CANADA-2016-TRANSACTION ADVISORY
The client was investing in a multifaceted heavy oil midstream infrastructure asset. The heavy oil supply came from several geologically large and diverse formations. The client needed to understand the uncertainties pertaining to future oil production in the area to understand if the infrastructure would service a long-term supply.
Project Highlights
- $1.7 billion transaction
- 390,000 bbl/d pipeline capacity
- Supply catchment area of approximately 25,000 km2
- Provided long-term supply outlook
Challenge
- The client was investing in a complex heavy oil midstream infrastructure asset in Alberta and Saskatchewan
- The heavy oil supply came from a number of geologically complex formations
- In order to ensure that the infrastructure would serve a long-term supply, the client needed to understand the uncertainties pertaining to future oil production in the area
Solution
- Sproule experts prepared low, best and high estimates for potential heavy oil volumes, with a forecast extended out to 2045
- Multiple data sources were used to create production forecasts, which were then evaluated using numerous criteria, including catchment area, operators, production technology, thermal production and more
- Oil and gas price forecast sensitivities were used to evaluate the uncertainty of future production volumes
Value
- Sproule’s technical expertise supported the client’s decision to close on a $1.7 billion opportunity in heavy oil pipeline systems
- Sproule provided the client with an independent production supply sensitivity analysis that allowed them to evaluate the risk and uncertainty pertaining to the investment opportunity
- Sproule’s analysis provided the client with the comfort they needed to commit to the deal
Managing Director, Energy Advisory
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