OT30321 - Capital Gains

Valuation of Oil Assets (including shares). Third Party Information and Information Sources. Using Wood MacKenzie.

The data to be used should not be limited to that obviously in the public domain. Unless there is a contested bid - which would not happen under the willing buyer/willing seller scenario – the assumption is that acquisitions take place after a visit to the vendor’s data room. The buyer would have all, or almost all, the information available to the vendor. Wood MacKenzie values should be considered in this context. Wood MacKenzie has valued established fields e.g. in November 1981 and May 1982. However these valuations are unlikely to incorporate all the information then available. At a Langham Conference in June 1996 Wood MacKenzie themselves gave an example of how their cash flows might be inaccurate due to insufficient information.

Wood MacKenzie's field reports are useful up to a point. What they say on reserves can be helpful in arriving at a decision as to whether a company's production profile is acceptable but the reports are unlikely to be able to displace contemporary evidence. They can provide useful estimates of opex and capex. They are more authoritative on acceptable discount rates, foreign exchange rates and the gas/oil prices.