A major oil and 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 a nearby crude terminal, and to identify risks that may materialise.
Our consulting team mobilised quickly to conduct a high-level operating and capital cost synergy assessment. Operating cost savings were assessed across power and utilities, maintenance, and labour. We analysed headcounts, maintenance requirements, and large power users to estimate the target company's operating cost to a consistent per barrel basis.
To assess capital costs and potential savings, Advisian prepared conceptual technical designs and estimated future capital costs that would be necessary for operations. We analysed 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.
Key operational and regulatory risks were identified, including potential asset integrity issues at the target facility, and future control system compatibility.
Advisian's findings became integral to determining the potential financial benefit and future risks of the planned acquisition. We identified additional revenue potential beyond the brief, through the optimisation of tank utilisation. We also provided our views on commercial aspects of the transaction including future contract attractiveness and new blended product marketing opportunities.