Mergers & Acquisitions

BACKGROUND

The maintenance and modification (M&M) market at the Norwegian Continental Shelf (NCS) is a multi-billion market and represents one of the largest segments within the Norwegian oil service market. An oil service company with several business units, M&M being the largest, had recently won several large contracts on the NCS and was planning global expansion of several of its business units. The company needed assistance in preparing material for analysts and a road show for an initial public offering (IPO).

APPROACH

By leveraging existing research products (Offshore Market Report Norway) and databases (UCube), Rystad Energy identified key value drivers through additional market research and interviews with both service providers and customers (oil companies). For the largest business segments Rystad Energy created bottom-up models consisting of named projects in the company’s current and future key regions.

RESULT

Through several workshops with the company and its business development department, Rystad Energy prepared a final presentation for analysts of different investment banks to use for IPO documentation.

The Largest Operator Dominates the M&M Market, with Decreasing Market Shares in an Increasing Market as New Installations Enter NCS
BACKGROUND

Development of novel technologies for the E&P industry often takes several years. Many ideas for potentially disruptive technologies are brought forward by start-up companies. For them, ensuring sufficient funding may be as challenging as the development work itself. Typically, companies establish joint industry projects together with likely future technology end users – oil companies. An important motivation is that this usually will also release substantial public grants, which in many cases provide the main funds of such projects. However, it frequently is hard to get oil companies to join these projects despite their often relatively small economic contribution to the projects. Reasons are that in the early phase the risk is high, products/services lie some years into the future, and so do the company’s benefits/savings effects of the new technology. Additionally, there may be many projects competing for oil companies’ attention and budgets.

APPROACH

The goal of our assessment was to identify the oil companies that had most to gain from new technologies in a time perspective compliant with development plans. The first step was to make an assessment of all the different applications of the company’s technology and qualify the benefits as compared to current industry practice. We worked out selection criteria for each application that would identify target fields. Next, we applied these selection criteria to our global asset database UCube to filter all fields for which this specific application was important. We analyzed the resulting data set to find out which operators were most exposed to the application – and thus had most to win by having technology developed.

RESULT

We followed the above approach for more than ten different applications. This provided a full overview of the expected market and a list of key operators that should be good candidates to partner with in projects. Further, we tailored road-show presentations for specific companies, emphasizing the particular benefits for that company.

Shell is Top Operator of Mature Fields with Platforms with Drilling Units
BACKGROUND

Initial investors in exploration-focused oil and gas or oil service companies may want to divest their interests to long-term industrial or financial investors, once these companies have established themselves in the market with a robust portfolio and/or turn-over.

APPROACH

Together with the client, Rystad Energy establishes a list of possible buyers of such interests by means of an analysis of prospective buyers’ strategic goals, current portfolio and geographical focus. On this basis, a prospectus showing the opportunity is presented to a discreet number of companies, which are then asked to express interest before further information is. Once a Confidentiality Agreement has been signed, Rystad Energy presents the opportunity in full detail and administers the Due Diligence process including data room visits. Once the preferred buyer is identified, Rystad Energy joins the client’s negotiation team and supports the negotiations with industry insight, numerical analysis and portfolio/market assessments.

RESULT

Rystad Energy provides independent assessments and valuation of companies and the underlying shares. Included in such analysis are projections of free cash flow forming the basis for value of the company in question. Once this is derived, benchmarking against historical deals is undertaken involving similar types of companies and resulting in expected market value (EMV) of the divestment object. A successful outcome of a divestment process is ensured through a robust bottom-up market value assessment combined with an aligned view between buyer and seller of the divested company’s projected future.

WellFlow: Important Information