Upstream Reserve Engineering Geosciences Technical Review In Connection With Restructuring

Upstream Reserve Engineering Geosciences Technical Review In Connection With Restructuring

Opportune was engaged by a U.S. multinational financial services company to provide restructuring advisory to the lender group of a pure-play Eagle Ford oil and gas operator (“the Company”). Opportune’s in-house engineering firm, Ralph E. Davis Associates (RED), provided a technical review of the Company’s reserves in two phases:

  • The initial review focused on the proved developed producing (PDP) forecasts in the Company’s Aries database, including:
    • Assessing the accuracy of future production estimates
      • Forecast ties to historical production
      • Forecast “b factors”
      • Terminal decline rates
      • Concentration risk
    • Ensuring the forecasted commercial parameters were consistent with actual performance
      • Operating expenses
      • Severance and ad valorem taxes
      • Commodity price differentials
  • The second phase of the review addressed the Company’s estimated recovery from proved undeveloped (PUD) locations, including:
    • Development of independent type curves for the future drilling locations using RED’s proprietary type well profile system
    • A detailed review of the presentations and other materials the Company provided to the lender group

RED’s technical and financial analysis recognized that the Company’s projections significantly underestimated the future operating costs and overstated the recovery of their future drilling activities. RED provided important input to the Company’s financial model that allowed Opportune’s Restructuring team to advise the lender group through the Company’s bankruptcy process.

In addition to providing critical information about the future performance of the assets, RED identified and advised the lenders on potential asset-specific risks they faced, allowing them to make informed decisions along each step of the process. For more information, CLICK HERE.

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