The Assignment / Client’s Problem

  • Our client, BP was seeking to divest its equity in the Forties Pipeline system and associated facilities and required an independent view on potential future volumes, “the upside”, which may be developed across FPS in different price scenarios
  • Westwood was engaged to produce a range of scenarios for the future profiles that are likely to be transported via the FPS

Westwood’s Approach & Analysis

  • Study based on Westwood’s proprietary UKCS fields, discoveries and prospects resources and reserves database
  • Overview of prospects and discoveries located within 45 kms of FPS including resource size, ownership and preferred hub choice based on WGEG proprietary “Hub Logic” software
  • Economic modelling and sensitivity studies utilising the in-house Pipeline Tool on these discoveries and prospects. Discoveries and prospects were then developed sequentially to illustrate the potential prize
  • Low and High cases constructed based on these resources being developed at different rates and at different oil prices. These supplemented a Base Case provided by the client of contracted and confirmed throughput

The Outcome & Benefit

  • Provision of the low, base and high case scenarios for the FPS catchment area, which subsequently was used in the sales process
  • Westwood’s analysis suggested that since the surrounding catchment area has significant potential in it given the large aerial extent of the FPS and as such FPS is well positioned to capture future developments
  • Our client subsequently went on to sell it’s equity in FPS and associated infrastructure to INEOS for a consideration of USD 250 million comprising an initial payment of USD 125 million and a subsequent earn-out arrangement over seven years that could total $125 million