XP Celebrates 20 Years of Sustainable Upstream Operations
With over 20 years of experience, XP is an upstream oil and gas operator specializing in managing and investing in mature assets. The company is also a leader in delivering tailored decarbonization solutions, with a strong focus on reducing methane emissions. With close to 1000 employees in Romania and Ukraine, XP is currently operating 28 oil and gas fields in these 2 countries.
As this year XP marks 20 years of sustainable upstream operations, David Martinon – CEO and Co-founder of the company, reviews the evolution of the company along this period.
Prior to co-founding Expert Petroleum (XP) in 2005, David Martinon spent his entire career at Schlumberger, where he started as a Well testing Field Engineer in Southeast Asia and worked his way up to Director of Mergers and Acquisitions at Schlumberger Limited in Paris. David has been involved in various production enhancement projects, in particular in Indonesia. He has a broad understanding of the Oil & Gas industry from operational and strategic perspectives. David holds an engineering degree in applied mathematics from INSA, France and an MBA from INSEAD.
Q: Looking back, how do you see the journey from the beginning of your activity to today? What are the most important milestones worth celebrating?
A: As any company we had our ups and downs, but overall, the trend has always been upward. The fact that we are where we are today, after 20 years, having another record year in term of financial, production and environmental footprint reduction shows the strength and resilience of our business model and our technical and financial capabilities.
If I had to list the most important milestones, I have seven that I would like to highlight.
The first one was when we acquired our first 8 concession agreements from the Romanian National Agency for Mineral Resources (NAMR) in 2006. This was an important step for us as over the length of the concession agreement it established our credential and qualified us as a serious oil and gas operator in the country, we have demonstrated our professional capabilities when it comes to investment, operation standards, social dialogue and decommissioning commitments.
The second milestone was in 2011 with a large failure and a huge learning experience. We were supposed to do an underbalanced sidetrack in an existing well in our Valuta concession to reach an untapped area of the reserves, but we ended up having to do 3 sidetracks, spending 25 million on this with nothing to show for. I want to mention this failure because we learned so much out of it, and it made who we are today. We went from a high-risk high reward approach, mainly driven by our private equity shareholder at the time, to a more sustainable, step by step approach, accepting lower reward for longer time.
Next milestone was in 2012 when we were awarded through a public procurement process a 15-year Production Enhancement Service Contract (PEC) with OMV Petrom for 13 producing oil and gas fields in Timisoara area. We took over around 400 people, and not only increase significantly the production and reserves but also reduced the Green House Gas emissions intensity by 75% and the Freshwater withdrawal intensity by 90%. We are still operating the fields and decommissioning some of the facilities and wells in the meantime. It has been a win-win for both parties.
Another milestone was when we bought out our private equity shareholder in 2014. We have since then a much more long-term view on the business aligned with the values and commitment of the large family office investment group which has been behind the XP since inception.
An important step in our growth journey has been in 2016, when we acquired Petrofac SRL in Romania and the 15-year Production Enhancement Contract with OMV Petrom they were initially awarded in 2010 for 7 producing oil and gas fields in Gorj County. We have since turn around the performance and transformed the operations such that the contract has been further extended until 2030.
In 2020 we have been awarded by Naftogaz in Ukraine, the first ever 15-year full-scale PEC in the history of Ukraine’s oil and gas industry, to increase hydrocarbon production on 13 producing gas fields in Western Ukraine. Despite the war we are still investing and operating the fields and demonstrating our commitment to Ukraine’s economic stability safeguarding over 200 Ukrainian jobs. These efforts play a vital role in strengthening Ukraine’s energy security in this difficult time. Our success would not have been possible without our resilient local Ukrainian team on the ground. This demonstrates also the strength of our model which is to train and empower the local operators, technicians, engineers and managers to deliver sustainable and more efficient operations.
And the last milestone to mention is the launch of XP Upgreen in 2023, to leverage our firsthand expertise and experience to decarbonize upstream operations.
Q: As a leader in delivering tailored decarbonization solutions for the upstream oil and gas industry, what kind of solution does XP offer in this regard?
A: We offer practical, fit-for-purpose of upstream operations decarbonisation solutions based on our 20 years track record on the subject. XP’s traditional focus has been on production increase and operations efficiencies on mature fields therefore we have been chasing relentlessly and in very much details all the inefficiencies, all the leaks we could found because every molecule of hydrocarbon that is lost in the air or on the ground is a molecule wasted for us, the same when it comes to energy efficiencies and freshwater withdrawal. So, right from the start, it has been part of our culture to reduce the environmental footprint of the fields we operate as it made sense economically for us. Typically, after five years investing on a mature field, we have reduced emissions by 60%, increased energy efficiency by 50%, and reduce freshwater withdrawal by 80%.
We have therefore built a unique know-how on providing economically and practically sound decarbonisation offering.
Furthermore, two years ago, when the EU Methane Regulation for oil and gas companies came into force, we decided to leverage further our decarbonization expertise and track record and include compliance services in our portfolio of offering.
Q: Digital technologies aim to make energy systems more connected, intelligent, efficient, reliable and sustainable in the coming decades. What is the role of digitalization in your company’s growth?
A: XP is a data driven and digitalization focused company. Taking over mature fields that have been operational for many years means that there is a huge amount of data (pressure data, production data, seismic data etc.) and reports (drilling, workover, incidents etc.) in various formats.
You can’t find opportunity for production increase and operations efficiencies unless you digitize these data and make it efficient to handle them. This is why at the heart of our operational model is a digital transformation, which includes field data acquisition, digitization, integration, real-time monitoring and advanced analytics, to enable us with faster and smarter decision-making.
Artificial intelligence has the potential to play a key role for XP, and we have already started to include AI solutions in our data analysis for Decline Curve Analysis for example.
Overall, this technical edge in data analysis enables XP to achieve higher recovery rates.
Q: What is XP’s approach to local content and sustainable development?
A: When it comes to sustainability development, we have been providing a very detailed annual sustainability report for the last seven years which describe well our continuous performance in that domain.
We are on track to meet our ambitious target of 0.20 tCH4/toe emissions intensity, thanks to an intensive measurement and investment program launched four years ago.
Other important performance that you will find in our upcoming sustainability report:
- In 2024 vs 2023 our Methane Emissions Intensity was reduced by 28% and 32% in absolute term;
- Our scope 1 and scope 2 Green House Gas emissions intensity was reduced by 9 % and in absolute terms by 11%;
- The freshwater intensity in 2024 has been further improved by 30% compared to 2023;
- Total energy consumption in 2024 continued the trend of the previous years and decreased by 2.7% and in the last 7 years the volume of liquid spills has been reduced by 95%!
When it comes to local content, we are a 100% local content company; this is a core characteristic of our business model, we hire, train and empower local teams in every country where we operate. Our entire team here is Romanian and as I mentioned before we have been successful in Ukraine in the last 3 years based on the same formula.
We also ensure we support the development of local services company even facilitating technological transfer from international technologies provider.
Q: Speaking of the workforce, how does XP compensate for the retirement of aging workforce?
A: It is a very significant challenge for us, especially as in mature fields operations, the workforce is typically older than in other part of the industry and it is difficult to replace them. We have been working on three mitigations measure for this risk.
First is the reduction of the operations footprint, typically mature field surface facilities have been designed and sized for a peak production that could have been 3 to 10 times the size of the actual production, so we invest to reduce the footprint and size of the surface facilities which allows for less people required on site.
Second is to increase the operations efficiencies through investment in automation and real-time remote monitoring which allow also to reduce the number of people required on site.
Finally, the third measure we are focusing on is to continue to attract young people to our company. And it has been difficult in the last few years as the industry’s image has not been great. It is often seen as a polluting industry with no future. This why XP Upgreen and our sustainability performance is so important for us, as it demonstrates to the younger generation that upstream operations can be sustainable and greener. We also try to make the workplace and package attractive for young talent. We offer scholarships and internships for students, traineeship journey for young graduates and emphasize the existing career that the industry can provide.
Q: Operators and experts in the oil & gas industry are concerned about developments in various sectors of the industry. Despite this, the market’s outlook has shifted somewhat. In your view, how will energy companies be able to thrive in this challenging environment?
A: I still see a bright future for the oil and gas industry and for oil and gas professionals. No one knows clearly how long this transition will take, we’re talking about 150 years of trade, infrastructure, regulation, education, market, technologies built around the industry. It takes time to transition from one to the other. So, I think the energy transition will happen, but not as fast as we think. Also, so far, the energy transition looks more like an energy accumulation as the world needs more and more energy which is affordable and secure. For example, last year the coal demand in the world was the highest ever, we did not transit yet away from coal! So, all the energies, including oil and gas available need to contribute.
Finally young people need to know that the skills they will learn in the oil and gas industry can be applied to the future: being exploitation and production of natural Hydrogen or Helium trapped in underground reservoir or geothermal energy or carbon capture and sequestration technologies, all of these upcoming green domains will need the expertise of our industry.
