INEXS helps clients understand and quantify oil and gas assets.
When clients are interested in buying, selling, or investing in oil and gas assets, INEXS helps them understand and quantify those assets by determining the risks of each asset through rigorous examination and analysis of existing geological, geophysical & engineering data. INEXS geologists, geophysicists and engineers provide detailed, independent reserves analysis.
INEXS is a geoscience and petroleum engineering consulting firm based in Houston, Texas that focuses on upstream oil & gas assets and company evaluations for capital providers, debt funds, private equity, and upstream oil & gas companies. INEXS has been very active working with restructuring firms and lenders to build an independent assessment and value of the assets while designing a workflow for ongoing well operations to insure stable cash flow for portfolio companies.
What differentiates INEXS from traditional reservoir engineering firms is the practical, operationally focused and risk-adjusted assessment of the true economic and realizable value of a company’s reserves. The INEXS team members are very professional, technically adept and are also commercial and can serve as an interface with the business community.”
- Traditional third party reserve reports are often assembled quickly, sometimes with little due diligence, and may be influenced by the client company.
- Third party reserve reports often have no risks applied to drilling and flowing proven non-producing (PDBP, PUD, PDSI) reserves – both technical and mechanical risks.
- Conflict of interest makes it impossible to evaluate drilling prospects and portfolios dispassionately and objectively.
- Certain companies and management teams have difficulties communicating technical information in a manner that can be translated easily into financial terms and may overlook key risks or costs associated with finding and developing new opportunities.
- As part of a complete technical review process, INEXS meets with the management teams, reviews all available data, interpedently evaluates current production and future drilling opportunities, generates type curves as needed, and fully evaluates and documents all risks to the drilling and production portfolio.
- INEXS then generates a summary report representing both the range of outcomes as well as the most likely outcome focused on defining and implementing the highest value field operations to maximize cash flow, through the process of generating an independent risk weighted NPV-10 value for all non-producing future well operations – including Probable and Possible reserves.
- INEXS provides complete technical project management, with teams that evaluate the technical data, analyze field operations, review G&A and LOE, and deliver the summary report, with options to implement the drilling, production, abandonment and environmental operations, and deliver the results efficiently and cost effectively.
INEXS independently evaluates the realizable economic value of a portfolio of assets and analyzed the current production performance and recommends enhancements to improve results.
- Review third party engineering reports. Confirm technical support for all proven reserves. Check support for acreage, reservoir thickness, porosity, water saturation, pressures.
- Review full presentation of portfolio, identify high value wells, and wells with insufficient support data, then meet with technical team to resolve.
- Generate risk assessment for recoverable reserves and apply these risk factors to create a risked reserve value for all producing, non-producing and undeveloped locations.
- Use developed risk values to identify the high value opportunities, and to downgrade those below key threshold ratios.
- Build full re-completion and drilling schedule to capture all the high value non-producing and undeveloped locations, and define the Investment necessary to complete the program.
- Review field operations to identify possible improvements to reduce downtime, lower lease operating expenses, increase field level efficiency, and maximize value.
- Generate full written report including complete well database, along with the field re-completion and drilling schedule of field operations over the next several years to maximize the value of the entire portfolio.
- As part of a complete technical review process, INEXS creates a summary report that is a P50 most likely outcome focused on defining and implementing the highest value field operations to maximize cash flow, through the process of generating an independent risk weighted NPV-10 / Investment value for all non-producing future well operations – including Probable and Possible reserves.
- INEXS provides complete technical project management, with teams that evaluate the technical data, deliver the summary report, with options to implement the drilling, production, abandonment and environmental operations, and deliver the results efficiently and cost effectively.
- Gather all data supplied by restructuring client including digital shape files of lease position, type curves, and pre-existing studies, investor presentations, including maps, cross-sections, and geological analytical information specific to client’s assets. All data, reports and reserves estimation will be accepted at face value “as it is” the short fuse on the project does not allow for QA/QC, revision or validation of data.
- Will need NRI’s, lease expiration dates, LOE’s, pipeline contracts and basis differentials and PhDWin or Aries well files – can convert from either database as needed
- Analyze proprietary and public production records of all surrounding wells to develop type curves that are relevant to the client acreage position
- Attempt to subset the acreage into logical grouping based on proximity to type curves and variability of type curves. These areas may be ring-fenced based on similar well performance (similar decline curves and reservoir setting).
- Compare and contrast all existing type curve studies from client to public information
- Determine well spacing and maximize potential well locations on acreage – if the client has already done this in their digital well database all the better
- Review all drilling and completion actual costs supplied by client and compare to recent trends in the basin
- Determine what variations – if any – to apply to those costs across the acreage position based on depth and pressure
- Review all lease operating costs supplied by client and compare with public information. These LOS/LOE’s together with well costs and production response may provide the elements for building an opex model and a matrix to estimate possible IRR’s and ROI’s.
- Review all pipeline transportation agreements and contracts supplied by client to and contracts supplied by client to determine basis differentials and compare and augment with public information. Determine relevant pipeline capacities.
- Water production, SWD wells, and disposal costs.
- Oil and liquids production, transportation methods and costs.
- Apply these differentials to each well case.
- Remove all acreage that cannot be drilled within the lease expiration dates provided.
- Design a logical timeline for drilling and completion of acreage and apply that to the capital expenditures and start of production for each well. Typical drilling curves, NPT and drilling record would be beneficial on establishing the drilling sequence.
- Estimate operational delays caused by weather and other factors and apply to the timeline.
- Build a complete valuation for each of the ring-fenced areas in terms of TYPE wells, and generate a PV-10 of the future value, based on the representative TYPE well decline curve.
- Review existing studies from client.
- Build separate cases for different reservoirs across the acreage and summarize the valuation for the acreage for each reservoir.
- Determine from surrounding production the percentage of wells underperform based on mechanical, reservoir, or operational issues and apply that to the summary valuation.
- Assume that P&A is so far out in the future for each well that the PV-10 cost would be negligible.
- Develop project cash flow model.
- Generate the full valuation of the program on a per acre basis. Complemented by providing ranges of possible outcomes, building ranges to be sensitized using High/Low cases and using Monte Carlo simulation.
- Develop a matrix comparing returns on investment to acreage value
- Analyze recent acreage transactions and attempt to normalize to current market conditions.
- Compare the recent transactions to the matrix to determine a minimum, most likely and maximum value for the two acreage cases in the different reservoirs.
- Create maps comparing normalized values to geographic locations.
- Analyze any existing distressed sales to determine the valuation reduction and apply to that scenario for the report.
- Summarize results into a written report to the client.
- Prepare to defend as needed.
- Supervision and management of day to day operations
- Production monitoring and reporting (Decline Curves, Histories, etc.)
- Optimization of artificial lift systems
- Evaluation of all operating costs
- Assessment of gathering, transportation and processing agreements
- Reporting of operational results on a weekly, monthly or quarterly basis
- Online access to operational data
- File all monthly production reporting, annual testing and injection reports required by various state and federal regulatory agencies
- Monitor production vs sales volumes to insure variances are within normal tolerance
Safety / Environmental
- On site safety representatives
- Assessment of current safety programs
- Phase I site inspections and Hazard and Safety Program assessments
- Incident response
- Assess permitting / reporting requirements
- Air Quality
- Greenhouse Gas Reporting
- SPCC Response plans
- SARA Title III
- One Call program
- Regular safety meetings and employee training
- General Ledger / Property
- Complete general ledger processing
- Financial reports
- Property (LOS) reports
- AFE tracking & reporting
- Accounts Payable
- Invoice processing (review and approve invoices in integrated document mangement system)
- Invoice payment
- Joint Interest Billing / Accounts Receivable
- Monthly billings per joint operating agreements
- Field and labor allocations
- Revenue Processing / Severance tax
- Record all revenue to appropriate lease / well level
- Make revenue disbursements to joint owners and royalty owners