Forest oil corporation oil and gas valuation report. There is a place in oil and gas valuation work for the comparative sale method. Manual for valuation and assessment of oil and gas producing property in new york state. Capitalization rate since the valuation of oil and gas property is predicated on a three year production, the capitalization rate will be considered in a similar manner.
As described in the referenced memo, lease operators. The final valuation variables are being filed for inclusion in the state register. The purchase of any oil and gas producing property is a complex business venture. This is an approximate price based on the current exchange. Published accounts of the valuation of oil properties have been con cerned chiefly with the important element of the oil and gas contents of lands. Numerous methodologies in the valuation of mineral rights have evolved over a period of time that form the basis for acquisitiondisposal discussions. H30702 economic evaluation of oil and gas properties handbook table of contents page. The difference between wellhead and in situ resource values is examined, as well as drawbacks inherent in the concept of oil and gas equivalents. Changes with temperature, decreasing temperature increases viscosity. The director of property valuation is required to value the property of any person or company that is in the business of transporting or distributing to, from, through or in this state gas, oil or other commodities in pipes or pipelines.
For those owners considering a sale, an oil and gas properties valuation is required to help you make the. The term appraisal is avoided in connection with the valuation of oil and gas reserves. The 105effect of underground storage tanks on residential property values in cuyahoga county, ohio journal of real estate research contaminated waterways and property valuation the appraisal journal buried oil tanks can break home sale deals north property values, tanks, and contamination practical environmental solutions. Upstream petroleum fiscal and valuation modeling in excel. The interest being valued should always be stated clearly in a valuation report. The first step in choosing the appropriate valuation approach is to understand the sector of the value chain in which the subject company operates. This task represents a complex analytical problem that has challenged traditional valuation methods. Overview manual for valuation and assessment of oil and gas. Oil property valuation isbn 9781443726412 pdf epub paul.
Before you begin projecting an energy companys financial statements, you need to know something about the units used. Before continuing, it may be useful to briefly re view the nature of oil property appraisal and how oil property valuation is related to the thr ee standard methods of appraisal commonly used by real estate and business valuation appraisers. With extensive experience providing services to the manufacturing, retail, distribution, software, oil and gas, and professional services industries, brians diverse knowledge and technical skills allow him to provide comprehensive consulting services to his clients. H30702 economic evaluation of oil and gas properties.
In summary, the methodology for the valuation of producing gas and oil properties can be stated. The comptrollers office relies upon the manual for discounting oil and gas income pdf to conduct oil and gas property appraisals used in the pvs. An oil and gas properties valuation lets buyers know if your property ready for business or if its a bit more complicated. High viscosity implies a high resistance to flow while a low viscosity indicates a low resistance to flow. Direct comparison is also quick and straightforward, and is the best method for valuing standardised units in housing estates. Property valuation oil and gas kansas department of. Oil and gas lease agreements generally provide for the lessee to begin drilling for oil and gas on the property within one year after the granting of the lease. For many years, analysts in real estate have used their own variants on valuation models to value real estate. To meet the challenge, new and highly innovative techniques. The seminar is designed to help you gain a better understanding of the various aspects of the evaluation of hydrocarbon reserves as. Oil and gas appraisal borrows many concepts and procedures from real estate. More examples are in production and will be made available as completed.
Oil property evaluation hardcover january 1, 1985 by robert s. We develop and analyze a model of an oil propertyeither a developed property or a proven but. Manual for valuation and assessment of oil and gas. A valuation does not necessarily lead to a transaction sale or purchase that can support or contradict the valuation, thus the value of the property is not exact and is often adjusted according to the purpose for which it is used. Scope this standard provides information and guidance concerning the effect of environmental contamination on the valuation of property for assessment purposes. With the market currently in a state of flux, oil and gas property owners are faced with the choice to sell assets or hold out until market conditions improve. Overview manual for valuation and assessment of oil and. This manual provides the methods and procedures to calculate the present value of oil and gas properties using discounted future income.
Smith department of finance southern methodist university dallas, tx 75275 june 2, 2003 i. This paper will provide a quick look at property valuation to. State of west virginia department of revenue state tax. There are no longer locally assessed gas gathering lines valued on personal property schedule v per the pvd gas transportation memo dated march 6, 2006, noted in the oil and gas appraisal guide. The principles of real estate valuation are presented in the uniform appraisal standards for federal land acquisitions 1992 and in the. The appraisal of oilgas mineral interests completed or producing for ad. This cd also includes selected papers from two out of print volumes spe reprint series no. Valuing oil, gas, and alternative energy assets, second edition keeps business appraisers, analysts and owners current with the key trends, data, and valuation approaches in this constantly evolving space. The valuation and assessment of oil and gas properties for property tax purposes, especially under the mandates of article xiii a of the california constitution proposition, represents a complex and sometimes controversial challenge to county assessors. To be successful, any valuation method must correctly account for uncertainty geologic as well as economic and the value of flexible management in pursuit of optimal development and use of the. Less attention has been given to those other influences which affect the value of the oil and gas, to the various valuation methods appropriate to. Scholesmerton methods for valuing put and call options. It is important to know not only how to determine the value of oil and gas properties but the methods used in arriving at property values.
H30702 economic evaluation of oil and gas properties handbook. Oil property evaluation thompson pdf as it is impossible to predict the price of oil in the future. Before covering specific details related to the oil and gas industry and your royalty interest, it is important to understand basic concepts related to all valuation analyses. Viscosity is more commonly known as resistance to flow. Definition and impact of petroleum property valuation the term petroleum property valuation refers to the analytical procedure by which the commercial value of oil and gas fields is assessed.
Refer to important disclosures at the end of this report. Startzman oil and gas auctions help transact billions of dollars in property sales in the us each year. Principles and practice of property valuation an active and wellpublicised property market, but if and only if the market works reasonably rationally. But for most people, its the exploration and production, drilling, and refining of oil and. Operating costs estimates for fixed, variable, per well, and overhead costs are included in any oil and gas properties valuation. Property evaluation form 4 free templates in pdf, word. Upon written application, the office of property valuation may grant an. Standard on the valuation of properties affected by. Three standard valuation approaches the income approach, the market approach and the asset approach typically are applied in valuing companies in the oil and gas industry. Forest oil corporation, oil and gas valuation report gdge0484v published 10 2008. See all formats and editions hide other formats and editions. The same applies to reserves terminology and reserves categories.
It provides that the fair market value of an oil and gas property is the amount which. Jan 06, 2020 the energy sector comprises of oil and gas, utilities, nuclear, coal, and alternative energy companies. Cash flows to be received immediately are given full weight, since pvi,0 1, but the weight assigned to a future receipt declines according to the amount of delay. Valuation is concerned with the value of an interest held in property. There can be several interests in one property at the same time and each of these is capable of being valued. Our purpose in this section is to provide a general overview of a few fundamental and universal concepts that.
Property tax forms and instructions for public service. Download free printable property evaluation form samples in pdf, word and excel formats. Jurisdictions will usually specify procedures somewhat differently than those contained in this chapter. First, attain the production decline rate of a field from past operation and the current production for the year of the appraisal to calculate the total production over the economic life of the well or property. In order to effectively convert a geological opinion or idea into a number, it is helpful to have a functional understanding of the methodology and terminology of evaluating the monetary value of a producing oil and gas property. The petroleum industrys reliance on accurate and reliable valuation methods is apparent. Division of property valuation pvd or as an addition to the lease by the county appraiser. Brian is an active member of several accounting professional. Value is lost by participants with ineffective strategies. The standard includes definitions of types of environmen. Valorem tax purposes in texas according to the texas constitution, article viii. A common application of valuation methods is to determine value for taxation.
Jan 01, 2015 1 overview 2 time value of money 3 investment decision analysis 4 resources and reserves 5 decline curve analysis using arps equations 6 introduction to advanced decline curve analysis 7 oil and gas prices 8 mineral and surface ownership 9 capex and opex 10 severance and ad valorem taxes 11 u. Oil property evaluation, second edition by robert s. Physical properties of oil viscosity the viscosity of an oil is a measure of the oils resistance to shear. Our purpose in this section is to provide a general overview of a few fundamental and universal concepts that materially impact any valuation. Simple property valuation model showing the 3 primary methods for valuing property assets with an interactive visual.
It consists of defining data requirements, assembling the best available data, and applying an appropriate evaluation method. If drilling has not begun within this period of time, the lease agreement will either expire or provide for the payment of a sum of money in order for the lessee to retain the lease. Forest oil corporation, oil and gas valuation report gdge0484v published 10 2008 globaldata. These examples serve as guidance for determining value for royalties and are not an appealable decision or order under 30 cfr part 1290, subpart b. The basis of economic evaluation of any proposed drilling venturea new field, pool, or just a single. Royalty valuation produced the following examples to assist onrr stakeholders in correct valuation reporting. A federal oil and gas property may be exchanged through the authority of the secretary of the interior under. Kansas department of revenue property valuation oil. Standard on the valuation of properties affected by environmental contamination 1. Ebitdax, proved reserves, daily production, the oil mix. Oil and gas property valuation and economics includes 30 papers on property and project valuation, risk analysis, international economics and fiscal regimes, and special focus topics. This barcode number lets you verify that youre getting exactly the right version or edition of a book. The term petroleum property valuation refers to the analytical procedure by.
The risk of paying too much for an acquired property. However, the price for metallurgical coal was revised based upon information that was unavailable on june 30. Oil gas valuation quick reference amazon web services. Mortgage sale purchase rent company reports probate. A simple property valuation excel model showing the 3 primary methods for valuing property assets. The use of guide policies, procedures, guidelines, and prescribed rendition forms are. You could value the other business segments by using a segmentlevel dcf or other methods rather. The basic economic equation for evaluating a producing property is as follows. Real estate investments comprise the most significant component of real asset investments. Chapter 26 valuing real estate the valuation models developed for financial assets are applicable for real assets as well.
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