OIL AND GAS SECTOR WICI KPIs
Draft proposed by NIBR/WICI Italy

The target of this framework is to identify relevant KPIs for the Oil & Gas industry
engaged in upstream and midstream activities. The upstream includes the searching forpotential underground or underwater crude oil and natural gas fields, drilling ofexploratory wells, and subsequently drilling and operating the wells that recover andbring the crude oil and/or raw natural gas to the surface. The midstream involves thetransportation (by pipeline, rail, barge, oil tanker or truck), storage, and wholesalemarketing of crude petroleum products. No inclusions of unconventional Oil & Gas (ie.:oil sands; extra heavy oil; gas to liquid).

To identify KPIs, we started from the model outlined in the chart presented on thenext page (Figure 1), in which we tried to show the link between intangibles and thevalue creation process in the industry. In the top section of the mentioned model we
tried to ideally outline the typical value chain for companies operating in the upstream
and midstream business from prospecting & acquisition of rights to decommissioning,
while the five core competencies considered “critical success factors” are proposed a t
the left-side of the chart. The basic idea is a matrix approach, in which value chain
blocks and core competencies are matched in order to verify which competencies should
be outlined in each phase.

As it can be understood by analysing the model, not all the critical factors have been
considered relevant across each block of the value chain. The inner part of the modelhas then been structured to outline the main relationships between the corecompetencies and the value chain activities. The strength of the model lies in its ability
to display the critical areas to be investigated and measured, through the proposed KPIs,
along the entire Oil & Gas industry value chain. On this regard the identification ofKPIs and their allocation to the core competencies have been made taking into accountthat the result of a certain activity in the value chain depends on and reflects a specific
set of core competencies/capabilities, which in turn is driven by a pool of intangibles,
each of which (as not measurable per se) is approximated in terms of measurement by acertain number of such KPIs. Therefore, for each value chain block we tried to outline
the most significant KPIs, explaining for each KPI the intangible to which it is related,the formula used to calculate it and the KPI’s features (e.g. number, percentage, valueetc.). In this way, different perspectives of analysis can be provided, since each KPI canbe diversely weighted in a company’s analysis depending on the KPI’s importance inthat company’s value chain. Since every company has it own way of creating value andutilizing resources, the same KPIs could be not applicable to all companies of the Oil &Gas sector.
Finally, the model matches the proposal of the WICI concept paper.

Figure 1 – The proposed model: Oil & Gas industry (upstream) - Value Chain and Core Competencies

Core competencies

Value Chain
Prospecting &acquisition ofrights

Nurturing
Nurturingofoftalenttalentqualityquality
Valuable customer
customer
relationsrelations

Efficient and reliable
execution
Competitiveandinnovation
partnering
Environmental & social
responsibility

Explorationandevaluation

Development

Production

Transportation

DecommissioningFigure 2. Oil & Gas sector: the complete list of proposed KPIs per core competencies/critical success factors

12

Nurturing of talent quality

Valuable customer relations

Employee commitment index

Employee turnoverOil delivery contracts

Days of strike

Fatal accidents

Delivery program index

Training hours per employee

Percentage of local workers

Average sell price for unit delivered
Average cost for unit delivered

3

Efficient and reliable execution

Acquisition of new field/license

Possible Reserves

Costs of acquisition of new field/license

Reserves at the beginning of the year

New Product Sharing Agreement

Reserves at the end of the year

R&D expenses

Fields/License acquisition planned

Extraction

Number of Patents

Exploratory and appraisal fields planned

Mineral resources quality

Investments in exploration planned

Value of reserves – future cash flows

Exploratory and appraisal fields in place

Value of reserves – future development costs

Costs of exploratory and appraisal fields in place

Value of reserves – future production costs

Oil spills

Undeveloped reserves

Change in Reserves value

Accommodation costs for spills

Success rate of exploratory activities

Reserves revision

Net direct emissions

Developed fields in place

Recovery of additional mineral resources

Development programs for local community engagement

Cost of developed fields in place

Costs of recovery of additional mineral resources

Safety and Environmental CAPEX
Environmental & Social Responsibility

Timeline of main projects

Reserves replacement rate

Transparency (Corruption index)

Project and target achievedReserves life

Disputes with local communities or NGO

Project and target not achieved

Fields disposal

Company perception from customer/stakeholder survey’s results

Project and target deferredDecommissioning costs

Total number of incidents or violations involving human rights

Proved Reserves

Value of future decommissioning costs

Probable Reserves

45

Competitive innovation

Environmental & social responsibility

Table 1. The complete list of KPIs for the Oil & Gas sector
Value Chain

KP’s features

Acquisition of new
1
field/license

PROSPECTING &ACQUISITION OF
RIGHTSKM2 pergeographicalarea

2

Costs of acquisitionof new field/license

PROSPECTING &ACQUISITION OF
RIGHTSCur3

New Product
Sharing Agreement

PROSPECTING &ACQUISITION OF
RIGHTS

4

Fields/Licenseacquisition planned

PROSPECTING &ACQUISITION OFRIGHTS

Nr

KPI

Exploratory and5 appraisal fields
planned
6Investments inexploration planned

Exploratory and7 appraisal fields inplace
Cost of exploratory
8 and appraisal fields
in place

EXPLORATION AND
EVALUATION# pergeographical
area
# per
geographicalarea# (or KM2) per
geographicalarea

EXPLORATION AND
EVALUATIONCurEXPLORATION AND
EVALUATION# (or KM2) per
geographicalarea

EXPLORATION AND
EVALUATIONCurKPI Formula

Acquisition in progress

Core
Competencies

Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution

Suggested
relevance

Nr

KPI

Value Chain

Undeveloped
9reserves

EXPLORATION AND
EVALUATION

Success rate of
10 exploratory
activities

EXPLORATION AND
EVALUATION

KP’s features

KPI Formula

Boe
# Boe
planned/# Boereserve# (or Boe) per
geographicalarea

11

Developed fields inplace

DEVELOPMENT

12

Cost of developed
fields in place

DEVELOPMENT

Boe or Cur

13

Timeline of main
projects

DEVELOPMENTYears

14

Project and targetachieved

DEVELOPMENT#/Boe15

Project and target
not achieved

DEVELOPMENT#/Boe16

Project and target
deferred

DEVELOPMENT#/Boe

Index of development life cycle

Core
Competencies

Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution

Suggested
relevance

Nr

KPI

Value Chain

KP’s features

KPI Formula

17 Proved Reserves

PRODUCTION

Boe

18 Probable Reserves

PRODUCTION

Boe19 Possible Reserves

PRODUCTION

BoeReserves at the
20 beginning of theyear

PRODUCTION

BoeProved reserve and other categories

PRODUCTION

Boe

Proved reserve and other categories

21

Reserves at the endof the year

22 Extraction

PRODUCTION

Daily Boe frommain fields or
Proved reserve and other categories
geographicalarea

23

Mineral resources
quality

PRODUCTION

Boe for tipology

24

Value of reserves –future cash flow

PRODUCTION

Cur

Proved reserve and other categories

Core
Competencies

Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliableexecution
Efficient andreliable
execution
Efficient andreliable
execution

Suggested
relevance

Nr

KPI

Value of reserves –25 future development
costs
Value of reserves –26 future production
costs
27

Change in Reserves
value

28 Reserves revision
Recovery of
29 additional mineral
resources
Costs of recovery of
30 additional mineral
resources
31

Reserves
replacement rate

32 Reserves life

Value Chain

KP’s features

PRODUCTIONCurPRODUCTIONCurPRODUCTIONCurPRODUCTION

Boe

PRODUCTION

Boe

PRODUCTION

Cur per Boe

PRODUCTION

Boe

PRODUCTIONYears

KPI FormulaCore
Competencies

Efficient andProved reserve and other categories
reliable
execution
Efficient andProved reserve and other categories
reliable
execution
Efficient andProved reserve and other categories
reliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andreliable
execution
Efficient andAmount of proved reserves added/amount of oil and gas
reliable
produced
execution
Efficient andreliable
execution

Suggested
relevance

Nr

KPI

Value Chain

KP’s features

KPI Formula

PRODUCTION

Boe

PRODUCTION

Cur

35 Net direct emissions PRODUCTION

Tons

i.e. Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide(N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons(PFCs), Sulfur Hexafluoride (SF6)33 Oil spills

34

Accommodation
cost for spills

36

Oil deliverycontracts

TRANSPORTATION

Boe

Quantity of Oil subject to delivery contracts

37

Delivery program
index

TRANSPORTATION

Boe

Proved reserves/delivery commitment

38

Average sell pricefor unit delivered

TRANSPORTATION

Cur/Boe

39

Average cost forunit delivered

TRANSPORTATION

Cur/Boe

DECOMMISSIONING#, KM2 or area

40 Fields disposalCore
Competencies

Environmental &social
responsibility
Environmental &social
responsibility
Environmental &socialresponsibility
Valuablecustomer
relations
Valuablecustomer
relations
Valuablecustomer
relations
Valuablecustomer
relations
Efficient andreliable
execution

Suggested
relevance

Nr

KPI

Value Chain

KP’s features

Decommissioning
41costs

DECOMMISSIONING

Cur

Value of future
42 decommissioning
costs

DECOMMISSIONING

Cur

Employee
43
commitment index

CROSSIndex

44 Days of strike

CROSS

#

Training hours per
employee

CROSS

Hours

46 Employee turnover

CROSS%

47 Fatal accidents

CROSS#CROSS%

4548

Percentage of localworkers

KPI FormulaCore
Competencies

Efficient andreliable
execution
Efficient andreliable
execution
Score defined by the employees on commitment (min=1;max 10): It is scored from an annual Employee Survey
Nurturing of
which provides a reliable measure of employees’
talent qualitycommitment to their work and the company
Nurturing oftalent quality
Nurturing ofRatio between Total training hours and total employees
talent quality
Ratio between total terminations and total workforce at Nurturing of
the end of the periodtalent quality
Number of deaths, included both employees andNurturing ofcontractors
talent qualityNurturing of% local workers on total employees
talent quality

SuggestedrelevanceNrKPI

Development
programs for local
49
community
engagement
Safety and50 Environmental
CAPEX
Transparency
51(Corruption index)
Disputes with local
52 communities orNGO
Company
perception from53
customer/stakehold
er survey’s results
Total number ofincidents or
54
violations involving
human rights

Value Chain

KP’s features

KPI FormulaCore
Competencies

Environmental &social
responsibility

CROSS

CurCROSSCur

Current safety investments and expenses

CROSSCur

Revenues for each region in which the Transparency
International Corruption Index is below 6.0 (source:EFFAS)

CROSS# or/and Cur

Lawsuits, expenses and fines (compliance,environmental, social risks)

CROSSIndex

Measure of how the company is perceived by external
parties (i.e. consumers)

CROSS#Report the total number of identified incidents involving
indigenous rights during the reporting period

55 R&D expenses

CROSS%

Ratio between Total R&D investments/costs and Total
revenues

56 Number of Patents

CROSS#Number of patents

Environmental &social
responsibility
Environmental &social
responsibilityEnvironmental &socialresponsibility
Environmental &socialresponsibility
Environmental &socialresponsibility
Competitive
innovation
Competitive
innovation

Suggested
relevance

Legenda
BoeBarrel of oil equivalent or M3 in case of gas
CurCurrency#NumberIndex Company score
KM2
Geographical extension
Years Period
Tons
Tons
Hours Hours

About the Network Italiano per il Business Reporting (NIBR) – WICI Italy

NIBR – WICI Italy was founded in December 2010 and is the official Italian jurisdiction for the “World Intellectual Capital / Assets Initiative” (WICIGlobal), the global Network for business reporting, and for the “World Intellectual Capital / Assets Initiative Network for Europe” (WICI Europe).

As of April 2016, NIBR members who have contributed to the preparation of the document “OIL AND GAS SECTOR KPIs” are:

Cristian Carini
Fabrizio Ceppi

University of Brescia
Borsa Italiana