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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.

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