The Challenge
Waterbridge Operating LLC, a private-equity-backed water infrastructure developer and operator, through its subsidiary DBR Land LLC, sought to expand its portfolio to align with its current operations in the Permian Basin. A strategic transaction was pursued wherein DBR acquired assets from DK Boyd, which primarily included approximately 103,000 acres of surface rights and supplemental water assets in the Delaware Basin. The transaction of surface rights would be allocated to DBR, and water assets to a separate Waterbridge entity.
Due diligence and complex financial reporting services support were necessary to execute the transaction. Leveraging its extensive energy accounting, transaction, and energy industry expertise, Opportune provided due diligence services to assist DBR in transitioning the Asset’s financial records from cash to accrual accounting and providing a comprehensive quality of earnings report. Our ability to deliver these services provided DBR with the financial clarity and credibility needed to secure funding from lenders, enhance transparency, and support informed decision-making during the acquisition. Opportune’s streamlined approach with our transaction advisory and Complex Financial Reporting teams working in tandem provided a key value add and streamlined the workstreams to lead to an on-time closing.
The Solution
Prior to the transaction close, Opportune’s Transaction Advisory team conducted a detailed review of the Assets’ financial records at the invoice level to appropriately record revenues and expenses on an accrual basis. Once carve-out financials were created for the assets, Opportune conducted additional diligence procedures and created a fulsome Quality of Earnings report documenting accounting policies, EBITDA adjustments, gross margin, capital expenditures, and bank statement reconciliations. This report was made available to DBR to allow them to understand the assets better and assist them in the underwriting processes. Additionally, our Transaction Advisory team performed a financial analysis and evaluation of the assets’ newly created financials, applying go-forward commercial and operating assumptions to historical figures to accurately present the Asset’s pro-forma performance under DBR management. After these procedures, a final report was issued to potential lenders to give them greater confidence in the model calculations.
Business Impact
DBR achieved the following benefits through its engagement with Opportune:
- Successful and timely close of the transaction, enabling strategic expansion
- Significant efficiencies and cost savings by using a single firm for Quality of Earnings and Financial Reporting requirements
- Enhanced lender interest and confidence by leveraging our extensive upstream experience to help Investors better understand the assets through Opportune’s due diligence
- Ongoing and well-established relationship with Opportune for long-term growth potential