Case studies

Restructuring across the Americas

Case profile

Deloitte restructuring (RS) practices, including Deloitte Canada, Deloitte Colombia, and Deloitte Risk and Financial Advisory (US), coordinated to provide cross-border financial advisory services to the Pacific Exploration & Production Company to support the Chief Restructuring Officer (CRO). These strategic teams provided a multitude of services which comprised of assisting Pacific with financial modeling, financial and stakeholder reporting, evaluation of oil reserves and oil reserve systems, internal controls, and operations.

Pacific Exploration & Production Company

Pacific Exploration & Production Company (“Pacific”), a $5.0 billion (US) exploration and production business, that had been built up through various acquisitions, found itself geographically fragmented across several diverse areas including Canada, Colombia, Belize, Guyana, Guatemala, Peru, and Brazil. While the company’s operations generated approximately $2.8 billion in revenue in 2015, $5.3 billion in long-term debt left the company over-leveraged and the decline in oil prices starting in the second half of 2014 resulted in a deterioration of its financial position.

This was a complex engagement because Pacific operates across multiple jurisdictions (headquarters in Canada, operations and exploration activities in Colombia, Peru, and Brazil), with cross-border financing arrangements involving debt in Canada, the US, and Colombia. There was also significant timing pressure given looming restructuring milestones. The team worked collaboratively to identify potential client needs and develop a proposal that addressed client needs in multiple countries. It pulled together a multinational team that deployed quickly to assist with the restructuring of operations in Colombia. The pursuit was originated and led by Pierre Laporte (partner, Deloitte Canada). This engagement also involved Benoit Clouâtre (partner, Deloitte Canada), Roberto Cortez (managing director, Deloitte Transactions and Business Analytics LLP, US), Javier Lancho (partner, Deloitte Colombia, and Latin American and the Caribbean Financial Advisory leader), Oscar Arroyo (partner, Deloitte Colombia) and Andres Roa (partner, Deloitte Colombia).

In addition to the restructuring services provided throughout the engagement, Robin Mann’s Resource Evaluation group provided significant technical services related to Pacific’s oil and gas resources, such as:

  • Review of Pacific’s upstream operations including exploration, production, transportation and field operations
  • Provide technical input to the CRO and the Deputy DFO on Pacific’s operations and how they relate to the go-forward strategy both in bankruptcy and following emergence from bankruptcy.
    Review the reserves and resource volumes of Pacific and conduct a reserves process review on how the company determined their publically disclosed reserves.
  • Performed a technical due diligence of various properties that were considered for disposal in Brazil, Peru, Guyana, and Colombia. Worked with the divestiture team to rank Pacific’s properties and provided technical input for potential sales documents.

Pacific Exploration & Production Corporation successfully implemented its plan of compromise and arrangement effective November 2, 2016. Deloitte RS practices were instrumental in the emergence, fielding a cross-border team led by Deloitte Canada and including RS practices in Deloitte Colombia and Deloitte Risk and Financial Advisory (US). “Through the restructuring process and the tireless efforts of everyone involved, Pacific is now emerging from its recapitalization with a renewed strategic focus, positive cash flow, a strong balance sheet, significantly reduced payables and a board of directors with the unique skills and experience needed to guide management and drive value creation for all stakeholders,” said Gabriel de Alba, chairman of Pacific.

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