Due Diligence
RWA's team of due diligence experts provide in-depth analysis and assessment of potential natural gas investments and transactions. We conduct comprehensive evaluations of targets' operations, scrutinize risks, evaluate compliance with regulations, and provide valuable insights regarding potential future capex/opex to enable our clients to make informed decisions and mitigate potential risks.
Notable Projects
APA International Group
Gas Due Diligence team that was asked to provide an independent review of key areas of the target gas utility assets being considered for acquisition for APA Group in 2021. The key areas reviewed included 1) Organizational Structure/Shared Services Impacts, 2) Operations, 3) Engineering & Planning, 4) Infrastructure Condition, 5) Capex and Opex Review, 6) Technology and 7) Environmental, Health and Safety. There was a particular focus on Shared services as the target assets were being split form a large multi-state utility. The RWA team assessed and described the condition of the gas utility’s infrastructure, operations, management, and technical aspects and provided an iterative report that focused on key issues the client was interested in as they were discovered.
The due diligence review described potential financial impacts to the proposed deal and discussed ways of mitigating those risks with the client. Specific review tasks included capital budgets; infrastructure condition and leak rates; asset management with a focus on shared services, IT transition risk, risk associated with the 2021 winter weather event; and environmental risks. The RWA due diligence review identified issues uncovered during the review and proposed an approach to resolve each issue as well as ways that previously unrecognized aspects of the target assets could represent opportunity for the client to capitalize on.
Puget Sound Energy
RWA served as project lead of the Gas Due Diligence team that was asked to provide an independent review of the key areas of the gas utility for Macquarie in 2008 and a consortium of investors in 2018 including: financial condition, operations processes, organizational performance/management review, customer service practices, operations and maintenance practices, regulatory compliance, technical best practices and standards, engineering, infrastructure condition and environmental areas. From this extensive due diligence review, Mr. Walker’s team assessed and described the existing condition of the gas utility’s infrastructure, operations, management and technical aspects and suggested ways to optimize performance of the assets, company operations and personnel including identifying any red flags and risks associated to the Utility.
The independent review identified impacts on the financial aspects of the deal, different types of risks or opportunities and ways to mitigate those risks. Specific review tasks included capital budgets; operations and maintenance budgets; asset condition with an eye toward operations and maintenance costs, obsolescence risk, equipment failure risks and/or opportunities to modernize; asset performance and 10-year plans to evaluate adequacy of capital budgets and risks to higher capital outlays due to higher than expected load growth, higher than expected obsolescence, new generation interconnection, changes in mandatory reliability criteria or other causes; environmental risks. The independent review identified issues uncovered during the review and proposed an approach to resolve each issue.
Philadelphia Gas Works
RWA led two independent teams that performed full due diligence of PGW, the largest municipal gas company is the US, for two separate potential infrastructure funds who were on the short list of potential to invest in and acquire the utility in one of the largest M&A auctions in recent US history. The teams reviewed all aspects of the Utility including operations, management, regulatory compliance, maintenance, key technology to support operations, procurement, engineering and environmental areas. The team reviewed and reported on the condition of the operations, management and technical aspects of the utilities as well as provided an assessment of assets, the performance of the assets, and the risks to the Utility associated with the assets.
The independent review included impacts on the pro forma, different types of risks or opportunities and ways to mitigate those risks. The specific review targeted PGW’s capital replacement program and its accompanying financial rate rider for PGW’s aging, leak-prone infrastructure, cast iron and unprotected bare steel, which are some of the largest amounts of each in the country.
Due Diligence Clients
Leidos
iCON
APA Services International
Philadelphia Gas Works