Oil Assets Environmental Due Diligence Evaluation

Upstream Oil and Gas


Powder River Basin,Wyoming


Oil Assets Environmental Due Diligence Evaluation




Oil Assets Environmental Due Diligence Evaluation

Cameron-Cole completed an environmental due diligence evaluation of existing oil assets in the Powder River Basin, Wyoming, for a confidential client and their capital funding institution. The assets consisted of 16 oil-producing properties, two drilled uncompleted (DUCs) wells and approximately 16,000 acres of undeveloped lease acreage. The purpose of the evaluation was to provide the operator and lending institution a better understanding of the potential environmental and regulatory liabilities associated with the assets and specifically to identify, document, and quantify the identified defects.   

The scope of the evaluation included review of the seller’s data room files, regulatory file reviews and interviews with regulatory personnel, historical aerial photographs, interviews with the seller’s Production Manager, and a screening-level reconnaissance of each asset. The data room files included surface use agreements, lists of tangible equipment, existing environmental plans (SPCC, SWPPP, and Emergency Response Plans), site facility diagrams, regulatory correspondence, and records of past environmental actions.  

Regulatory agencies included the Wyoming Oil and Gas Conservation Commission, Bureau of Land Management, EPA, Wyoming Department of Environmental Quality, and U.S. Forest Service. The historical aerial photographs were used to document the use and locations of reserve and mud pits, surface water pathways and distances, former areas of release and equipment storage, and dates of development. The reconnaissance included distances to residences, water supply wells, surface water, and other potentially sensitive receptors; as well as inventory and operational condition of pumping units, separators, heater treaters, combustors, and tanks. Additionally, reconnaissance considered condition, type, and volume of secondary containment structures, chemical/fuel storage practices, condition of gathering systems and transfer points, stormwater assessment and evidence of erosion, evidence of spills or releases, condition of pits, and other impoundments and reclamation status.

The results of the evaluation were provided as a written report and summarized in a site evaluation summary matrix, documenting the defects identified, and providing a general risk ranking, as well as budgetary estimates of the cost to address each of the defects. The budgetary estimates were used to negotiate the purchase price, carve out any undesirable assets, and provide an actionable punch list the buyer could use to prioritize their future environmental capital expenditures.