Strategy to Enhance Organizational Performance Through A New Functional Management Initiative at Bor Penunjang Migas

Abstract : Bor Penunjang Migas (BPM) is a rig contractor that operates about 47 drilling rigs across Indonesia. Besides rigs, BPM has a small number of associated drilling services (non‐rig), such as directional drilling, cementing, drilling fluid, casing running, coring services, etc. Historically, BPM has rented out rig and non-rig equipment separately. However, the market for non-rig services is less mature than rig services. Despite accounting for less than 10% of BPM’s productive assets, non-rig services contribute over 20% of the company’s revenue and consistently achieve a net profit margin (NPM) exceeding 15%, in contrast to the approximately 5% NPM from rigs. Currently, there is massive ramping up of drilling activities in Indonesia; therefore, BPM expects significant growth in both revenue and profit. Given the operational and financial performance, asset structure, and organizational capabilities, BPM is redefining its business strategy to emphasize enhancing non-rig services alongside its core rig offerings. To improve marketing and asset productivity, the company plans to offer end-to-end integrated drilling services by bundling rig and non-rig offerings. This marks BPM’s strategic transformation from a conventional rig contractor to an integrated drilling service provider. This paper discusses the change process behind this new strategic direction, including the applied change model, key behaviours required for successful transformation, core elements to be addressed, and the expected benefits of implementing the new initiative.