Project Brief
The Client was considering a potential investment into a portfolio of mature to ultra-mature UKCS fields.
The Client required an independent review of the asset portfolio including commercially recoverable resources, cessation of production, potential abandonment cost / liabilities and any potential upside that could be delivered through infrastructure synergies and further capital investments.
The Client also wanted to understand other viable bidders for this asset portfolio, including a view of how inorganic growth aligned with their strategies and how complimentary the fields were to existing portfolios.
Our Process
a) Understand the client business
- Assessing the reasons / drivers behind the Client’s proposed entry to the UKCS
- Understanding the Client’s strategic goals and associated timeframe to achieve key objectives
- Reviewing perceived Client preferences for specific UKCS basins, and the reasons behind these preferences
b) Understand the Client challenge, questions and problems to solve
- Westwood worked with the Client to describe what ‘good’ looked like from an acquisition perspective
- Understand the drivers behind the potential investment and perceived benefits of acquiring the portfolio – e.g. stable production / cashflows, upside potential, ability to produce hydrocarbons with a lower operating cost than the incumbent E&P Operator etc
- The Client required an assessment of potential portfolio upside, both from further capital investment and from infrastructure synergies
- An understanding of the magnitude of abandonment costs / liabilities associated with the portfolio & the impact of this on remaining portfolio value was needed
- The Client required a view on how competitive a bidding process could be, to guide its approach to the proposed transaction
c) Assess how we could help
- Westwood proposed a bespoke study, underpinned by the Atlas database
- Westwood provided a screening of all fields in the UKCS portfolio, including a review of remaining reserves, anticipated cessation of production date, ownership, facilities & associated potential abandonment costs / liabilities. In addition, Westwood appraised the upside potential around each field, including a review of local pipeline infrastructure, discoveries and prospects
- Westwood used its extensive network in the Northwest Europe E&P sector to glean insights into the strategy of key E&P Operators that may participate in a bidding process
The Outcome and Benefit
A bespoke study underpinned by Atlas. This enabled the Client to:
- Gain an in-depth understanding of the remaining value of the asset portfolio net of abandonment liabilities
- Gain an understanding of potential future upside to the asset portfolio, and where this upside may be found (e.g. UKCS infrastructure synergies and further capital investment)
- Gain an informed view on potential competitive bidders, based on careful assessment of the strategy & existing portfolio of a selection of key companies likely to pursue inorganic growth
As a result of Westwood’s analysis, the Client was able to confidently commence discussions with the vendor, based on a granular understanding of the strengths, weaknesses and opportunities associated with the UKCS portfolio.
