Two global oil companies created a joint venture to manage $3 billion mature oil fields that were declining in production. While each owner had a lot of pride and history, there were significant differences in culture, technology, and operating philosophies. To remain profitable and to meet their aggressive performance targets, the new organization had to get up and running quickly and be more efficient than either parent organization.
The joint venture was expected to deliver benefits calculated to exceed $300 million over twenty years. This included expected savings achieved by optimizing infrastructures, reducing overhead, and greater economies of scale. More than a third (35% or more than $100 million) of the savings were predicted to come from “creating a different, more independent company” with no specifics about how this would be achieved.