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Upstream: Outsourcing/Transactional Due Diligence: Asset Transaction/Transition

“Project Charlie” was an asset acquisition led by a leadership team backed by a private equity (PE) firm. The leadership team was assembled for this transaction and it didn’t hold any other assets previously. The asset consisted of 1,000 operated wells and 400 non-operated wells that included leases on federal, state and U.S. Bureau of Indian Affairs (BIA) lands.

Opportune was brought on to guide the leadership team through the transaction and transition the assets from the seller in a short three accounting month Transitional Services Agreement (TSA). Before the deal closed, Opportune managed the transaction on behalf of the leadership team and the PE firm while also getting the new company set up to do business in the state the asset was in and getting over 300 new Master Service Agreements (MSAs) signed with all vendors already working the assets. Opportune also had an existing relationship with the seller, which streamlined ad hoc data requests during the transactional and transition periods when there were well discrepancies.

After the transaction closed, the team only had three months to transition the assets from the buyer to the seller or pay another $600,000/month in TSA fees. The data conversion from SAP to BOLO, which normally takes nine months, needed to be completed in three months. The leadership team realized they needed production services that weren’t accounted for in the original estimates and project planning. During that same time period, the federal government shut down, making it almost impossible to contact the Office of Natural Resources Revenue (ONRR). Adding to that, there were also two special Net Profits Interest (NPI) areas that needed special revenue and joint interest billing (JIB) decks set up to calculate royalties on 130 wells.

Opportune professionals added value by taking on all these challenges head-on by leveraging our experience, expertise and connections. Our data conversion resources have over 20 years’ experience converting to and from every major energy software platform. The following are just some of the solutions we delivered:

  • Outsourcing JIB, revenue and land managers rebuilt the decks to handle the NPI scenarios
  • Revenue and onboarding team initiated the ONRR unbundling process on behalf of the client
  • Regulatory team leveraged personal connections with the ONRR to get the paperwork pushed through on time
  • Production team set up and operated their Merrick environment without delaying the start date.

In the end, Opportune successfully transitioned Project Charlie on schedule and under the original estimate.

Opportune strives to continuously add value to clients. In this case, efficiencies in our Outsourcing group have further reduced Project Charlie’s per-well costs to a fraction of Council of Petroleum Accountants Societies (COPAS) overhead. We bring value to our clients on every transaction advisory assignment through the execution of each critically important component we are assigned. For more information, CLICK HERE.

Anderson Lee

DirectorOpportune LLP