Change Management

In the face of events that threaten to damage a company’s reputation, companies adopt strategic changes to curb losses (Madura, 2007). The 2010 BP oil spill in the Gulf of Mexico prompted varied changes in the strategies of companies involved in oil trade around the affected region. Devon Energy and Plains Exploration and Production Company (PXP), both listed under the New York Stock Exchange instituted divestiture and strategic changes in their bid to remain competitive in the volatile oil industry.

Devon Energy on its part, transformed to onshore exploration and development by divesting its offshore assets. The company completed two divestitures in the early 2010 receiving $515 million in the process (Fox, 2010). Devon sold an oil field in China and sold its shelf properties in the Gulf of Mexico to Apache Corporation. The company is underwent strategic positioning in which it will now concentrate on onshore assets in the US as well as others in Canada (Fox, 2010). The company timed the sales to avoid undergoing losses in the post oil spill period amidst tighter regulatory environments in the oil industry.

Unlike Devon which opted to divest its assets in the gulf of Mexico, PXP announced it would go into Joint ventures and as well sell its properties in the Gulf of Mexico to raise between $1 and $2 billion (Fox, 2010). PXP executed a securities purchase agreement with Global Energy Partners in which Plains Exploration received $450 million in exchange of 20% equity interest in its offshore operations (Rigdata.com, 2011).

The entry by a company into a joint venture affects its organizational structure as it accommodates the interests of its partner’s management (Madura, 2007). Moreover, the concentration of assets in one area say onshore has ramifications on the potential growth and profitability of the company.

References

Fox, E. (2010, August 9). Devon

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