Oil Enterprise's Cost Driver Analysis And Its Managerial Implications

At present,China's most inland oilfields have stepped into the post-development phase, in order to maintain required production level, oil enterprises are facing considerable pressures. Petroleum industry has a long development history and thus well matured, therefore, oil enterprises regard implementing cost strategy as an important measure to enhance their core competitiveness. The vital procedure to gain competitive edge is to identify oil enterprises'core cost driver. For this reason, to analyze oil enterprises'cost composition and find out the cost-drive-factor, accompanied by pointed cost driver supervision and management, can effectively constrain an oil enterprise's operating expenditure level.This paper, from both theoretical and empirical views, conducts the following researches. First, based on oil and gas producing flow, this paper analyzes oil enterprises'cost composition, and categorizes oil enterprises'main operating cost into different classification using the concept of activity level. Under each activity level, correspondingly, cost drivers are analyzed. Next, based on former researchers'results, this paper proposes cost driver selection model and optimization model. Besides, the paper discusses the use of cost driver theory in oil enterprises'management practice, including the cost driver selection, multiple-cost-driver OLF model, and the cost driver budget. In the end, this paper also discusses how to improve Chinese oil enterprises'cost management level concerning cost driver theory.