Multi-field acquisition due diligence

Overview

In 2013 Murphy Malaysia sold a 30% interest in its 24 oil and gas fields offshore Sabah and Sarawak. Time available for conducting due diligence and submitting a bid is usually limited. RISC attended the data room and completed quality acquisition due diligence over a four-week period and provided to our client the independent analysis and confidence needed to support a competitive $2.0 billion bid.

Our approach

An efficient and focussed approach is required to optimise the value of due diligence on 24 fields in a few weeks. Experience and knowledge allows the team to identify and focus on the key value drivers. Key questions are:

  • What are the key value drivers and factor that will affect the bid and decision to bid?
  • Are production forecasts and development plans consistent between the seller, the Operator, Government submissions, the various reports and models?
  • Are they supported by production history and test data? What adjustments and sensitivities are required?
  • Are development and operating costs consistent with historic costs, schedules and industry benchmarks?
  • What are the key risks and opportunities; technical, economic, commercial, operational or political? How could a new owner influence the asset management and enhance value?

Quality-controlled due diligence must identify the critical areas to analyse and work through the data, and challenge and adjust the forecasts. RISC accepted production forecasts on six fields and adjusted forecasts by up to 50% on others. Abandonment costs and forecast reductions in Opex were adjusted. SWOT analysis and key risks were quantified.

Outcome

  • RISC’s due diligence results were presented to, endorsed by and integrated with the client’s findings.
  • Our client was provided the independent analysis and confidence to submit a $2.0 billion bid on 24 fields.
  • Technical due diligence typically costs less than 0.1% of the bid. Choosing a consult that you can work with, trust and rely upon is critical.
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