Oil & Gas Valuation Model
Hi All,
I was wondering if you guys knew a good website for Oil & Gas Valuation modeling, or if you could share a simple model with me that would be very basic ..
Many thanks for your help
biws oil & gas modelling course is really good.
otherwise here's a sample nav model: http://studenttheses.cbs.dk/bitstream/handle/10417/3218/Tullow%20Oil%20…
Thank you this is very helpful!
Oil & Gas Modelling/ Accounting Question (Originally Posted: 01/26/2015)
Hi guys, I've got an industry-specific question I can't wrap my head around -
You model E&P companies on an asset level, this I know. On the asset level cashflows, depending on the regime, you pay different levels of "tax" i.e. royalty and corporate tax, so let's take a simple one - the UK. Let's just assume there is the CT tax (effective 62%); for simplicity let's forget old assets' royalty payments, etc.
So, the tax I calculate this way on an asset level - this is what I report on the income statement, right? For simplicity - I have 1 asset, and the 2015E tax I calculate is $50m, and I assume I pay the full 100% in 2015E for simplicity as well.
Now, if this is the tax I really report on the income statement, what benefit do E&Ps have from the tax shield of debt? If my tax is pre-determined on the asset level, and I have debt to pay, how is the tax shield going to reduce my tax payable to the government?
Hope someone can help out on this very specific question.
Many thanks!
I think you're conflating things here. Royalties are paid at the well (ie asset)-level (at least in North America). Corporate tax is paid at the operating entity-level, which (usually) comprises many many wells and other operations. And then there are obviously games a company can play to shift taxes around from opco to holdco.
Thanks mrb87 - this is one thing I am confused on.
In the UK system, newer developments don't pay royalties, so we can scratch that. The developments instead pay a "corporate tax" and "tax surcharge" at the asset level, which is effectively at 62%.
What I am having trouble with is how that tax can be lowered through the use of leverage in a case like this, i.e. is there some additional corporate tax at the corporate level that exists?
Thanks mrb87 - this is one thing I am confused on.
In the UK system, newer developments don't pay royalties, so we can scratch that. The developments instead pay a "corporate tax" and "tax surcharge" at the asset level, which is effectively at 62%.
What I am having trouble with is how that tax can be lowered through the use of leverage in a case like this, i.e. is there some additional corporate tax at the corporate level that exists?
Large Oil and Gas Company Valuation (Originally Posted: 12/02/2016)
I was wondering if anyone had an example of a DCF/NAV/etc. valuation they conducted on a large oil and gas company (like XOM). I am unfamiliar with the industry and was hoping an example would provide clarity to a lot of the details regarding discount rate/growth rate determination, as well as other components that go into finding the stock value.
Thanks very much. Will reward with several SBs.
Also curious
Bumping, need help here PLEASE!
You are not going to learn how to do this on WSO. Breaking Into Wall Street has an expensive guide on doing this if you really care. Otherwise, unless you're in an industry group or you have been in finance long enough to figure it out on your own, you're probably not going to figure it out.
Oil&Gas M&A Valuation Question (Originally Posted: 06/28/2014)
In a typical M&A deal in the BB, the target generally acquires new reserves to replenish assets close to the decline rate and is operating assets.
a) In this case, would the steps be 1) proforma 2) Debt-Adjusted Cash Flow 3) Perpetual value 4) EV/DACF b) Is perpetual value DACF/r is this situation? c) When would you do a sum of parts (NAV) for an integrated producer? d) For an BB M&A interview what valuation steps would you go though?
I have read the DB primer, but want to prep for the technical interview for this group
It depends where in the supply chain you are. If you are talking about a producer/driller, then valuation is based on target amount of oil supplymarket priceprobability of success - cost to extract and properly dispose of the site and a lot of other risk factors. None of the perpetual growth or income approaches are relevant to this kind of valuation.
Natural Gas company valuation (Originally Posted: 09/18/2007)
I am wondering if someone could help me with natural gas valuation. If I wanted to do a revenue buildout for a natural gas company, what important metrics would be appropriate to consider in building a model? Thanks for the help in advance.
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