COMMERCIAL AND ECONOMIC DUE DILIGENCE OF UK E&P ASSETS
ECC was engaged by a private-equity backed E&P company to provide commercial and economic due diligence during its evaluation of a package of major offshore and onshore assets in the UK. ECC provided various DD services during an intense evaluation phase including:
Thorough review and critique of the commercial agreements in place for each oil and gas asset (e.g. JOA, UUOA, TA, TPOSA, GSA).
Detailed assessment of the proposed development and work programmes on each asset, highlighting any potential commercial, financial and operational risks that could be detrimental to their value.
Detailed analysis of the quantitative terms in the transportation & processing and product sales agreements e.g. tariffs, cost share, sales prices, network charges.
Built a discounted cash flow model reflecting the various UK tax and allowance provisions. Used the model to produce asset valuations and sensitivity test key issues identified in the commercial DD.
ECC used its industry experience to identify for each asset the key commercial and technical risks and advise on their impact on the appeal of the transaction. The client used the economic valuations as the basis of its bid for the assets.