The New Business Department is one of the drivers of business growth. New Business handles the acquisition of new oil and gas interests and accompanies Perenco’s subsidiaries in the management of their asset portfolio.
Targeting external growth
The acquisition of new oil and gas fields opens new horizons, secures Perenco’s growth and helps renewing the Group's global reserves. Whether in countries where Perenco already operates or in new entry countries, the evaluation and negotiation process means our profession is at the core of the company. We systematically bring together resources from geosciences, projects, drilling, legal and finance to refine assumptions (development plans, profitability and risk management), with the aim of assessing the fair value for Perenco.
Targets are selected if their development characteristics are in line with the group technical strategy and if we identify operational synergies and growth prospects (known as “upsides”).
For example we have acquired onshore and offshore fields in Gabon last year, which produce 24,000 barrels per day and offer many synergies with our existing operations. Trinidad & Tobago is a new country entry. We have redeemed three mature offshore fields in shallow waters, which produce 13,000 bopd and provide a growth relay to the company in this region of the world, while staying in our technical comfort zone.
Optimising portfolio management and commercial contracts
Our role is also to advise and accompany our 15 subsidiaries' general managers on an individual basis to protect and extend our oil contracts. We operate during negotiation phases whenever our concessions are due to expire but also throughout the duration of contracts. Contracts generally have 20 to 30 years term with legal and economic stability clauses however the legislator may occasionally be tempted to renegotiate certain terms or even modify Oil or Gas Codes (changing the law). Amendment requests may also come from our initiative to allow for the sanction of a particular investment project in order to accelerate organic growth.
Our department intervenes on all major company projects as well, such as the FLNG project, result of a partnership between Perenco and the State of Cameroon for the production, processing and liquefaction of natural gas reserves. This had not been considered technically or economically viable in the past, but contractual arrangements and the "risk matrix" negotiation between all different projects components (upstream/ midstream/downstream) were key in taking the decision to invest. Perenco chose to invest at the end of 2015 while our industry was suffering a difficult downturn. However the quality of our cooperation with the subsidiary and our contractual boldness have made all the difference.
In short, we constantly interact between parties and we are here to support our subsidiaries! Our role thereby consists in facilitating and optimising exchanges and supporting negotiations and commercial relations with our partners.
Exploiting our financial and decision-making agility
Perenco is the first independent European company with a daily production of 465,000 barrels. Our operational performance and cost-effectiveness are the key to our investment capacity. Given the capital structure, that of an independent family company, we are investing in projects with relatively short cycles to minimise "pay-back" durations and avoid exposing the shareholder to long revenue periods. This requires us to be highly selective in the choice of our targets. However, contrary to our competitors ("Majors" and quoted Oils and Gas companies), this independence means we have a very short decision cycle that gives us a competitive advantage to quickly finalise negotiations with sellers.
The choice of acquisition targets and support provided to our subsidiaries must be consistent with the company’s technical strategy. Our department is at a crossroad between acquisition projects and asset portfolio management, so that we can optimise our missions while remaining as close as possible to Perenco’s value-generating, operational subsidiaries.
A successful "entry country"
In 2016, following the crisis, Perenco chose to invest and acquire three mature fields in shallow waters in Trinidad and Tobago. The company will make a very short return on investment (less than three years) on this acquisition, which marks Perenco’s entry into a new country. To start this new subsidiary with a transition period of only three months, we had to rally all headquarters’ operational teams and support departments (projects, finance, legal and IT, etc.), thereby enabling a very quick take-over without any production interruption. Starting a new field especially in a new subsidiary is always a thrilling moment that creates strong links between the teams and brings together the entire company.