November 3, 2020
Each week, XI Technologies scans its unique combination of enhanced industry data to provide trends and insights that have value for professionals doing business in the WCSB. If you’d like to receive our Wednesday Word to the Wise in your inbox, subscribe here.
Succeeding in oil and gas M&A comes down to how well and how quickly you can analyze potential opportunities. Once a month, XI Technologies will apply its evaluation tools to a currently available asset to give readers a sense of the opportunities available and how they can be evaluated for A&D purposes.
For this month, XI will examine opportunities that may fall out of the strategic combination of Cenovus Resources and Husky Energy.
Cenovus and Husky are very compatible with overlapping production in around 50% of their fields. This means there are several opportunities to look for as potential fallout properties from this merger, where companies may be looking to finance other strategies after the deal is complete.
An important thing to do when a merger is announced is think about what non-core assets may fall out of the deal. Looking for assets in those 50% non-overlapping land and production areas that are owned by either company, but particularly Husky may yield an acquisition opportunity. For instance, Husky’s prolific Wainwright field appears to have no Cenovus activity nearby. While this is no indication of Cenovus’ willingness to part with these assets, as we do not know their internal strategy, it is certainly worth asking the questions. XI’s Merger Report makes this analysis easier.
One of the most important parts of A&D research these days is to look at the liabilities carried by the asset. Once you have parsed out the ideal fall out properties, you can run these individual assets in XI’s LLR module to calculate liabilities per the various regulators or do an independent evaluation of the asset’s retirement obligations with calculations using XI’s ARO Manager. Our independent cost model is the most trusted in the industry. In addition to knowing an asset’s ARO numbers, it’s helpful to know the scheduling of those obligations and how they will fit into your company’s short, mid, and long-term planning.
These are just a few quick ways to do A&D prospecting, using a real-world example that is currently available for purchase. If you’d like to learn more about how XI’s AssetSuite can analyze potential acquisitions, contact XI Technologies.