An exploration and production (E&P) company was restructuring its corporate footprint. The company had engaged Sproule to provide finance and accounting support over the previous five years, but as focus and corporate strategy changed, the E&P requested Sproule engage in other aspects of their business. Sproule Asset Management was engaged to provide additional oversight of Engineering, Geology, Production, Operations, Finance, Accounting, Land, Health, Safey & Environment as well as Emergency Response, ultimately reducing the total general and administrative expenses(G&A) by ≈50%.
Project Highlights
- Junior E&P company with daily production of over 200 boe/d.
- Significant mineral land base of over 22,000 ha and 110 potential drillable locations in an emerging oil play.
- The company’s strategy was to pursue growth on a focused development play.
- Sproule’s scope of service increased from departmental support to full Asset Management.
Challenge
- Minor Working Interest position: The company’s asset base was largely non-operated, which necessitated close collaboration with the operator and majority working interest owner.
- Cashflow: Low overall production & reduced commodity prices were pressuring the company’s finances. Sproule’s team was able to optimize all services while reducing G&A costs.
- Limited Resources: The Company had limited staff with which to execute its business plan. As a result, the few individuals working for the company performed many duties, some of which were outside of their primary skill sets.
Solution
- Restructure: Elimination of office space “brick & mortar” costs while having access to over 18 dedicated professionals allowed the company to increase profitability and continue operations while focusing on executing the development plans.
- Asset Review: Sproule’s fully integrated team quickly reviewed the asset base, defined core and non-core assets and executed approved A&D activity to focus the company.
- Operational Integrity: Sproule Asset Management deployed operational and regulatory expertise to ensure regulatory compliance, emission reduction and asset retirement obligation reduction while negotiating with joint venture partners to accelerate the development of the primary asset.
- Strategic Advisory: Sproule evaluated and advised the Board of Directors on specific corporate strategies, complete with full economic analysis, for consideration and subsequently assisted with the execution of the chosen plan.
Value
