Oil and Gas Virtual Data Room: How VDRs Streamline Energy Deals

The energy sector is now facing significant changes and has to adapt to the quickly transforming market and consumer expectations. What’s more, it’s regularly a target of cyberattacks — over 90% of oil and gas companies suffered from data breaches through third parties last year. 

To cope with those challenges, a virtual data room was developed. It’s a solution that helps dealmakers from the energy or oil and gas industry with day-to-day operations, fundraising, divestitures, mergers, and acquisitions while securing sensitive data and critical documents.

Keep reading to find out how to implement oil and gas virtual data room technology to successfully complete energy transactions.

What is a virtual data room for energy transactions?

A virtual data room for the energy sector is a place where both non-renewable and renewable energy companies can store and share sensitive documents, collaborate with third parties, and complete financial transactions without security risks.

VDRs are better than traditional data rooms, physical data rooms, because they are:

• More reliable, as sensitive information can’t be lost or damaged during transit or storage
• More accessible, as users can access confidential information from anywhere
• More affordable, as companies don’t spend money on rent and maintenance

VDRs are better than free cloud storage because they are:

• More secure, as have security features like advanced permissions 
• More efficient, as have advanced features for communication, user activity tracking, and confidential information management

Energy companies choose virtual data rooms because they offer cost efficiency and help simplify business processes, speed up decision-making, and complete deals more efficiently.

Virtual data room solutions for the energy industry

Here’s what non-renewable and renewable energy companies can use a virtual data room for. 

Oil and gas acquisitions and divestitures

Growing worldwide demand for oil and gas, problems of scarcity, and attempts to switch to renewable energy are just a few challenges the energy industry faces today. 

Since energy companies are going through difficult times, optimizing asset portfolios has become a priority for many of them. They do it through acquisitions and divestitures — risky, complicated, and time-consuming financial transactions.

Oil and gas data room simplifies and speeds up transactions, providing advisory firms or investment banks with features that help:

• Prepare and organize multiple financial and technical documents
• Share documents with key stakeholders 
• Control what users see and do with files

M&A transactions

A virtual data room for the energy industry is the best solution to streamline an M&A process and ensure proper deal management. VDR providers help both a sell and buy side by offering:

• Secure space for due diligence documents storage
• Advanced user permissions to control who can access documents
• Regulatory compliance with international legal requirements
• Features to quickly and efficiently respond to bidder requests
• Security features to prevent data leaks and breaches

Here’s how a VDR can be helpful during each step of an M&A and other corporate transactions:

1. Pre-marketing phase. A seller prepares a data room, uploads pre-marketing documents, and invites key stakeholders.

2. Due diligence phase. VDR users have quick access to compliance documentation, financial statements, and other confidential documents.  Potential buyers ask questions about documents or request additional ones during the transaction timeline.

3. Post-merger integration phase. A new company uses a VDR for integrating financial, legal, IT, and other departments, storing corporate documents, and collaboration.  

Fundraising

Startups and companies considering a funding round can use a virtual data room to:

1. Distribute confidential information to investors 
2. Share updates
3. Keep control of files in case a deal doesn’t go through
4. Get notifications and statistics on uploaded documents 
5. Check which investors are most interested in a deal
6. Communicate with investors via one secure space

The better and more organized a virtual data room is, the quicker and more efficient a fundraising process will be. Here’s what you can do:

• Create a clean and easy-to-navigate folder structure
• Use advanced permissions and allow read-only rights so that third parties can’t download or edit documents
• Create separate data room access for each investor and provide targeted information for each one
• Establish a content update schedule and stick to it

Restructuring

Restructuring is a complicated and time-consuming process. To make it more efficient and easier, companies in the oil and gas sector can use a virtual data room — a comfortable, secure, and well-organized space that allows users to:

• Upload and manage disclosure statements, restructuring plans, and other documents
• Respond to creditor and debtor requests quickly and efficiently
• Add and remove participants from a data room easily

How virtual data rooms benefit big energy companies

No matter the industry, be it a private equity data room or a real estate deal data room, secure data rooms bring many advantages to companies using them.

High-level protection of confidential information

Virtual data room providers ensure secure document storage and distribution during all kinds of energy sector transactions and processes: from M&A to environmental audits and joint ventures. This is possible due to the following security measures:

1. Physical security. Data centers are physically protected due to strict access policies and biometric entry authentication systems.

2. Security certifications and compliance. Data room vendors earn internationally recognized certifications to ensure infrastructure, document, and access security. Such certifications may include ISO 27001 or PAS 2060.

3. Document security features. They include:

• Redaction to black out sensitive information in a document
• Dynamic watermarks to see who and when viewed a file
• Fence view to protect files from unsolicited viewing

4. Access security features. They include:

• Advanced user permissions to give access based on a role in a project
• Two-factor authentication to verify users’ identity
• IP access restriction to restrict access from a certain IP address

Time and costs savings

Virtual data rooms are more affordable in comparison with their alternatives like physical data rooms. They’re also much more convenient and accessible than free cloud storage options. 

More specifically, virtual data rooms help energy organizations save time and money on:

• Traveling. No need to drive or fly to physical rooms located in a different city or country.
• Rent. No need to spend resources on a physical data room’s rent and maintenance.
• Paper documents. No need to print paper documents and look for secure space to store them.

Improved workflow

There are many features virtual data rooms have that significantly simplify the work of energy enterprises:

1. Document management features:

• Bulk uploads to upload multiple files at the same time
• Drag-n-drop to quickly grab and drag a file to a data room
• Any format support to upload documents in any format without having to reformat them
• Automatic index numbering to automatically number files and folders for easier search

2. User management features:

• User invitations to quickly invite users one by one or in bulk
• Detailed advanced user permissions to adjust different levels of access to users
• Notifications to send users updates about uploaded documents

3. Activity tracking features:

• User-activity tracking to check who viewed, printed, edited, or downloaded a file
• Full audit trails to record every action that occurs in a data room
• Reports to stay informed on project activity details

Ease of use

A virtual data room is a cutting-edge technology that is extremely easy and convenient to use because of:

• Intuitive interface to start using a data room with no prior training
• Mobile app to securely access documents on-the-go
• Single sign-on (SSO) to log in with a single set of credentials to multiple projects
• The plugin-free environment to view documents in their native format

Enhanced communication

Based on our observations, energy companies undergoing financial transactions have to communicate with numerous third parties. That’s why virtual data room providers offer a range of communication tools:

• Private and group chats to securely discuss project-related questions
• Comments to ask and answers questions right in documents
• Expert assignment to assign tasks to experts specializing in definite areas
• FAQ section to find answers to the most common questions about documents

Professional customer support

Our experience shows that it’s better to choose a virtual data room provider that has:

• Multilingual support to talk to a support specialist in a language you prefer
• Multichannel support to contact a support team via a chat, email, or phone
• 24/7 support to reach a support rep at any time

Implementing VDRs in oil and gas transactions

The implementation of an oil and gas virtual data room typically comprises four main stages. 

1. Choosing the right VDR provider

The first and most critical step is selecting the appropriate VDR provider. The right provider will offer features and services tailored to the specific needs of oil and gas transactions, such as:

• Security. Oil and gas transactions are always about sharing highly sensitive data. Choose a provider with robust security features, including data encryption, two-factor authentication, detailed audit trails, and several levels of access permissions. Also, pay attention to compliance and certificates.

• Support. Ensure that the customer support team of a virtual data room provider is accessible at any time and knowledgeable so that you can solve arising issues quickly and efficiently.

• Customization. Look for a provider that offers various customization options: from customizable access controls to branding.

👁️‍🗨️ Tip: To better understand what virtual data room provider you need, take a quick survey that will help you pick up the best offer.

2. Setting up a VDR

Once you’ve chosen a provider, it’s time to set it up. The main stages are the following:

• Organize documents. Start by organizing and categorizing all relevant documents, such as contracts, geological surveys, financial records, and environmental assessments. Create a logical folder structure within the VDR to make it easy for users to navigate.
  
• Set up access controls. Implement strict access controls based on user roles. This ensures that only authorized personnel can view or download specific documents. Define permissions such as view-only, download, or edit.
  
• Invite users. When all the documents are uploaded and access controls are set, you can invite all the relevant parties by email.

👁️‍🗨️ Tip: Explore all the nuances of setting up a virtual data room in our dedicated article.

3. Training and support

For all the users to use a VDR effectively, training and support are typically required:

• User training: Ensure that the VDR offers sessions so that all stakeholders, including internal teams, external advisors, and potential buyers or investors who access your VDR can easily navigate it.
  
• Support resource. Ensure that all users have access to user manuals, FAQs, and other support materials so that they can quickly solve any issues that may arise during the transaction process.
  
• Ongoing updates. Regularly update users on any changes to the VDR, such as deleted or added documents.

4. Monitoring and managing the VDR

The final stage is to ensure the VDR remains effective throughout the transaction. This is possible through the ongoing monitoring and management:

• Activity monitoring. Use the VDR’s reporting and audit trail features to monitor user activity.
  
• Managing access. Regularly review and update user access rights, especially as the transaction progresses and different stakeholders require or lose access to specific documents.
  
• Document version control. Ensure that the VDR maintains version control to prevent confusion over which documents are the most up-to-date. This is particularly important in dynamic transactions where documents may be revised multiple times. 

Key takeaways

Here are the key points to consider for non-renewable and renewable energy corporations looking for a virtual data room vendor:

• A virtual data room is a cloud solution used to securely store and share confidential information.

• Energy companies use virtual data room solutions for oil and gas divestitures, M&A transactions, fundraising, and restructuring. 

• The advantages of a virtual data room are high security, time and cost reduction, improved workflow, user-friendliness, enhanced communication, and professional customer support.
  
• The implementation of VDR for oil and gas transactions typically involves four main stages: choosing the right VDR provider, setting up a VDR, ensuring training and support, and maintaining ongoing monitoring and VDR management. 

Visit the main page to choose among the best virtual data rooms for energy transactions. Contact a sales rep and book a demo to learn how a data room can facilitate business operations in more detail.