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ConocoPhillips drills for IT plan ahead of major business split

Oil firm has spent years integrating systems

ConocoPhillips has said it is carefully weighing up its IT options after announcing a dramatic move to demerge the oil company into two parts.

The SAP-based firm is set to spin off its refining and marketing assets in a strategic step aimed at focusing on exploration and production, while removing a part of the business that it sees as presenting higher costs and fewer growth opportunities.

The company is the sixth largest global oil producer, after ExxonMobil, BP, Shell, Chevron and Total. It generated revenues of $198 billion (£123 billion) in the last financial year.

Jim Mulva, ConocoPhillips' chief executive, was last week asked by analysts what the plan was for managing the new businesses resulting from the split.

Mulva said that "making sure we have the proper IT systems and everything else that you need in these companies" was a priority for the firm, alongside deciding the leadership of each business. The split is due to happen early next year.

After those changes, Mulva said, "then we can press the button and we go from ConocoPhillips into the two separate companies".

ConocoPhillips has spent extensive time in recent years standardising its IT infrastructure after it made a raft of acquisitions - including oil refiner Tosco, explorer Burlington Resources - as well as increasing its ownership stake in petrol processing firm Duke Energy Field Services.

After taking on the disparate systems from all these firms, it set out to build a standardised technology infrastructure that was also capable of integrating new acquisitions and business projects quickly and cost-effectively.

The company runs a global SAP enterprise resource planning system, which has also helped it standardise processes.

But with the operational split, questions remain over how it will deal with the systems.

It is understood that ConocoPhillips may consider maintaining the type of core systems in use but simply operate separate instances. Such a step would likely focus on ERP technology.

The company did not respond to requests on how it will manage the system changes. But Mulva insisted last week that the split will be brought about in a way that will enable both companies to "continue to benefit from the size and scale" of their operations while allowing faster change.

The integrated strategy operated by the company until now had "been effective", he said, but after splitting the company the two elements would retain "independent but consistent strategies" that allowed greater "focus" while retaining scale.

It is expected that the company will provide more details on the operational split later in the year.


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