Energy Valuation Insights

A weekly update on issues important to the oil and gas industry

Special Topics

5 Takeaways from NARO Appalachia’s Annual Conference

Taryn Burgess recently attended the National Association of Royalty Owners (NARO) Appalachia Chapter Annual Conference in White Sulfur Springs, West Virginia.  Over the two day conference, speakers addressed many topics including certain aspects of lease agreements, current legislation affecting mineral owners, clean water solutions, clean energy programs, legal issues affecting mineral owners, midstream and storage development, and more. Here is an overview of five key takeaways from the conference.

Mineral and Royalty Rights

How to Value Overriding Royalty Interests

When comparing a royalty interest to an ORRI, it is critical to understand the subtle nuances of the rights and restrictions between the two. Owners of royalty interests utilizing Permian Basin Royalty Trust as a valuation gauge should adjust for such differences as well as other differences between publicly traded and non-marketable securities.

Mineral and Royalty Rights

How Do Post-Production Deductions Affect the Value of Your Oil and Gas Royalty Interest?

From the first Board Meeting to the last session of the conference, post-production deductions were discussed in great detail at the NARO National Convention.  Why were these deductions brought up time and time again? Because post-production deductions affect the value of a mineral owner’s interest yet the regulations surrounding them is somewhat unclear and exists mainly on a contractual basis.

Special Topics Valuation Issues

How to Use Reserve Reports When Determining Fair Market Value

Last week, we analyzed the SEC’s $6.2 million settlement with a Big 4 audit firm relating to auditing failures associated with Miller Energy Resources, an oil and gas company with activities in the Appalachian region of Tennessee and in Alaska. The SEC order determines that the Big 4 audit firm did not properly use the reserve reports conclusion of PV-10 (present value at 10%).  This post considers the proper use of reserve reports and risk adjustment factors when determining fair market value.

Oil & Gas

Mercer Capital provides oil and gas companies, oil and gas servicers, and mineral & royalty owners with corporate valuation, asset valuation, litigation support, transaction advisory, and related services