The client who is an oil & gas exploration and production company discovers that their wholly owned reservoir is connected to a nearby reservoir in which they partially own in a JV
Although unitization is new in Thailand, it is a worldwide practice in which concession owners join connected reservoirs into a unit operation and each owner gets corresponding share for revenues and costs
The client would like to determine how much they should claim for their share of historical production and also weighing the tradeoff if they pursue the future production as a wholly owned standalone
Role and methodology
Unitization agreement depends largely upon negotiations between concession owners which is typically subject to various possibilities
Identifies key strategic parameters which are oil price, participating interest, unitization timing, fiscal regime change of participating concession blocks
Develop a financial model to incorporate all key parameters, and determine the loss/gain of each owner including government take
Project outcome
Provide commercial value of different market scenarios and corresponding gain/loss to each owner including the uncertainties in negotiation process e.g. loss in commercial value per delay time
The result helps the client management make decision on the concession and support the negotiation process
