Energy Valuation Insights

June 6, 2016 Bankruptcy Valuation Issues

Bridging Valuation Gaps: Part 2

This is the second in a series of three blog posts aimed at helping E&P companies to navigate the sale of non-core assets and bankruptcy by examining how option pricing, a sophisticated valuation technique, can be used to understand the future potential of assets most affected by low prices, PUDs and unproven reserves. In this second installment we explain the general idea behind option pricing and why it may be more suited to a low price environment than traditional DCF models. Part three will then cover some of the issues that arise when using the option pricing method to value oil and gas companies’ assets.

May 30, 2016 Bakken Shale Bankruptcy Valuation Issues

Bridging Valuation Gaps: Part 1

Due to a precipitous drop in oil prices since June 2014, oil exploration and production companies in the US have struggled to pay their debts and in many cases have had to file for bankruptcy. This is the first post in a three part series examining how option pricing, a sophisticated valuation technique, can be used to understand the future potential of the assets most affected by low prices, PUDs and unproven reserves.

May 23, 2016 Downstream Analysis

How Sweet It Was

Refiners anticipated crude oil exports would increase when the export ban was lifted which reduced excess supply in the US and relieved the downward pressure on market prices. Once the price of crude increased in the US, refiners profit margins shrink, and profits shrank as expected. But with falling crude prices worldwide, the compression of downstream margins cannot be explained by the story refiners expected.