Valuing Oil & Gas Projects - Crude Awakenings
GETTING TO VALUE WITH BLOCKCHAIN IN OIL & GAS
Petroleum Science. International oil and gas projects feature high capital-intensity, high risks and contract diversity. Therefore, in order to help decision makers make more reasonable decisions under uncertainty, it is necessary to measure the risks of international oil and gas projects. For this purpose, this paper constructs a probabilistic model that is based on the traditional economic evaluation model, and introduces value at risk VaR which is a valuable risk measure tool in finance, and applies VaR to measure the risks of royalty contracts, production share contracts and service contracts of an international oil and gas project. It is helpful for decision making.
The oilfield services segment can also be considered a distinct segment, which serves the upstream oil and gas companies. Three standard valuation approaches — the Income Approach, the Market Approach and the Asset Approach — typically are applied in valuing companies in the oil and gas industry. The first step in choosing the appropriate valuation approach is to understand the sector of the value chain in which the subject company operates. For each sector, certain considerations must be taken into account. Activities within the upstream sector include searching for potential underground or underwater oil and gas fields, drilling exploratory wells, and drilling and operating wells that recover and bring to the surface crude oil, natural gas and related liquids. The midstream sector starts at the gathering system, which collects oil and gas from the wellheads. Gathering systems range in size from small systems that process gas close to the wellhead, to large systems consisting of thousands of miles of pipes that collect from hundreds of wells.