IIPM PUBLICATION
And here lies the catch – the
companies should expand more and more to champion the cause of economies of scale, as the costs of operation otherwise would not lower on their own. In the past couple of years, the cost of employing a drilling rig in water-bodies has increased from $200,000 per day to $500,000 per day! As Sarah Hunt, Analyst, Capital Management Associates also agrees, “… what is important is to elevate production volumes, so that the oil companies are safe even if the oil prices fall down to the $35- $40 per barrel range and cost inflation is taken care of.” Hence, with the impending decrease in the prices of oil, the profit margins lie in great danger even for the Cyclops of the oil industry.
Therefore, the oil giants have to ensure that capital spending must yield higher outputs and that Return on Gross Invested Capital (ROGIC) should be raised from the current level of 2% to industry standard of 5-6%. Oil companies need to understand that the situation, however bright it appears at the moment, will definitely depreciate in the near future and for that, all the companies in the industry have to collectively gear up!
Read Complete IIPM Article, Click on IIPM Article
Source :- IIPM Editorial, 2006, Editor - Prof. Arindam Chaudhuri
For more IIPM info, Visit below....
http://iipm-power.blog.co.uk/
http://iipm-blog.blog.co.uk/
http://iipm-amazing.blog.co.uk/
http://iipm_media.rediffblogs.com/
http://iipmnational.rediffblogs.com/
http://iipmmarvelous.rediffblogs.com/
http://rupiah.rediffblogs.com/
http://iipmcurrency.rediffblogs.com/
And here lies the catch – the
companies should expand more and more to champion the cause of economies of scale, as the costs of operation otherwise would not lower on their own. In the past couple of years, the cost of employing a drilling rig in water-bodies has increased from $200,000 per day to $500,000 per day! As Sarah Hunt, Analyst, Capital Management Associates also agrees, “… what is important is to elevate production volumes, so that the oil companies are safe even if the oil prices fall down to the $35- $40 per barrel range and cost inflation is taken care of.” Hence, with the impending decrease in the prices of oil, the profit margins lie in great danger even for the Cyclops of the oil industry.Therefore, the oil giants have to ensure that capital spending must yield higher outputs and that Return on Gross Invested Capital (ROGIC) should be raised from the current level of 2% to industry standard of 5-6%. Oil companies need to understand that the situation, however bright it appears at the moment, will definitely depreciate in the near future and for that, all the companies in the industry have to collectively gear up!
Read Complete IIPM Article, Click on IIPM Article
Source :- IIPM Editorial, 2006, Editor - Prof. Arindam Chaudhuri
For more IIPM info, Visit below....
http://iipm-power.blog.co.uk/
http://iipm-blog.blog.co.uk/
http://iipm-amazing.blog.co.uk/
http://iipm_media.rediffblogs.com/
http://iipmnational.rediffblogs.com/
http://iipmmarvelous.rediffblogs.com/
http://rupiah.rediffblogs.com/
http://iipmcurrency.rediffblogs.com/
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