Meeting the IT and systemic challenges of acquisitions

Asset transfers can be information and technologically complex, but can be a springboard for innovation, as well as providing expected productivity. The critical path concerns the transfer of the service contract, the safety case, the preparation and the transition of operations. This article highlights the types of transfer, the issues we face, and Sword’s proven approach to dealing with them.

The transferor may not have detailed plans of what to transfer or how to do it, and the acquiring organization may have limited experience with transfers. The team at either end can take on this work in addition to their current job, with deadlines that are often beyond their control. This creates stressful demands on key personnel and affects their ability to make critical decisions quickly.

The impact on contracts and purchases is often underestimated. Limited time for bidding and expenditure approval, as well as a lack of expertise in contract scope and novation, all require an appropriate strategy. Sword helps to do this efficiently by coordinating a range of suppliers, using specific models from our sourcing catalog, understanding technical scopes and validating prices. We understand the importance of early identification of contracts that cannot be transferred or custom and outdated systems that will need to be replaced. Beware of items with surprisingly long lead times such as radio licenses, network circuits, software customization, and offshore deployment.

A changing landscape

The UKCS landscape is changing. Supermajors are changing their portfolios and mid-level organizations are looking for opportunities, but the most dynamic area is in new entrants. Rising prices are increasing investor appetite, but this should be offset by the energy transition and ESG pressures.

Asset transfer approaches take into account the practical differences in maturity and capacity of systems between companies of varying scale. The challenges encountered reflect the different types of transfer; from an untapped asset, unmanned platform or subsea production system, to a major platform or FPSO. The corresponding project and investment times and costs can range from one or two months at one end of the scale to six months or one year at the other.

Step-by-step approach

The main goal is to always meet the transfer deadline. It creates the mentality of ‘move everything’ as is ‘, start using it, then worry about the details later’. Transfer projects can involve dozens of systems and huge amounts of information, paper, tapes, samples, and other data. There is clearly a need to maintain the chain of custody to govern how information changes hands. Not all systems are suitable for cloud technology, and it certainly won’t help with physical archives and samples. On-premise systems take longer to deploy, and private data centers can experience short-term capacity limitations.

Don’t try to implement radical innovations unless you already have proven methods and funding in place. Project fatigue after handover can set in, creating a risk that the performance sought by the new owner will not materialize. Executives and investors alike will expect increased performance, so plan for it. Make sure the company, engineering, and basement information is all taken care of. This ensures that you can use your staff and financial resources to make future changes to your production assets and get the most out of your reserves. Sword’s approach consists of three distinct phases:

• Transfer – Plan, execute and complete the transfer;

• Improve – Make logical and incremental improvements after the transfer;

• Innovate – Introduce smarter (often digital) ways of working to create greater efficiency and better understanding.

Final thoughts

• Asset transitions are complex for both buying and selling companies. We recommend developing a plan that recognizes where delays can and will occur.

• This is not just about IT – it doesn’t help much if there is too little understanding of information such as safety critical technical documentation or underground data.

• Big change requires strong governance to avoid negative operational consequences. Sword will help you move smoothly from handover to ongoing operational support, coordinating all parts of your vendor landscape.

• Plan and budget for improvement and innovation phases to maximize the value of your new assets.

• Having a single partner during the divestment and acquisition stages for information transfer and related IT work is an efficiency benefit.

Sword has successfully carried out numerous asset transfers and related services on behalf of a range of UKCS companies, including Neo Energy and Serica Energy, alongside some of the most well-known operators in the industry.

Contact Neale Stidolph (Sword Energy Sector, Chief Information Officer), [email protected]

Recommended for you

North Sea M&A: Managing the “ what if ” key to a smooth transaction


Source link

About Robert Wright

Check Also

The Changing Sounds of Nelson Bandela

Nelson Bandela. Photo courtesy of the artist. I’m pretty sure the first time I heard …