Crisis management essentials for Covid-19April 6, 2020
Thomas Maher, president of Apex International Energy, talks to The Energy Year about how the COVID-19 outbreak is impacting the company’s operations, lessons the industry can learn from the experience and opportunities for public-private co-operation to fight the pandemic. Apex International Energy is an independent E&P company focused on Egypt.
What steps is your company taking to mitigate the risks stemming from the COVID-19 pandemic and to protect your organisation?
Fortunately, we are a relatively small company. We have about 20 employees in Egypt and another 12 in our Houston office. All of our Houston personnel transitioned into a remote-work environment a couple of weeks ago. We have recently adopted the same remote-work schedule in Egypt too, and we only come into office when emergencies arise.
Since we are not a large organisation, it is fairly easy for us to set up and work in an environment of social distancing. For the most part, everyone is working from home and we do not have any employees that tested positive for COVID-19 within the company [as of April 3].
We were actually involved in drilling operations until March 10 in Egypt, and we finished drilling one of our wells just before the first COVID-19 cases were diagnosed and quarantines put in place across the country. Fortunately, we do not currently have any ongoing field operations for which limited movement of personnel and equipment would be a big issue.
We are obeying all the protocols that the Ministry of Health and other relevant agencies have put in place. We are also under a night-time curfew imposed by the Egyptian government, although that may soon turn into a full curfew as the infection rate increases. We are prepared to react if this happens.
Does the current crisis present an opportunity to identify strategies to improve business productivity and enhance operational efficiency?
There are always some costs that can be reduced and more efficiencies that can be achieved. However, since most companies adopted severe cost-cutting measures after the oil price crash in 2014 and 2015, there may not be as much room for significant reductions.
We still have four exploration wells that we need to drill under our production-sharing agreement with the Egyptian government, although we recently made the decision to put that task off until the fourth quarter of 2020 for two reasons. The first is to get better insight on how oil prices will evolve going forward and the second is to see what additional costs can be cut out of the system in the next six months, rather than continue to drill in the current environment.
Everything is starting to move more slowly in the field because of COVID-19. Companies will have to start adjusting their operations accordingly, and we will have to accept that things will not be quite as efficient out there as they normally are.
Many say big data and digital infrastructure can help us through COVID 19. How do you think COVID-19 can help companies realise the benefits of fast-tracking the digital transformation?
The bigger a company is, the more benefit it will probably get out of big data and digital infrastructure, both of which can help us through COVID-19. In our case, digitalisation will not be too impactful, at least for now, given our limited number of people and operations at any one time. We are still in the stage of exploration drilling and we do not yet have production operations.
We are also heavily involved in the mergers and acquisitions market, and we are looking for opportunities as they arise in the current environment. There may be some distressed sellers out there or companies with shareholders that are looking to take advantage of some additional funding. We continue to keep a close eye on such opportunities that may emerge from the crisis.
In your view, what have been the keys to effective crisis management so far?
The number one key is obviously protecting the health and wellbeing of our staff and contractors that work with our company in some capacity. Regarding business continuity, what the current experience gives us is preparedness to cope with similar situations in the future.
We had a major storm here in Egypt a couple of weeks ago that also caused some serious interruptions to our business and to the country’s economy as a whole. So, I believe that we need to get accustomed to dealing with similar occurrences in the future, whether that be because of pandemics, economic distress or natural disasters.
What is your take on the Egyptian government’s emergency response to the COVID-19 outbreak?
I was very happy to see that the government has been much better equipped to make important decisions and react quicker than they have been in the past.
The industry organisation I chair, Egypt Oil & Gas Technical Committee, recently started working on two important initiatives with the government and the Ministry of Petroleum following the outbreak of COVID-19. We have developed a COVID-19 emergency response plan working together with the Egyptian General Petroleum Corporation (EGPC) that the ministry has shared with all of its joint venture companies. The plan will allow the entire oil and gas industry to pursue a more consistent approach to coping with the crisis than it otherwise would have by implementing different approaches to the challenges arising out of this crisis.
We have also put in place a CSR initiative that aims to help the Ministry of Petroleum and the Ministry of Health raise awareness and funding for medical supplies and coronavirus treatments. Initiatives such as these have already helped us develop closer relationships with the government. It has really been a mutual partnership. Communication is a lot better and actions seem to be quicker and more efficient than they used to be. I think the government is heading in the right direction.