Are your assets fully prepared for upstream acquisition and divestment?

As the oil price stabilises above $60 per barrel, the headlines have been dominated by acquisition and divestment activity as sellers divest non-core assets, and buyers, with the available capital, look to expand their portfolio.

The scale of the transaction grabs the headlines. Media sources would have you believe that these deals involve a simple handover of keys in exchange for a sizable cheque. However, the transfer of commercially sensitive data, which has the potential to severely delay the transaction, accurately describes the reality of acquisitions and divestment as complex and high risk.

Extensive preparation is required when acquiring or divesting assets. Access to historical information detailing essential operations and maintenance, the condition of critical equipment, vendor agreements and financial reports are absolutely vital for continued safe and efficient operations. The data which represents this information is often safeguarded in ERP and back-office systems which need to be integrated into the buyer’s system, or extracted into a standalone environment in preparation for selling.

With more than 20 years’ experience in upstream oil and gas, SAP specialists Absoft have an established track record in executing migration projects and the recent surge in upstream acquisition and divestment has only allowed Absoft to refine and perfect this methodology.

Referring to a particular divestment project, Absoft was tasked with separating key business information residing in an SAP ERP system, to facilitate the sale of an asset on behalf of a Supermajor.

The timeframe to complete the transaction forced Absoft to become pioneering in their approach. Typically, migration projects can last anywhere between six and nine months, but this particular divestment process had to be completed in as little as seven weeks.

Our SAP consultants were authorised with immediate access to the Supermajor’s SAP ERP system to prepare configuration and deliver the technical solution and infrastructure at the earliest opportunity.

Working alongside in-house SAP teams, Absoft was able to specifically ‘carve out’ the required business data from within a large and multi-discipline SAP ERP system to provide the buyer with their own dedicated environment and fit-for-purpose solution.

With first-hand experience of upstream acquisition and divestment projects, Absoft consultants alleviated the added workload and burden associated with the transaction. This freed-up in-house SAP teams to focus on day-to-day activities which are pertinent to sustaining cost efficient operations in such challenging economic times.

Accessing the seller’s SAP ERP system was previously unheard of, but expedited completion of the divestment process allowing both the seller and buyer’s system to remain fully operation from day one of the transaction, with no operational downtime and disruption to business continuity.

Following the successful migration, Absoft quickly moved to a support phase, with a team of consultants working onsite to monitor the ongoing operational efficiency of the new SAP ERP system.

This is one of many migration projects where Absoft has been called upon to provide upstream acquisition and divestment expertise within SAP. It’s our own hands on account of a divestment process, which took place seamlessly, behind the headlines, and encouraged us to improve upon our own methodology to deliver results within a limited and unforgiving timescale. It’s also a sign of the times that major players in upstream oil and gas are continuing to streamline their asset portfolios to generate working capital quickly, and also grow more cost effectively in anticipation of oil price recovery.

Want to know more? If your organisation is in a position to buy or sell assets and would like to learn from our project experience, we’d be happy to chat with you as part of this blog discussion or offline via: info@absoft.co.uk. Alternatively, download our solution brief below.               

by Gareth Petherick, Principal SAP Consultant