Multi-Market Offshore CCS Transaction Due Diligence
Sproule ERCE advised the Client, a national gas infrastructure company with onshore and offshore assets in Europe, on a binding offer for the acquisition of a portfolio of offshore low-carbon (CCS) development projects. Sproule ERCE conducted independent due diligence of subsurface assets, wells and drilling, sub-sea infrastructure, surface facilities, permitting and regulatory compliance, and reviewed the seller’s financial model, preparing revised technical and economic assumptions—including CAPEX, OPEX, performance, regulatory, and market revenue inputs—for inclusion in the Client’s acquisition strategy. This supported the Client’s investment decision and asset valuation by identifying key transactional red flags and potential value upsides across the assessed CCS portfolio.
Project Highlights
- Completed thorough VDR review and provided gap analysis report
- Red Flag Review – subsurface, surface, commercial, regulatory and compliance risks
- Complete revision of the Sellers Financial Model, providing industry benchmarking
- Provided recommendations for near-term and future project phases
Challenges:
Technical and Commercial Scope: The Due Diligence scope included subsurface, wells and drilling, surface facilities, regulatory and compliance, financial modeling and current and future CO2 storage considerations, necessitating collaboration and coordination of numerous subject matter experts.
Large Quantity of Data and Short Timeline: The study required assessing a considerable amount of VDR data, adapting to a shifting schedule, and executing in-depth due diligence within a 6-week transaction window.
Proprietary Data: Sproule ERCE was tasked with delivering a comprehensive red flag review for preliminary executive level internal evaluation, detailed due diligence report, and industry benchmarked financial model.
Large Quantity of Data and Short Timeline: The study required assessing a considerable amount of VDR data, adapting to a shifting schedule, and executing in-depth due diligence within a 6-week transaction window.
Proprietary Data: Sproule ERCE was tasked with delivering a comprehensive red flag review for preliminary executive level internal evaluation, detailed due diligence report, and industry benchmarked financial model.
Solutions:
Multidisciplinary Red Flag Review: Sproule ERCE performed a comprehensive due diligence and red flag review of the Client’s seller CO2 assets across two distinct regulatory and storage licence application processes involving detailed technical to commercial operations and professionals.
Industry Benchmarked Financial Model: Leveraging Sproule ERCE’s commercial experience, the Energy Advisory team developed a revised, Industry-benchmarked financial model with a review on assets financial estimation, including CAPEX, OPEX, DRILLEX, MMV and ABEX cost components.
Technical legislation and regulation: Sproule ERCE professionals evaluated the target assets’ storage documentation and assessment of compliance required by competent authorities for CO2 storage and (onshore and offshore) pipeline transport.
Industry Benchmarked Financial Model: Leveraging Sproule ERCE’s commercial experience, the Energy Advisory team developed a revised, Industry-benchmarked financial model with a review on assets financial estimation, including CAPEX, OPEX, DRILLEX, MMV and ABEX cost components.
Technical legislation and regulation: Sproule ERCE professionals evaluated the target assets’ storage documentation and assessment of compliance required by competent authorities for CO2 storage and (onshore and offshore) pipeline transport.
Values:
Identified Key Risks/Discrepancies: Provided the Client with critical insights and value, denoting asset containment risks, scheduling misalignments, overestimation of project-injected CO2 volumes, and material variances in both capital and operational expenditures – e.g. projects overestimating reservoir injectivity, increasing the number of wells or pipeline CAPEX related to design specifications.
Robust Investment Decision Analysis: Sproule ERCE provided the Client with a clear and concise analysis, highlighting key project risks, risk severity given project maturity and ranked recommendations to improve the understanding of each CCS operation and support the project valuation.
Technically Sound and Commercially Robust Solution: Sproule ERCE provided a technically independent assessment of each CCS project, specifically, transportation infrastructure, subsurface storage, storage infrastructure, MMV planning, regulatory, and compliance, attributing tangible metrics to the identified risks, to support the client’s offer to acquire an international portfolio of CCS assets.
Robust Investment Decision Analysis: Sproule ERCE provided the Client with a clear and concise analysis, highlighting key project risks, risk severity given project maturity and ranked recommendations to improve the understanding of each CCS operation and support the project valuation.
Technically Sound and Commercially Robust Solution: Sproule ERCE provided a technically independent assessment of each CCS project, specifically, transportation infrastructure, subsurface storage, storage infrastructure, MMV planning, regulatory, and compliance, attributing tangible metrics to the identified risks, to support the client’s offer to acquire an international portfolio of CCS assets.