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Thursday, February 6, 2020 | History

4 edition of Oil property valuation found in the catalog.

Oil property valuation

Richard V. Hughes

Oil property valuation

  • 205 Want to read
  • 21 Currently reading

Published by R. E. Krieger Pub. Co. in Huntington, N.Y .
Written in English

    Subjects:
  • Oil fields -- Valuation.

  • Edition Notes

    Includes bibliographies and index.

    StatementRichard V. Hughes.
    Classifications
    LC ClassificationsTN871 .H8 1978
    The Physical Object
    Paginationxi, 331 p. :
    Number of Pages331
    ID Numbers
    Open LibraryOL4536912M
    ISBN 100882754025
    LC Control Number77002945
    OCLC/WorldCa2818289

    Although valuing oil and gas assets is not necessarily more difficult than valuing other asset classes, valuing these types of assets requires a detailed understanding of the relative merits of traditional valuation methods. A merger model is a merger model is a merger model no matter how the company earns revenue, so nothing changes the fact that you need to combine all 3 statements, allocate the purchase price, and factor in synergies, acquisition effects, and so on. A low value would suggest a potentially undervalued firm. A Market Approach, such as a Comparable Company Analysis or Precedent Transaction Analysis, provides the relative value of the target assets based on how investors price similar assets.

    However, similar to GAAP, tax depletion deductions using either method reduce [11] the tax basis of the property giving rise to the production [12]. Pooling and divisions of interest are explained. Absolute Valuation Methods Absolute value models value assets based only on the characteristics of that asset. Although sales, free cash flow, and EBITDA are commonly used metrics in this approach, the metric need only be observable, not necessarily financial. As this method does not take into account any synergies, it's only useful for valuing commodity businesses like mining companies. How Everything Flows Together We already went through part of this one with the revenue and expense projections above, but just to recap: You start by projecting annual production on a per-commodity basis, and then assume low, mid, and high price cases for each commodity to build multiple scenarios in Excel.

    You also link CapEx to production and translate the dollar amounts back to natural resource units Barrels, Cubic Feet, Tonnes, Ounces, etc. Midstream Companies: They focus on transporting oil, gas, and other commodities to companies that will sell them. The adjustment procedure is accomplished by applying an individual RAF to the discounted net present value for each reserve category. Those emphasize the techniques that oil and gas professionals apply when creating documents for SEC filings, or internal valuation related to deciding which prospects to drill.


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Oil property valuation book

Full Cost. That is proven, probable, and possible reserves together. You also link CapEx to production and translate the dollar amounts back to natural resource units Barrels, Cubic Feet, Tonnes, Ounces, etc. But for most people, it's the exploration and production, drilling, and refining of oil and gas reserves that make the energy sector such an attractive investment.

Although a NAV is essentially a very detailed DCF Analysis which includes very specific information on the selected oil and gas reserves, all of the other methods mentioned above should be considered and evaluated when performing a valuation analysis on oil and gas assets.

Estimated AMT inclusion [25] seems consistent with the scheduling approach, but is apparently mooted by the Short Cut approach which ignores the present value of tax payments. Investors should also determine the cost of developing new fields to get a better idea of an oil company's financial health.

That is, through the examination and comparison of prices of properties in the same location and with a similar building specification, a market value estimate of the subject property can be had.

A merger model is a merger model is a merger model no matter how the company earns revenue, so nothing changes the fact that you need to combine all 3 statements, allocate the purchase price, and factor in synergies, acquisition effects, and so on. The applied price projections are based on NYMEX futures and should be selected as close to the valuation date as is reasonable to ensure the forecast takes into account the current market views.

Oil & Gas Financial Modeling 101

Asset Retirement Obligation: Just as it costs money to open up new oil wells and gas fields, it also costs money to shut them down. And then you deduct this production from their reserves… and hopefully replace it with sufficient CapEx spending, linking the dollar amount of that spending to a specific amount of reserves.

Rule c 4. We will also touch on diversified, or integrated major, companies, such as Exxon Mobil since you can learn a lot about other segments by analyzing them. More services and features. This is as it should be. He graduated with honors from Northeastern University.

Because the valuation is based on current market sentiment, the NAV approach may not be an accurate indicator of Total Enterprise Value when the market prices are set near cyclical peaks or troughs.

So there are some differences, but the mechanics of selecting and calculating the metrics and multiples for comps remain the same. And the list goes on. But because visiting each individual property in person can consume a lot of time, energy, and resources, transaction databases can be used to get necessary information concerning the properties in question.

Revenue recognition is straightforward, but the expenses get tricky. The compared properties are within close proximity of each other.

What Are The Five Methods Of Property Valuation?

When considering the tax effects of these GAAP [2] calculations, FC entities clearly have more tax-related steps to take in performing the calculation, but there are deferred tax consequences to impairments recorded by SE entities as well, as is discussed below.

All figures are for the period ending Dec. Midstream Companies: They focus on transporting oil, gas, and other commodities to companies that will sell them. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sharmila Ganguly The email address of this maintainer does not seem to be valid anymore.

Such assets include investments in marketable securities such as stocks, bonds and options; tangible assets like buildings and equipment; or intangible assets such as brands, patents and trademarks. It is useful for transnational comparisons as it ignores the distorting effects of different taxes for each country.

Rather, the key requirements are that a comparable firm have similar cash flows, growth potential and risk [iii][iv]. Choosing the right investment—whether that means purchasing shares in an oil and gas company, an exchange-traded fund ETFor a mutual fund—to help you make a profit means you'll have to do your homework, just like the professionals do.What Are The Five Methods Of Property Valuation?

What is Comparative Method? It’s sometimes referred to as the Comparable method, or the Inferred Analysis of property value. Comparative method of property valuation functions by estimating a property’s value based on the value of neighbouring properties.

5 Common Trading Multiples Used in Oil and Gas Valuation

That is, through the examination and comparison of prices of properties in the same. Public Utilities: Valuation and Assessment of Oil and Gas Home | Table of Contents.

February Overview Manual. Introduction. This manual has been developed to provide an overview of the valuation and assessment of oil and gas producing property in New York State. The Hardcover of the Oil Property Valuation by Richard V.

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Jan 31,  · The most common and widely accepted method to value an oil and gas company is a Net Asset Value Analysis, and nearly every valuation estimate for oil and gas assets will include a NAV analysis. However, relying solely on the results of a NAV analysis leaves the estimate of value susceptible to some potential shortcomings of this method.

Oil and Gas Declarations are mailed to Oil and Gas companies in January. Declarations will include a listing of all previously reported personal property. It is the company's responsibility to add any personal property put into service January 1 of the previous year and delete any property no longer in service.

The Pricing of International Oil and Gas Companies – A Structural Shift in the Equity Valuation Process By Bård Misund1,3, Petter Osmundsen1,2 and Frank Asche1,2 1 University of Stavanger 2 Institute for Research in Economics and Business Administration AbstractCited by: 1.