Oil and Gas Mergers & Acquisition: Acquiring and Divesting Assets and Companies - October 2022
24/10/2022 - 26/10/2022
Energy Institute, 61 New Cavendish Street, London, W1G 7AR
Non-Member: £2770.00 (excl. VAT)
Member: £2520.00 (excl. VAT)
About this course:
Access to quality international producing assets and reserves combined with infrastructure synergies, economies of scale and rapid growth potential are the key factors driving companies towards asset and corporate acquisitions. On the other hand portfolio rationalisation, lack of materiality and harvesting value in times of volatile commodity prices drives companies to divest assets, companies and, in some cases, seek mergers. Whether a buyer or seller the acquisition and divestment process in the oil and gas industry requires careful management and a structured approach if values are to be maximised and deals completed in an efficient manner and timeframe.
This course develops the theme of optimising corporate and portfolio value focusing on the role of business development to ensure long-term growth and improved returns through and the careful selection and structure of acquisitions, divestments and, in some cases, mergers. It concentrates on process and the recognition of the factors driving companies to acquire, divest or merge. The principles, skills and techniques required for successful acquisition and divestment activity apply to both large and small companies.
The course focuses on integrating an understanding of M&A activity trends, the process involved in conducting M&A activity and and the skills that requires. The course involves presentations, case studies, exercises and discussions
Who should take this course?
This course is designed for a multi-disciplined audience from commercial, technical, corporate, business development, economics, human resources, planning, strategy, portfolio, financial, legal and risk management backgrounds.
Course content addresses issues and skills relevant to professionals and support staff involved in mergers, acquisitions and divestment activities from across the industry. This would include, but not be limited to: acquisition advisers, asset managers, analysts, bankers, buyers, economists, engineers, geologists, financiers, insurers, investors, lawyers, negotiators, planners, portfolio managers, and risk analysts.
Day One – Acquisition and divestment drivers and industry performance
- Factors driving oil and gas companies to acquire, divest or merge
- Exercise: identifying transaction types
- Review of a wide range of recent oil and gas industry transactions
- Key performance indicators relevant to acquisitions and divestments
- Exercise: evaluation of key performance indicators
- Historical performance of oil and gas acquisitions and divestments
- Oil and gas price forecasting to value upstream oil and gas assets
- Identifying and exploiting asset and corporate synergies
- Case studies: mergers of major oil and gas companies
- Desktop corporate and asset valuation model – inputs and outputs
- Exercise: SWOT analysis of acquisition / divestment participants
- National oil companies' (NOCs) acquisition and divestment strategies
- Privatisation and partial privatisation of national oil and gas companies
Day Two – Structured approach to acquisition and divestment process
- Asset valuation process – fair market value and other approaches
- Probabilistic models for reserves valuation
- Simulation approach to establishing asset and corporate values
- Recognising and accounting for risk and opportunity
- Risk factors applied to valuations of different categories of reserves
- A structured acquisition and divestment process
- Information Memoranda (IM), Data Rooms and Due Diligence
- Exercise: competitive bidding
- Reserves audits and valuations associated with upstream deals
- Independent engineering, environmental and safety audits
- Exercise: compare Competent Person’s Reports (CPRs)
- Formulating proposals: offers and counter-offers
- Letters of intent outlining agreement terms subject to conditions
- Preferential rights or pre-emptive rights or rights of first refusal
- Sale and purchase agreements (SPA)
- Exercise: review a pro forma SPA
- Conditions precedent determining if and when deals may close
- Representations, warranties, covenants and indemnities
- Effective dates for transactions and their significance
- Identifying and addressing trailing liabilities
- Completion of agreements – what this usually entails
- Farmout and asset swap agreements: structures and objectives
- Exercise: evaluate terms for a farmin / farmout agreement
Day Three – Strategic, financial and payment issues
- Competitive bidding theory and practice
- Case studies of high profile bidding rounds for upstream permits
- Leveraging acquisition values using debt finance
- Deferred considerations and earnouts partially hedge deal outcomes
- Hedging oil or gas prices to manage risk and secure finance
- Integrating tax synergies: asset versus corporate deal structures
- Financial management and structure of transactions
- Analyst and balance sheet approaches to valuing listed companies
- Exercise: analyse balance sheet valuation metrics for a major oil company
- Reverse takeovers and their purposes
- Exercise: rationalise an asset portfolio
- Valuation of long-life assets: limitations of discounted cash flow techniques
- Real options as an alternative to valuing certain assets
- Portfolio approach to acquisition and development evaluation and selection
- Exercise: good and bad practices in the integration / assimilation of “acquired” staff
- Transition phase of ownership and control following an acquisition
Dr David A. Wood B.Sc. Ph.D
Dr. Wood is an experienced consultant, with more than 30 years of international oil and gas experience, and provides technical, fiscal and contractual advice, technical and management training to a wide range of oil, gas and energy entities. He has extensive, economic, financial, fiscal operations, project, risk and strategic management experience with many international energy organizations and assets.
Industry experience includes Phillips Petroleum, Amoco (Africa, Europe & UK) and Canadian independents (South America, Africa, Middle & Far East) with three years based in Colombia and four years based in Dubai. From 1993 to 1998 he was he was UK Managing Director for Lundin Oil & then Morrison Petroleum responsible for a broad portfolio of assets and a staff of more than 100.
For the past decade he has worked as an independent international consultant and expert witness. He has published an extensive body of work on diverse energy related topics including: the international energy markets, performance modelling of fiscal designs, petroleum economic analysis, enterprise risk & portfolio simulation, LNG, GTL and gas supply, deep-water exploration and production techniques, corporate performance, portfolio and strategy management, mergers & acquisitions, negotiations & project management.
He is actively involved in diverse professional training, research, publication and development programmes. He is a member of the Energy Institute (MEI) and the Petroleum Exploration Society of Great Britain and associate editor of the Journal of Natural Gas Science & Engineering.