Farm-In Opportunity

Client Information

Our client is an international energy firm with headquarters in the United Kingdom. They were actively pursuing opportunities to expand their presence in Nigeria through the acquisition of new acreage, exploration and farm-in opportunities.

Objective

The client had identified a major asset as a farm-in opportunity and required a flexible economic model of the asset to be built. This needed to be shared with the existing partners and possible investment partners along with the National Oil Company. Following this task, the objective was to examine possible commercial structures around a farm-in and build a contractual arrangement for the deal.

Palantir’s Role

Palantir was initially asked to build the economic model in Excel to calculate the large collection of onshore and offshore assets that made up the project. A particular challenge came from massive uncertainty around the future Nigerian tax regime for gas projects. The model therefore had to be capable of calculating under a variety of hypothetical fiscal regimes. Furthermore it had to be capable of evaluating several partners and be easily audited when required. With a model in place, the consultant became responsible for the economic evaluation of several commercial structures for the farm-in. In addition, it was necessary to train NOC staff on site in Nigeria and discuss the viability of the possible fiscal regimes. Within the company, large numbers of scenarios were run to help test extremes of price, costs and alternate development scenarios. The Palantir consultant prepared and presented reports to management as part of the internal approval process. In addition, the consultant was heavily involved with the drafting of commercial agreements, resulting in quicker sign-off of these agreements and reduced negotiation time.

Benefit to the Client

The client was impressed by the quality of the Excel model and the associated analysis. The project continued for over a year with ongoing work to the model and continuous economic analysis. The client appreciated the rapid response times that were provided. The Palantir consultant travelled extensively to Nigeria to work directly with NOC representatives and provided technical support to high-level negotiations, assisting the client in their negotiation position.