Dear Colleagues,
2015 has been filled with many challenges and opportunities. The low oil price environment means that cost management and efficiency improvement are of the greatest importance and urgency to our company, and strong efforts are needed from all personnel across Chevron.
While we have increased our focus on cost management during the year, I am pleased to see that we did not compromise at all on Operational Excellence performance. Our key personal and process safety metrics met the targets, with strong production reliability and efficiency performance. These OE performance achievements are a testament to the world-class commitment and dedication of our workforce. The company has also done very well in managing costs down by about $174 million for C&E and OPEX despite higher well count. We have driven cost reduction efforts through Well Factory optimization, Supplier management, Lean Sigma initiatives, Operations Efficiency Project (OEP) and Project Spring.
Amid all the positives above, it is very unfortunate that we were unable to deliver a few significant other areas in our scorecard. Our production did not meet the target, directly impacting the company’s cash flow. Low oil price exacerbated the impact to our financial performance. Key milestones for our major growth projects, like Ubon and B8/32, could not be fully achieved due to some external factors. As we continue to weather through this very challenging price and market environment, it is extremely important that all personnel jointly drive efficiency improvements and reduce spends across all areas even further.
With this year’s market condition and overall company performance, the bonus for eligible national employees will be 0.5 months, to be paid on December 30, 2015.
Our company’s focus areas for 2016 will be aligned with the tough operating environment and will include continued reduction of capital spend and operating expenses, efficiency improvements, and sustained focus on safety and production reliability performance. As you may have read from recent executive communications, Upstream organizations are being reviewed to ensure rightsizing of organizations during this difficult period. For Chevron Thailand, Thailand Management Team has decided to expand Project Spring's scope to evaluate and define low cost operating model and rightsize our organization to fit our business outlook and ensure long term competitiveness. The scope will also include identification of incremental cost reduction and process efficiency opportunities.
Conducting periodic reviews is important as it provides an opportunity to ensure we operate effectively and efficiently, have an appropriate organizational structure, and possess the capability to support current and future portfolios and business needs. The global consulting firm, Boston Consulting Group (BCG), has been contracted to assist us with the review, starting in January. BCG has worked with a number of Chevron entities around the world and will be working with our internal team to conduct the analysis, and provide recommendations to the Decision Review Board.
In closing, I would like to thank everyone once again for all your hard work throughout the year. Let us take some time to enjoy the holidays and come back to work refreshed and ready for 2016. I extend my very best wishes to you and your families during the festive season.
Have a Safe and Happy New Year.