A new company, R&A Investments, has quietly emerged on to the North Sea stage. Its founder, Richard Selwa, previously established the multifaceted oilfield SME, Vienco, and prior to that, was with engineering consultancy IGL.
Selwa, who was the subject of a boardroom coup at Vienco in 2007 but whose stance was subsequently vindicated, believes the R&A Investments model is highly appropriate to the North Sea industry as it grapples with the impacts of the credit crunch.
Its core mission is to help oil companies large and small make sense of North Sea oil&gas assets and how they can potentially be developed in such a tough environment where financial institutions are reluctant to lend and lean towards setting Draconian conditions.
“Many need help to understand what their core business is,” Selwa told Energy.
“This includes assistance in deciding whether they’re going to harvest, grow or exit. They need to go somewhere where they can objectively look at their business and try and get a technical understanding and commercial value on it. They need help translating that into something that investors will understand and find appealing.
“Certainly, when I was raising funds in prior times, it was hard work trying to capture and articulate the real story. So what we’ve found, probably by default, is a niche in the market.”
Selwa described R&A as a boutique consultancy that has four people at its centre, plus a ring of specialist associates that can be called in as required from subsurface companies, tax firms and engineering firms to piece the whole thing together. Core disciplines are strategy and project development.
“On the strategy side, with one client, we’ve been able to unearth and create just under $4billion of North Sea value simply by looking at an asset differently. On the development side, we’ve been able to identify, for two clients, about $1.5billion of value.”
Strategy services are aimed at existing asset owners who are then trying to find out what they should do and at future potential owners who are looking to come in.
“We have a large project with an existing owner which we’ve been working on for the best part of a year where we’ve gone in and looked at the whole of their business … technical, operating, commercial business; valuing it, and pricing it.
“More importantly, we’ve been able to work with them to identify what their genuine value projects are and move them from a position of harvest/exit to one of recognising that there is a genuine growth opportunity.”
Selwa said it was important to get into the minds of a client’s board and, in essence, bring a CEO’s perspective to the table and secure buy-in.
On the field development side, the first step is to work out whether a proposed development might or might not be potentially viable and what the best approach might be. This boils down to making a business case – one thoroughly backed by solid engineering.
“That’s exciting because, in that business model, there are multi-billion-dollar companies that don’t have the in-house resources but are under pressure to keep developing. They’re occasionally prepared to outsource a project almost in its entirety. These are marginal fields … the small ones that energy ministers talk about … 5-15million barrels recoverable.
“The things that I’ve tried to do over the last five years on developments are very much now coming to the fore. We’re not FSA regulated, nor do we intend to be, but we’re actually being asked to identify potential investors, lenders, help people piece together where to go, what financial models to use, what the real position is.”
When asked why he had waited more than a year before taking the wraps off R&A, Selwa said it was necessary to lay the foundations of a track record.