Global upstream transactions are estimated at $150 bn in 2019. Production/cost forecasts and assessment of future opportunities/risks are crucial inputs to the economic evaluation of a potential acquisition. It follows that potential buyers need to conduct technical due diligence on these inputs. In times of volatile oil and gas prices, good technical due diligence can be the difference between a good and a bad deal.
Petroleum engineers are often called upon to join acquisition teams. With typically a few days/weeks of evaluation time, technical due diligence requires considerable focus and a fundamentally different approach to the typical industry workflow. Yet, there are no industry courses on this subject and a OnePetro search reveals the last paper was 30 years ago.
This talk highlights how a Petroleum Engineer should approach working in an upstream acquisitions team and illustrates practical methods for conducting technical due diligence. A 'top down' process that starts with identifying what drives value is proposed. Several case studies are presented showing how good technical due diligence has had a fundamental impact on acquisition decisions.
The key thing I would like people to take away is that technical due diligence requires a very different approach from the Petroleum Engineer's 'day job'.
Geoff Salter is a Partner at RISC Advisory specializing in Reservoir Engineering. He holds an MSc in Petroleum Engineering. His early industry experience was focused on field development and production operations with major operators Shell and Woodside. During his nearly 25 years at RISC Advisory based in London or Perth, he has led technical due diligence teams on oil and gas acquisition opportunities in the Asia-Pacific region, Europe, Middle East and Africa. He has travelled extensively throughout these regions, presented at industry conferences and participated in SPE ATWs.