A major oil & gas company, seeking significant earnings growth from their midstream partnership through both organic growth and targeted acquisition, engaged Advisian to undertake an analysis of potential operating synergies that may be achievable prior to the acquisition and integration of nearby crude terminal, and to identify risks that may materialize.
Our consulting team mobilized quickly to conduct a high-level operating and capital cost synergy assessment. Operating cost savings were assessed across power and utilities, maintenance, and labor. We analyzed headcounts, maintenance requirements, and large power users to estimate the target’s operating cost to a consistent per barrel basis.
To assess capital costs and potential savings, we first prepared conceptual technical designs and estimated future capital costs that would be necessary for operations. We then analyzed both our client’s and the target company’s future capital plans that would be fully or partially avoided and estimated any residual capital required.
We identified key operational and regulatory risks, including potential asset integrity issues at the target and future control system compatibility.
Our findings became integral to determining the potential financial benefit and future risks of the planned acquisition. We identified additional value beyond our brief in additional revenue potential through the optimization of tank utilization. We also provided our views on commercial aspects of the transaction, including future contract attractiveness and new blended product marketing opportunities.