Investing in North Sea gas
While its boom years are behind it, North Sea gas still offers opportunities to generate attractive revenues. As the major players move away from infrastructure they built when it is no longer profitable for them, specialist upstream infrastructure companies are seeking to operate pipelines, and processing and storage facilities as efficient, standalone businesses.
Their ability to do so successfully is very much dependent on efficient management and the maintenance of gas flows through their systems. Understanding future flows and the competition for new field developments is therefore critical to investors considering buying any offshore pipeline and processing system.
Low-cost pipeline business
Our client, a consortium of North American infrastructure funds, was considering the acquisition of a North Sea offshore pipeline and processing business. They saw potential growth in the business and wanted to assess potential future revenues to guide their valuation.
While some of the business’ future revenue streams were already contracted, the majority was dependent on sustaining gas production in existing fields and also on new volumes being generated by future exploration.
The consortium needed Gas Strategies’ insight to help them determine how much gas was left in this declining basin, the likelihood of new discoveries being made, the risk of the ageing infrastructure failing, the chances of maintaining historic tariff rates in the future and other factors that would impact the potential return on their investment.
Reliable revenue forecasts
We used our considerable knowledge of North Sea oil and gas, including forecasting models that we have used in multiple transactions, to assess future production. From that, we were able to determine future flows, capacity bookings and revenue.
Our consultants working on this project are experts in North Sea gas and the upstream basins relevant to this investment opportunity. They combined their unrivalled knowledge with forensic analysis of all the data available to create a reliable production and revenue forecast on which our client’s valuation was based.