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Case Studies

Technical due diligence uncovers upside and potential risks of a proposed acquisition in the Gulf of Mexico

A South American independent producer continuously investing in new opportunities to enhance their portfolio of producing assets requested assistance in their due diligence of a potential acquisition opportunity. As the company considered purchasing the interests of a deepwater oilfield in the Gulf of Mexico, it wanted to understand the uncertainties and the technical aspects of the reserves to support an accurate valuation.

Project Highlights

  • Technical analysis prior to potential acquisition
  • Geological and engineering expertise to support valuation
  • A subsalt oilfield in the deepwater Gulf of Mexico
  • Potentially 90 – 325 million BBL of oil in place

Challenge

  • The producer only had access to the seller’s technical interpretation and production forecasts but not the seismic data that led to the interpretation
  • The company needed a more in-depth understanding of the geological and engineering aspects to be more comfortable in establishing a valuation
     

Solution

  • Sproule brought geological and engineering expertise to help the producer form a complete picture of the opportunity and risks
  • Sproule visited the data room in Texas to review the vendor’s technical interpretation and production forecast. Without the ability to view the seismic data, Sproule relied on the vendor’s interpretation and its own knowledge of deepwater Gulf plays to present a detailed technical analysis of the opportunity and a risk profile
  • The advisory project highlighted upside potential and technical uncertainty in the vendor’s production forecast
  • Sproule completed the review and analysis within a two-week timeframe
     

Value

  • With Sproule technical and commercial insights, the producer gained a much clearer view into the risk profile of the opportunity and now had the information required to make a reasonable and supported purchase offer.
     
Barry Hanson, P.Eng.,<br>Senior Petroleum Engineer
Barry Hanson, P.Eng.,
Senior Petroleum Engineer

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