The purchase of any oil and gas producing property is a complex business venture. Oil and gas appraisal borrows many concepts and procedures from real estate. A calculation to determine the collateral value of a property or properties the loan value would be considered a valuation but would logically be. This manual has been developed to provide an overview of the valuation and assessment of oil and gas producing property in new york state. Upstream petroleum fiscal and valuation modeling in excel. May 05, 2015 because the molecules are free to move about in a gas, the mass of the gas is normally characterized by the density. Oil property evaluation hardcover january 1, 1985 by robert s. Apr 27, 20 how to determine the value of oil and gas properties and optimizing their values hamdy a. Translate internal rate of return requirements from oil and gas reserves and economic forecasts. Guidelines for the evaluation of petroleum reserves and resources 3 petroleum reserves and resources are important to both companies and countries. On the macro scale, the properties of the gas can change with altitude and depend on the thermodynamic state of the gas. The sales of the canadian oil and gas evaluation handbook cogeh is now being administered by sproule.
Oil and gas taxation in the united states deloitte. Forest oil corporation, oil and gas valuation report gdge0484v published 10 2008. Expert witnesses who are available to consult and testify regarding oil and gas appraisal may be located on this page. This paper will provide a quick look at property valuation to. Numerous regulatory bodies around the world have developed regulations relating to the evaluation and external reporting of reserves. Knowledge of the physicochemical properties of potential chemical alternatives is a requirement of the alternatives assessment process for two reasons. Fiscal terms surrounding property acquisitions what is owned by the oil companies versus original land ownersgovernment are complex. The departments florida ad valorem valuation and tax data book is a comprehensive summary of reported state, county, and municipallevel information regarding property value, millages, and taxes levied. This chapter describes the use of a reserves estimate to prepare an economic evaluation and perhaps then place a value on the reserves. Search the worlds most comprehensive index of fulltext books. The cost basis of the real property interest is recovered through depletion. Thompson,b requa, washburne, lombardi, 6 arnold, 7 johnson and. Assessors handbook section 504 ah 504, assessment of personal property and fixtures, is a complete rewrite and compilation of three original manuals no longer in circulation.
The professionals found here may advise regarding the appraisal of oil and gas properties and reserves of product. The text covers all of the subjects necessary to evaluate oil and gas properties. Rates of levy on the website of the west virginia state auditors office. Using the depletion deduction to minimize oil and gas tax. Assess strengths and weaknesses in valuations ending up in the courthouse. In summary, the methodology for the valuation of producing gas and oil properties can be stated. It also modifies impairment testing of exploration and evaluation assets by introducing different impairment indicators and allowing the carrying amount to be tested at an aggregate level not greater than. Assess the level of operating risk related to a specific investment.
Reserves definitions and evaluation practices and procedures published september 2007 includes a discussion of evaluator qualifications. How to determine the value of oil and gas properties and optimizing their values hamdy a. As the owner of oil and gas properties, you are familiar with all of the decisions, fees, and hassles of managing your rights. In this chapter, that document is referred to as the spee fmv.
Article 4 real estate ratio study register of deeds compliance directive 03041. Project framing and the volume to value evaluation analysis. Colorado school of mines supporters csm click here. Oil and gas property evaluation developed separately and can stand alone without reference to real estate practice. Definitions of proved reserves for property evaluation. The book has some typos but it is a self explanatory book with tremendous number of problems. This is the long awaited sequel to thompson and wrights oil property evaluation. A worked examples approach demystifies fiscal analysis which, unlike disciplines such as earth sciences and engineering, can be learned from a book. This chapter often refers to a document titled perspectives on the fair market value of oil and gas interests published by the society of petroleum evaluation engineers spee in the spring of 2002. 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 his will, the decedent specified that the oil, gas and mineral rights under the said property. For purposes of this section, the terms mineral property or oil and gas property refer to a real property interest. The manual encompasses the responsibilities of the new york state office of real property tax services orpts in annually certifying unit of production values for economic units of oil and gas properties. First, the inherent hazard of a chemical, such as its capacity to interfere with normal biological processes, and its physical hazards and environmental fate degradation, persistence are determined by its intrinsic physicochemical properties.
Find all the study resources for oil and gas property evaluation. Learn possible pitfalls in oil and gas property appraisals. 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. Management and financial accounting in oil and gasupstream industry. For those owners considering a sale, an oil and gas properties valuation is required to help you make the. It was common ground that the sole remedy for any breach of. 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. The appraisal of natural gas properties is a complex problem affected bymany nonengineering factors. This article presents basic aspects related to the economic evaluation process. 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. Oil and gas exploration economic model manual version 2.
Manual for valuation and assessment of oil and gas producing property in new york state valuation and assessment of oil and gas producing property in new york state. These appraisals are conducted according to methods and procedures outlined in the comptrollers manual for discounting oil and gas income, as required by property tax code section 23. Landowners who have active oil and gas extraction on their property may be able to reduce their income tax liability for their royalty payments by using what the internal revenue service irs refers to as the depletion deduction. The energy sector comprises of oil and gas, utilities, nuclear, coal, and alternative energy companies. The ceiling limitation is the estimated aftertax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for designated cash flow hedges. Thompson oedipus rex online pdf and wright is a must for the bookshelf of anybody who works in the oil and natural gas industry. The basic economic equation for evaluating a producing property is as follows. Decline curve analysis is a means of predicting future oil well or gas. Predict if an oil operator will produce prudently in the long term. Valuation of oil and gas entities beyond the reserve report february 19, 2015. Manual for valuation and assessment of oil and gas.
Audit of oil, gas property could turn up exponentially more. The ytf number as an additional motivation for reading this book. Select from the options below to buy the oil and gas property evaluation book by john d. This cd also includes selected papers from two out of print volumes spe reprint series no. Subjects include decline curve evaluation using both arps equations and more recent equations, and net cash flow calculations in a royaltytax system and a production sharing contract. For those owners considering a sale, an oil and gas properties valuation is required to help you make the most informed decision before listing your rights on the market. To order any of the cogeh volumes, please visit the spee website the second edition of volume 1.
Assessors handbook section 571 ah 571, appraisal of equipment, inventory, and supplies, section 221. Ifrs 6 has the effect of allowing entities adopting the standard for the first time to use accounting policies for exploration and evaluation assets that were applied before adopting ifrss. Overview manual for valuation and assessment of oil and. Ifrs 6 exploration for and evaluation of mineral resources. Wright, published by thompson and wright llc, august 2015, isbn 9780989674904. We specialize in innovative solutions to difficult problems. Subjects include decline curve evaluation using both arps equations and more. Economic evaluation is an essential step for assessing and studying and selecting new petroleum projects which involve different activities.
There is more flexibility in performing valuation assignments for oil and gas assets. Under the fullcost method of accounting, the net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated ceiling. Valuation, for example, can be biased in the clients interest to arrive at a starting point to negotiate a sales price. Valuation of oil and gas entities ark heirloom seed kits. To prepare an oil and gas appraisal or valuation, turrett will need to evaluate the property and begin with a standard list of questions. This text covers all of the subjects necessary to evaluate oil and gas properties.
Economic evaluation of petroleum projects basic aspects dr. See all formats and editions hide other formats and editions. Property tax forms and publications wv state tax department. Guidelines for the evaluation of petroleum reserves and. Jan 01, 2015 i have been studying this book for the entire semester at texas tech university. In re estate of womack, 2016 ut app 83, 2016 wl 1729528, involved a decedent whose formally probated will devised a 160acre parcel to his three children, in equal shares.
Online registration is now open at the nsai website. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a gaap, nongaap, ifrs, and fair market value context. Forest oil corporation oil and gas valuation report. Methods of exploration and production of petroleum resources. V methods of exploration and production of petroleum resources ione l. Financial evaluation of existing production is most often performed via discounted cash flow dcf analysis. Through a combination of our employees and our associate consultants we offer a broad range of consulting to companies in the upstream oil and gas industry. Rashed, cma, capm 6 if the company needs to optimize the exploration property, oil and gas company needs to run more seismic acquisition and processing 2d or 3d, to find new prospects that have high chance of success, and high size of potential reserves. Proved reserves the quantities of crude oil, natural gas and. Another basic assumption was that the cost of the gas fired power production in malta wont have to be more expensive than by the alternative fuels. Time value of money and managerial indicators are also discussed.
Oil and gas property valuation and economics spe books. Pete 653 or approval of instructor oil and gas property evaluation, by john d. Attention will be brought here to the moreimportant matters that influence value of such properties, such as thenecessity of competent estimates of reserves, availability of the products andof market outlets, the expected rate of recovery, the anticipated prices ofproducts and future costs. See all 2 formats and editions hide other formats and editions. Wright consulting company is a worldwide petroleum engineering and geological consulting company located in golden, colorado. This ms excel equity valuation model is an equity valuation spreadsheet with added complexity to be geared specifically towards oil exploration and production companies. But for most people, its the exploration and production, drilling, and refining of oil and. Attention will be brought here to the moreimportant matters that influence value of such properties, such as thenecessity of competent estimates of.
Economic evaluation of petroleum projects basic aspects. The state of the gas can be changed by thermodynamic processes. The property tax oversight pto program publishes the florida ad valorem valuation and tax data book twice a year. Net present value in evaluating oil and gas companysperformance and stock price. Solstice engineering provides quick and accurate end of life liability estimates and license to operate exposure summaries for potential acquisition and divestitures. The basic economic equation for evaluating a producing.
Oil and gas producing properties environmental assessment. The true value or net book value of business personal property is to be determined annually as of january 1. Taylor encyclopedia of life support systems eolss 3. Wright consulting company wright consulting company. This date is the date as of which assessment is to be made with respect to the taxes pay vi 5. I definitely recommend this book for property evaluation, net cash flow, reserve classification and decline curve analysis based on arbs. The irs defines depletion as the using up of natural resources by mining, quarrying, drilling, or felling. Fall only pete 652 deterministic reserves evaluation graduate classification only. In most cases the campus bookstore will carry the book. Written in plain english for laymen and for experienced practitioners alike, it is a readerfriendly, clear, practical, stepbystep hands. Oil and gas taxation in the united states deloitte taxation and investment guides 2 2. Definitions of proved reserves for property evaluation 1965. Subjects include decline curve evaluation using both arps equations and more recent equations, and net cash flow calculations in a royaltytax system and a production sharing.
Many appraisers and most people working in the industry use the income approach virtually to the exclusion of the othe r two methods. Table of contents forest oil corporation, oil and gas valuation report gdge0484v published 10 2008. Physicochemical properties and environmental fate a. How to determine the value of oil and gas properties. Our reports provide a comprehensive snapshot of your current and prospective assets to help you determine how to proceed. A major factor in the examination of oil and gas records is the verification of the cost of a property.
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