Basics 2 of 7 · Oil and gas industry basics
Supermajors and independents
The logo everyone wants is the deal the show tells you not to chase first.
Almost every company that comes to the show wanting to sell into oil and gas names a supermajor as the target. The hosts have sold to them and give the same answer each time:
“the lowest profit margin you will ever make and the hardest deal you will ever close will be with ExxonMobil”
Source: Breaking into Oil and Gas, a Five Step Process, episode 100 of the Oil & Gas Sales & Marketing Podcast.
The reason is not hostility. The show describes the supermajors as very good at buying: a professional procurement organisation whose job is the price. A mid-size independent, in the show's telling, is more worried about the fix than the price, writes the check sooner, and treats a vendor it likes as a partner. That difference shows up in the margin and in how long you wait to be paid.
The same deal, two kinds of buyer
| Supermajor | Mid-size independent | |
|---|---|---|
| Who you deal with | A procurement organisation that is very good at buying | Possibly the president, at your booth |
| Time to a PO | Months to negotiate everything | A check, sometimes right then and there |
| What they weigh | The price | The fix, more than the price |
| The deal | The hardest, lowest margin deal | Same problems, a much faster cycle |
| After you win | You are treated like a vendor | You are treated like a partner |
There is a second reason the big logo misleads, and it matters even if you do win one. A supermajor is not one customer. The show's example is Chevron, and the number is specific.
The words
- Supermajor
- One of the integrated giants that explore, produce, refine and sell at retail. Public, global, and run by procurement organisations that buy for a living.
- Independent
- An operator that is not a major. Ranges from a family company with a dozen wells to a multi-billion dollar public company like Occidental or Devon. Most of the industry, by count.
- Business unit
- A division with its own president and budget. Inside a supermajor, exploration, pipelines and refining are separate companies in everything but name.
More from the show
Each unit has its own president, its own budget, often its own CIO, and the units do not talk to each other. Selling to the pipeline unit tells the refining unit nothing about you. So the target is never the logo; it is one unit and one president.
“you need to understand that Chevron is 17 different business units. Each one of them has their own president, their own budget.”
Source: Oil and Gas Sales Basics. Not just for Newbies, episode 6 of the Oil & Gas Sales & Marketing Podcast.
One logo, 17 budgets
- Exploration and productionown president, own budget
- Pipelineown president, own budget
- Refiningown president, own budget
Outlined: unit not named in the episode.
The show returns to the same contrast a year later, and adds what the relationship feels like once the deal is done.
“They start treating you like a partner, not a vendor. Whereas the super majors most probably will treat you like a vendor.”
Source: PR, Sales, Marketing: Their Roles in Oil and Gas Success, episode 69 of the Oil & Gas Sales & Marketing Podcast.
And it puts the two kinds of buyer side by side at a conference booth.
“A big company like Exxon or Chevron that takes months to negotiate everything and get a PO or a small company where you may be talking to the president in the booth and he can write you a check right then and there.”
Source: Harnessing Conferences for Business Growth, episode 68 of the Oil & Gas Sales & Marketing Podcast.
Before the next call
Which business unit are you calling, and who is its president?
