The oil and gas industry is one of the largest influencers on the global economy. However, producing, distributing, and performing oil and gas transactions involves complex, capital-intensive processes that require advanced technologies and secure, trustworthy tools.
A data room is a solution that has proven to be efficient in handling information and performing a vast number of transactions, including due diligence in the oil and gas sector. But that’s not the only reason to use them. Keep reading to find out how VDRs can foster industry processes and discover the most common usage areas.
Reasons to use a VDR in oil and gas transactions
The oil and gas sector has some of the world’s largest corporations. These corporations require a smooth and secure flow of information among their subsidiaries, partners, and other involved parties. Virtual data rooms have the power to streamline many aspects of their business, from M&A, fundraising, and environmental audits to joint ventures, among others. Here’s why.
Secure data handling
Data security is a crucial requirement for any deal in the oil and gas industry. Virtual data rooms can help handle large volumes of data and safeguard their integrity by complying with international security standards like GDPR, ISO 27001, and SOC2. What’s more, they can offer end-to-end encryption, identity management, customized watermarks, and a 24/7 customer support service to protect your company data through any deal or tender offer.
Time and cost-efficiency
Using virtual data rooms for oil and gas transactions opens up new cooperation and partnership opportunities within the industry. It helps oil and gas companies broaden their target markets and seek new partners without extra costs. With VDRs, you no longer need to print documents, send couriers, or travel, as every party can access all the necessary information from any part of the world. All that, in turn, speeds up international deals.
Ease of the bidding process
Employing VDRs as part of the oil and gas due diligence checklist can help your company expand the number of submitted bids and grow the list of interested companies. Thanks to virtual data rooms, the tender process can be split into relevant blocks, so you can securely share sensitive information about reserves only with authorized parties. They, in turn, can better evaluate and interpret the data and get quick responses from sellers (thanks to the built-in Q&A section). All of this results in more competitive bids and closed deals.
Safe cooperation and strategic partnership
A virtual data room’s features like granular access, or restrictions to what users can do with each file, allow you to share corporate information temporarily without compromising the company’s integrity. This makes it possible to undertake short-term partnerships to bridge the gaps caused by the commodity cycle or fluctuating demands for oil and gas derivatives.
All in all, the oil and gas industry can reap countless benefits by employing VDR solutions. Let’s take a closer look at the specific areas where a VDR can come in handy.
Applications of VDRs in the oil and gas industry
Most oil and gas transactions are notorious for their large volumes of data. Virtual data rooms provide a secure environment and helpful tools to track data and users through any deal stage with full visibility.
We’ve gathered some of the most common data room applications in the oil and gas industry.
Acquisitions and divestitures
Oil and gas A&D transactions are complex, as they involve large volumes of data. Given that, you need a reliable tool to keep everything organized. Most VDRs offer bulk uploads, automatic indexing, view control, and many other tools to streamline the processes and support your confidence during each step of acquisitions and divestitures.
M&A
During mergers and acquisitions, your company will share or view confidential information regarding the company’s finances, intellectual property, or strategies. Virtual data rooms ensure secure data handling and smooth communication. This accelerates your transactions and maximizes deal value, whether you are on the buy-side or the sell-side of the M&A process.
Debt and equity fundraising
Using data rooms can help potential investors perform in-depth due diligence. On the other side, you’ll be able to manage that process, set permissions, and monitor activity in the data room to identify serious investors.
Environmental audits
A virtual data room is a perfect place to organize and maintain all the supporting documents you may need for an environmental audit. What’s more, a VDR makes it simple to find any file you need, deliver it to your auditors, and answer their questions using a built-in Q&A tool.
Joint ventures
When oil and gas companies consider joint ventures, they need to exchange proprietary information to make sure they can trust each other and collaborate effectively. Using virtual data rooms allows you to engage in negotiations, exchange documents, draft and review contracts, or perform other due diligence activities confidentially with peace of mind.
Conclusion
Most oil and gas transactions are quite complex. Companies have to process large volumes of data, let alone share it with other parties. Such activities need a safe medium to organize, exchange, and control the company’s most sensitive information. Data rooms can handle these tasks by providing secure storage space and automating routine operations, like data sorting.
So whether you’re planning to go through the due-diligence process or merely organizing all your company assets, a virtual data room can become your best friend to ensure a smooth flow of your company’s operations.
