Henry Ford, operations are standardized as much as possible. No more expensive, volume chasing strategies. Instead, the successful E&Ps of tomorrow will develop an end-to-end well-delivery process that integrates each workflow into a coordinated and efficient operation—from planning to plug and abandonment.

E2E Flow Model

A common understanding of the value steam, capacity, buffers, constraints, and demand signals.


Drill the same well, the same way, on the same pad... every time.

Consistent Operating Rhythm

Operations are executed and handoffs occur seamlessly with a consistent lead time, duration and cadence.

Integrated Planning

Longer term planning horizon (18+ month) that is integrated across functions and operating areas.

KPIs & Data

Capability to objectively know when you're of trend, identify improvement opportunities, and measure progress.

Continuous Improvement Mindset

The organizational capability to sustain the model, identifying incremental opportunities and driving year over year improvements.

Benefits of the manufacturing model at the wellhead...

Less nonproductive time

  • Drilling more feet and completing more stages per day
  • Lock in schedule further in advance and limit “fire drills”

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Reduced waste

  • Avoid “overbuilding” of pads while drilling and completions activity lags behind
  • Reduced water hauling costs with fewer last minute completion schedule changes

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  • Efficient ramp up/down across entire value chain versus “cutting rigs”
  • Fewer deferrals when drilling outpaces pipe construction

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"The manufacturing model reduces costs and delivers more value to external constituents."

Benefits of the manufacturing model beyond the wellhead...

Supplier Integration

  • Bundle services to enable higher participation from service companies in the full well lifecycle… and allow them to own their efficiencies instead of “taking orders”
  • Contract differently… force collaboration among OFS service lines, with fewer points of contact to manage

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External Confidence

  • More consistently meet production and capital targets
  • Protect the portion of earnings allocated to development versus buy-backs and dividends

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Getting started on the journey to better capital efficiency

Before designing the standards, piloting the process, and implementing across the org. for sustainable performance improvement, the first step is to identify the opportunity and set the vision through the following steps:

Contact us

Mike  Scheller

Mike Scheller

Principal, PwC US

Richard Rose

Richard Rose

Energy Director, PwC US

Blake Baptist

Blake Baptist

Senior Manager, Strategy&, PwC US

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