• Tuesday, July 16, 2024
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ACCA outlines survival strategy for oil, gas firms as revenue dips


Disturbed by the declining revenue in the oil and gas sector due to the current plummet in oil prices globally, the Association of Chartered Certified Accountants (ACCA) has tasked companies in the sector to firmly manage their costs, funding, growth and externalities, if they must remain afloat in this very volatile period.

In a new report titled: “Four areas every Oil & Gas chief needs to master if they want to weather the sector’s ‘Perfect Storm”, the prominent global financial institution explains that with oil prices tumbling to $33 dollars per barrel, and further drops in price not out of the question, the risk of going under is now very real for many oil and gas companies.

“The key to navigating the choppy waters we are currently experiencing in the oil and gas sector is good management of growth, costs, funding and externalities. Get those four factors under control and you give your organisation the best chance of success,” Toyin Ademola, head of ACCA Nigeria, said in the report.

According to the association, to manage growth efficiently, companies will need to identify and postpone projects with a high degree of uncertainty; seek partners to share in the risk – and of course, reward of projects and if possible, explore opportunistic growth via acquisition in areas with room for consolidation.

While to manage cost, the institute believes it is crucial for firms to concentrate their asset sales on those not central to long-term strategy, as organisations with a strong core focus are always better prepared in times of extreme stress or volatility.

To raise funding, the report stated that though it is currently looking like it’s all about survival at the moment, it is important that organisations do not lose sight of a credible growth story for the longer-term.

“To give your organisation the best chance of attracting funding, ensure the security of your current income stream, even if it is reduced,” the institution said.

Adding that firms should also explore non-debt options for funding as minimising risk and exposure has become critical.

As part of efforts to manage externalities, organisations are expected to become a clear and respected voice on key sector issues such as the advocating role of government, whether via regulations and global transparency frameworks, or tax incentives to support reduced revenues.

These strategies, the association says if effectively implemented should help business chiefs successfully steer their organisations through the challenging period.

ACCA is the global body for professional accountants. Its aims are to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world; people who seek a rewarding career in accountancy, finance and management.