Book description
Oil Property Valuation By PAUL PAINE. PREFACE: 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. 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 different
circumstances, and to the forms in which oil properties occur. The aim
here is to help close that gap, especially for the younger engineers,
with a review of the meaning and scope of valuation in the oil business,
the factors which enter a valuation, and the methods of applying these.
Questions which arise in valuation practice and the avenues of solution
are discussed rather than efforts, in these days of rapid changes, to
provide specific answers and detailed lists of equip ment costs. And
thanks should be recorded here to H. K. Armstrong, Ernest K. Parks, and
Robert Moore, who have done much to improve the original manuscript of
this book. PAUL PAINE LOS ANGELES, CALIF. August, 1942 Contents include:
CHAPTER I: THE SCOPE OF VALUATION Introduction Meaning of value Purpose
The specific date Classes of valuations Valuation methods Relation of
the appraiser to his employer. CHAPTER II PROPERTIES 13 Classes Unproved
lands Proved lands Forms of ownership Fee Mineral rights Surface rights
The lease The prospecting permit Contingent payment Carried in terest
Fractional interest Drilling contract Unit project Royalty interest Land
descriptions Listing of proper ties Definitions. CHAPTER III UNPROVED
LANDS 44 Measures of value The lease Selection rights The toplease The
salt dome Deep sand prospects Royalty. CHAPTER IV OIL AND GAS RESERVES
65 Definitions Depletion Occurrence of oil and gas The reservoir
Reservoir measurements Estimates Volumetric method Decline curve method
Irregularities in curves Additional oil recoveries The salt dome Natural
gas Saturation method Pressure decline method Casinghead gas Gas
distillate Well spacing. viii CONTENTS CHAPTER V PAGE ELEMENTS IN A
VALUATION 98 The oil Marketing The gas Casinghead gas and natural
gasoline Costs for acquisition, development, opera tions, taxes, and
overhead Present worth Unit projects Marginal properties. CHAPTER VI
VALUATION METHODS 138 The engineering or analytical method The payout
The daily barrel The well as a unit The barrel in the ground For the
lender The royalty Fair market value. CHAPTER VII THE EXAMINATION AND
REPORT 174 The data Examination Accounting The balance sheet Profit and
loss statement The report Contents Check lists Reports for regulatory
bodies. INDEX 197. CHAPTER I: THE SCOPE OF VALUATION. The petroleum
industry is the one circus bigger inside the canvas than on the posters.
Sketches in Crude Oil, by JOHN J. McLAURiN The principal factors in the
valuation of a producing oil property are the estimates of 1 the
recoverable oil 2 the profits to be ob tained from the extraction of
this oil 3 the resulting values under various conditions. The value of
nonproducing acreage is more simply ascertained. This work is concerned
with these topics, with less emphasis on the subject of estimating the
oil reserves. Most of the recorded study relating to the subject has
been directed toward the estimation of the recoverable oil and gas,
called the oil and gas reserves, and has had its inception in tax
situations and the accom panying accounting matters. The derivation of
the worth of these reserves, expressed in dollars, has received less
attention. However, the dollar values of oil properties have been of
concern to the leaders in the industry since its beginning. Before
Colonel Drake put down the first successful well that was drilled for
oil in the United States, he prevailed upon the landowners to reduce the
royalty rate to one-third of that stipulated originally in the lease...
