Digitalisation as a critical tool in resource asset valuations, acquisitions and dispositions

Abstract

Digital twins and digital ‘solutions’ have become increasingly common in recent years, as companies recognise the benefit of greater visibility and control into their operations. When built and implemented properly, a digital twin (DT) offers the potential for significant cost savings, coupled with attractive add-on value in safety, operational integrity and predictive maintenance, all of which can also result in increased production. DTs are also critical for effective portfolio management, in allowing a full understanding of asset or field value, upside, and long-term potential. By identifying areas for optimisation, a DT can help the operator prioritise investment, and accurately understand which assets to keep or monetise. Through building DTs for operating properties, Nova Systems and PTC have gained a deep understanding of the upside potential inherent in the technology. This also means that DT technology can be invaluable in asset acquisitions. During merger and acquisition (M&A) analysis, a company typically looks for technical, operational and financial leverage which can unlock potential not seen by the current owner. These can be commercial (commodity contract, price deck and agreements), technical (e.g. engineering approach and models, and subsurface), operating synergies (common services, facilities and duplication) and digital solutions. While most companies utilise traditional and tested approaches to asset valuation, new digital solutions offer the opportunity for break-out higher valuations which can drive an entirely new approach to M&A growth. In today’s competitive marketplace, the company with an innovative digital solutions skillset will have the advantage.