Verify title and transaction authority
First establish the legal owner, licence holder and party authorised to offer the interest. Review the licence status, participating interests, encumbrances, disputes, government approvals and transfer restrictions with qualified legal advisers. A mandate to introduce an opportunity is not the same as authority to transfer an asset.
Interrogate reserves and production data
Reserve classifications and production forecasts should be reviewed by independent technical specialists. Ask who prepared the report, when the data was collected, what assumptions were used and whether production history supports the forecast. Separate proved information from estimates and promotional projections.
Understand field condition and development needs
Consider well integrity, pressure, water cut, decline rate, facilities, evacuation route, pipeline access and required workovers. A producing asset may still require significant capital to sustain output. A non-producing asset may need appraisal, drilling, infrastructure and regulatory work before revenue is possible.
Model the complete economics
The acquisition price is only one component. Include development capital, operating expenditure, royalties, taxes, security, insurance, decommissioning, transportation, community obligations and financing costs. Test the economics against lower production and price assumptions, not only the optimistic case.
Assess environmental and social liabilities
Historical spills, remediation duties, gas-flaring obligations, decommissioning provisions and host-community commitments may transfer with the asset. Independent environmental and social due diligence should identify both current compliance and potential future liability.
Control information and decision stages
Use confidentiality arrangements, a structured data room and staged access to information. Define what must be verified before an indication of interest, before a binding offer and before completion. Investment decisions should be made by authorised principals supported by legal, technical, financial, tax and regulatory advisers.
Simlar Energy facilitates introductions to selected oil-field and marginal-well opportunities. We do not provide investment, legal or technical advice, and no introduction should be treated as confirmation of title, reserves, production or value.