Oil & Gas | FTI Consulting
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Oil & Gas

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Oil and gas companies operate in an ever-changing financial, competitive and regulatory environment. Conflicting legal and regulatory frameworks, pervasive contractual disputes, and market volatility all create both enormous challenges and opportunities to the industry and its businesses. Based in key markets around the globe, the senior professionals of FTI Consulting, bring their deep understanding of the interdependencies affecting the oil and gas industry to address the full spectrum of clients’ needs, from disputes, investigations, policymaking and environmental analysis, to strategic business consulting, transaction advisory, restructuring support, interim management, and strategic communications.


Areas of Expertise

Exploration & Production

Oil and gas production occurs in an environment of high risks and great rewards. There are enormous opportunities, including lower energy costs and the export potential of liquefied natural gas and crude oil, as well as challenges, including regulatory and policy issues and renewed competition between natural gas and oil. To tackle challenges and take full advantage of opportunities throughout the energy supply chain, clients rely on the support of our senior professionals — all of whom have unparalleled experience at the forefront of energy policy and industry operations. Our team has a global footprint and is comprised of former senior energy executives, noted academics and former regulatory officials.

Fuels

Changing regulatory environments have generated ongoing dispute activity, and petroleum refiners have been forced to rethink their product mix. For example, in the U.S., federal mandates originally required the use of oxygenates like methyl tertiary butyl ether (MTBE) to reduce air pollution. Once MTBE was outlawed, however, it created a considerable amount of stranded investment and legal disputes. Clients retain FTI Consulting for dispute resolution, as many of our professionals held their careers in oil companies, refining operations or regulatory agencies.

Gas Processing, Storage & Transportation

The gas processing, storage and transportation segment involves processing products into a salable condition and transporting those products to market. This segment is in a significant expansion mode, and there is an increased emphasis on attracting capital, especially in the form of master limited partnerships (MLPs). To support clients in this segment on various matters, we leverage our extensive experience across the midstream MLP space, particularly in storage and transportation, and combine it with analytical rigor and intimate knowledge of both the policy and the workings of the industry.

Petroleum Refining

Refining operations are confronting new challenges, including flat product demand, competition, potential threats from natural gas, more stringent environmental regulations, and in the U.S., the emergence of light shale oil reserves. Clients continually call on our professionals to tackle these challenges, relying on our experience with refining operations, knowledge of the oil and products marketplace, and expertise in regulatory policy.

Royalties

Royalty owners in individual and class action lawsuits raise claims regarding the appropriate value of produced products, proper deductions from royalties for post-production costs, correct royalty rates, royalties associated with processed gas and liquid products, and shut-in gas royalties. FTI Consulting has extensive experience in data collection and analysis of royalty payments associated with production from government and private oil and gas leases. In addition, we have expertise analyzing the royalty commitments associated with government leases around the world. Our senior professionals assist in the development and implementation of royalty policies and procedures, interpretation of applicable royalty regulations, and compliance with the royalty provisions of oil and gas leases.


How We Help

Disputes

The high-risk/high-reward environment in which oil and gas producers operate has led to a multitude of legal challenges. Disputes often arise over royalties, lease agreements, sales contracts, commodity prices, valuation of oil and gas assets, aging refining assets, expansion of pipeline infrastructures, environmental issues, pipeline rate challenges and increased regulatory involvement.

To help clients around the world identify underlying causes of disputes, FTI Consulting professionals leverage their considerable experience in economics, finance and operations within the oil and gas industry. We deliver privileged consulting engagements and expert witness testimony, drawing on our firm’s industry knowledge base and computing power to examine large data sets and discover information that may be useful to our clients in defending their positions.

Environmental

When confronted with environmental claims or counter claims, clients often need critical, hard-to-find historical, retrospective evidence coupled with damages assessments. FTI Consulting energy professionals have the expertise and resources to evaluate claims against our clients and the costs of those claims, initiate litigation and support cost recovery, and apportion costs among responsible parties. Our services include privileged analysis and critical expert witness testimony.

Interim Management

The success of a restructuring or transaction may depend on how quickly management voids can be filled once it is completed. The professionals at FTI Consulting with C-level experience are prepared to fill the void when client organizations face leadership, financial or operational challenges. Our experienced and credentialed senior executives can immediately assume C-level roles when the need arises, and provide the strategic leadership to maintain critical momentum and continuity, establish corporate priorities, and build morale . We serve in the following roles: chief executive officer, chief operating officer, chief financial officer, chief restructuring officer, controller and treasurer.

Investigations

To assist clients in any investigation, we combine our in-depth knowledge of the oil and gas industry with our firm’s computing power to analyze large data sets. We distill this data into a meaningful view of an incident or set of events — information that is frequently useful to our clients in defending their position. Our investigative teams consist of certified public accountants, certified fraud examiners, forensic investigators, former law enforcement and government officials, technology specialists, engineers, attorneys and former auditors. These professionals are extremely proficient in data collection and analysis, and at building tremendously large databases — one of which includes actual oil and gas transactions dating back to the beginning of the 20th century.

Some of our clients take proactive, preventative measures and use investigations to support programs designed to offset vulnerabilities, such as cross-border agreements and compliance issues regarding anti-corruption. Others use investigations to react to alleged non-compliance lawsuits. Most issues concerning exploration and production involve tremendous amounts of data that need to be analyzed. Royalty disputes and controversies often require research and analysis of the facts surrounding an issue, identification of root causes, and recommendations for necessary remediation and prevention of reoccurrence. Clients involved in gas processing, storage and transportation, as well as in petroleum refining, have issues that require understanding of specific accounting requirements and analysis of tremendous amounts of data to support their position.

Policy

Oil and gas producers, refiners, and transportation organizations all face aggressive regulatory and policymaking activity focused on shale oil and gas exploration. To stay competitive, producers must play an active role in the development of legislation and regulatory policies. Refiners face a host of serious policy issues ranging from air quality to transportation — sulfur regulation, the Low-Carbon Fuel Standard and the National Ambient Air Quality Standards, to name a few. In addition, environmental concerns are impeding the development of additional pipelines to bring new crude oil sources to existing refineries. As a result, railroads have become an expensive transportation alternative to pipelines for moving crude oil. This is generating a considerable amount of policy deliberation about safety protocols and likely restrictions.

Prior to joining FTI Consulting, our energy specialists spent their careers working at energy and pipeline companies, as well as in government entities and regulatory bodies, including on Energy committees of both the U.S. Senate and House of Representatives, as well as in policymaking positions in the EPA and the Department of the Interior. Because of this, we are uniquely qualified to assist clients with navigating through the current difficult regulatory environment. We combine our professional experience with our industry knowledge and analytical capabilities, including economics, modeling and valuation, to engage in persuasive regulatory and public policy discussions, and to craft policy, regulations and amendments that favor our clients’ interests.

Restructuring

Exploration and production (E&P) companies typically consider restructuring because their exploration program has not generated sufficient liquidity to continue to replace reserves. We have been involved in every major E&P restructuring in the past two decades, and our deep analytical skills and understanding of E&P operations enable us to help our clients maximize the opportunities and minimize the effect of challenges.

Strategic & Business Consulting for Royalty Agreements

Clients trust us to help them manage royalty costs because of our experience in managing all aspects of royalty agreements and our understanding of the nuances involved. We review leases and product sales agreements, applicable current regulations, and established legal precedents. We perform a compliance analysis of lease royalty obligations to determine if there are possible exposure issues. If so, we calculate the potential additional royalty amounts and assist in making the appropriate business decision to resolve the royalty issues.

Strategic Communications

With oil and gas exploration and production expanding beyond historic locations, both conflict and opportunity confront oil and gas producers and refiners. Expanding existing pipelines or building new ones to increase the supply of natural gas often encounters public resistance. It is critical that key audiences — legislators, regulators and the public — get the correct information about important issues. The senior communications and energy professionals at FTI Consulting communications are dedicated to helping clients secure, protect and enhance their permission or license to operate through strategic communications and stakeholder involvement. We understand the policy, the politics and the communications challenges associated with the oil and gas industry. We have extensive experience executing effective community relations and education plans, rapid response campaigns, crisis management, CEO positioning, and issue campaigns that educate and influence legislators, regulators and the public on behalf of our clients.

Transaction Advisory: M&A/Antitrust/Carveout/Spin-off/Divestiture

The success of shale oil and gas exploration and production has given rise to considerably more transaction activity around the world. As energy and power companies re-evaluate their portfolio of assets and reposition themselves to take advantage of new opportunities, they engage FTI Consulting to assist and advise on potential transactions, leaning on our professionals’ deep experience in and understanding of the economic, financial, operational and regulatory challenges and opportunities that exist.

We support your M&A activities from the earliest part of the planning process through completion of the deal and beyond. We examine potentially problematic issues with transactions such as commodity risk, antitrust concerns, and shareholder resistance, and we develop creative alternatives that address the issues without forsaking the benefits to be delivered by the deal. For acquisitions, we provide critical financial and strategic due diligence, oversee communications with key stakeholders and advise on the regulatory review process. For carveouts, spin-offs and divestitures, we help the new entity prepare for and thrive in its restructured standalone environment. When a client is no longer dependent on a parent company or larger organization, we understand what the new entities will require, the importance of transition services agreements, and how to set up these new organizations to be successful.

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