REPORTS AND STUDIES
"Integrating Market Information into California State Board of Equalization Regulations for the Appraisal of Oil and Gas Properties for Ad Valorem Tax", January 11, 2006. Click
here for a PDF version.
"Fair Market Value Transactions, Cost of Capital, and Risk", California Oil and Gas Property Transactions 1983 through 2004. January 20, 2005. Click
here for a PDF version.
"Fair Market Value Transactions, Cost of Capital, and Risk", California Oil and Gas Property Transactions 1983 through 2003. January 29, 2004. Click
here for a PDF version.
"Economic
Cycles and the Valuation of Oil and Gas Properties" April
8, 2003. Do Changes in Interest Rates and Other Economic Factors
Reduce or Increase the Value of Oil Properites?
A Power Point Presentation. Click
here for a PDF version.
“Valuing
Oil & Gas Properties as (if they were) Closely Held Corporations,”
October 26, 2002 prepared for the ASA/CICBV 5th Joint Advanced
Business Valuation Conference.
Oil and gas properties are generally viewed as a special form
of real estate which is particularly difficult to appraise because
it cannot be seen or measured directly, is continually being redefined
as to volume and the amount of revenue that it will produce before
depletion, and resists valuation by the standard real estate methods.
One of the more significant problems in oil property appraisal
is the derivation of a property specific discount rate in the
absence of empirical market data. This paper examines some of
the ways in which business valuation methods maybe used to resolve
the discount rate issue in the appraisal of oil and gas producing
properties.
“Fair
Market Value Transactions, Cost-of-Capital and Risk: California
Oil and Gas Property Transactions 1983 through 2001,”
January 16, 2002 prepared for Western States Petroleum Association,
74 pages.
A compendium of data derived from over 250 Fair Market Value property
sales in California over an 18 year period. Also includes
an analysis of cost-of-capital and the relation between market
discount rates and cost-of-capital.
Summary only. Full Text available in hard copy by mail.
Prior year study reports for 1985 through 2001 are available on
request unless out of print.
“A
Review and Analysis of the Published Parameters Used by the Kern
County Assessor to Appraise Oil and Gas Properties for Ad Valorem
Tax: Special Emphasis on the Procedure for Selecting Market Value
Discount Rate,” October 18, 2001 prepared for Western
States Petroleum Association Property Tax Educational Forum.
The purpose of this study is to examine the standards published
by the office of the Kern County Assessor to select and assign
discount rates (capitalization rates) to specific properties for
ad valorem tax appraisal and to determine if those standards and
the selection methods employed result in discount rates that replicate
market conditions. The results of the test should indicate whether
the Assessor’s parameters are a valid method of discount
rate selection.
“Statistical
Analysis of California Oil and Gas Property Transactions: A Supplement
to WSPA Property Sales Studies 1985 through 2001,”
September 28, 2001, prepared for Western States Petroleum Association,
88 pages.
This report is comprised of (a) a compilation of the statistical
and other analyses done for and presented in the WSPA reports
starting in 1985 and continuing through 2001, and (b) new work
done for this study using the sales data accumulated through 2001.
The previous WSPA studies and the current study make use of both
single and multiple regression analysis of discount rates to determine
the relationship of the market value discount rate to physical,
operational and economic parameters specific to the property(s)
acquired. In the course of this study, 22 individual parameters
were investigated. The results of the analyses are presented
for each parameter as part of the text.
Summary Only. Full text available in hard copy by mail.
“The
Evaluation Engineer, the Courts, and the Search for “Cosmic
Understanding” or Speedbumps on the Path of Truth,” June, 1994, 6 pages.
An analysis of the effect of court decisions, particularly the
Daubert v. Merrell Dow case, on engineering evaluation work.
“Derivation,
Analysis, Selection and Application of Discount Rates for Appraisal
of Oil and Gas Properties for Ad Valorem Tax,”
February, 1996 Prepared at the request of the California State
Board of Equalization, 24 pages.
“A
Comparison of Several Definitions of Oil and Gas Reserves: A Learned
Discourse into those Matters of Law and of Common Usage which
Influence the Assignment of Volume and Value to Differing Classes
of Oil and Gas Reserves,” June, 2002, 18 pages.
This study was done to compare the several SPE definitions of
reserves from 1965 through 1997 with each other and to examine
the changes to those definitions over time. The SPE definitions
were then contrasted with (a) the SPEE expansions of the SPE Reserves
definitions published in 1987 and 1997, (b) the Securities and
Exchange Commission definitions, (c) the definition of reserves
contained in the regulations issued by the California State Board
of Equalization and (d) the discussion of reserves definitions
contained in court decisions.
“They
Used What Discount Rate to Value That Property?,”
March, 2002, 14 pages.
This study was prepared in response to a very poorly written and
documented article which appeared in the Oil and Gas Journal for
October 29, 2001. That article purported to show that discount
rates for so-called “quality” properties had declined
during the past 15-20 years to be equivalent to not more than
prime rate. The article used a variety of spurious data
sources to produce a conclusion not supported by the data and
based largely on opinion and conjecture. Sadly, the Oil
and Gas Journal, arguing that it was not a “peer-reviewed”
publication, declined to consider publication of any form of rebuttal
article that would have contradicted the erroneous information
that the October 29th article had foisted on the readers
of the Journal.
“The
Evaluation Engineer and the Law,”
January, 2001, 12 pages.
An updated discussion of the effect of court discussion regarding
“scientific” testimony on the practice of evaluation
engineering. The emphasis is on the application of the Kumho
Tire case but others including Daubert and Robinsion are discussed.
