Corporate M&A

A global conglomerate faced the challenge of establishing a stand-alone energy business after acquiring 2,500 producing oil and gas wells in Texas for nearly $1.5 billion. The company aimed to set up this subsidiary with operational capabilities in less than six months, which presented a complex set of challenges. These included designing a lean organization, executing a rapid hiring plan, implementing a new SAP enterprise resource planning (ERP) system, deploying a field supervisory control and data acquisition (SCADA) system, and establishing a supply chain function with over 400 unique suppliers. Additionally, the company needed to determine the opening balance sheet for the new business in compliance with international financial reporting standards (IFRS). To address these challenges, the conglomerate partnered with Ernst & Young LLP (EY), leveraging their extensive experience in the upstream oil and gas industry. EY's team implemented a structured approach that included immediate accounting support and a roadmap for building a self-sustaining organization. They facilitated the onboarding of 106 oil field employees and assisted in the transition service agreement (TSA) to maintain basic while ensuring a timely exit to avoid punitive payments. Within three months post-acquisition, the new subsidiary's headquarters opened, and organizational design workshops were conducted to create detailed functional transition plans. The EY team prioritized the implementation of the SAP S/4HANA suite, which was completed in just 4.5 months—significantly faster than the typical nine to twelve months for such projects. This rapid deployment was made possible by EY's pre-configured Upstream SAP template, which minimized customizations and ensured compliance with SAP guidelines. By the end of the six-month timeline, the new Exploration and Production (E&P) company had successfully established over 100 processes across all functions and deployed more than 20 applications, including essential IT infrastructure. Seven months after the deal announcement, the subsidiary achieved its first month-end close and recorded its first revenue. This swift and efficient transition not only positioned the new company for immediate operational success but also laid the groundwork for long-term growth and efficiency in the competitive oil and gas market.

Successfully completed $1.5B transaction

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