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The value of an oil and gas asset goes beyond the volume of
hydrocarbons in place. Fair valuation incorporates volumes, risk
and the value of mapped and future exploration potential in any
particular area. In today's market, determining the fair valuation
of an asset is more important than ever. Explah okoration upside is
often a differentiator in competitive M&A deals when the
producing assets are valued by different companies using the same
price decks.
The oil and gas industry is in transition. In most companies,
decision makers are focused on rapidly reshaping exploration
portfolios into short-cycle and low carbon intensity opportunities,
typically via divestment and M&A activity.
As more-demanding shareholders insist that operators exercise
fiscal discipline, companies are shifting their focus to core
assets and streamlining their portfolios. Portfolio Opportunity
Ranker allows you to compare apples and apples and have an entire
evaluation of your exploration portfolio within a truly global
context.
Predictions beyond known data points
The fair valuation of an oil and gas exploration asset
quantifies its risk and future exploration potential. It is
determined by calculating the risk of volume and value of all the
known and unknown prospects in a certain area or within a company
portfolio. This can be done at the country, basin, prospect,
license, or block level.
Portfolio Opportunity Ranker incorporates the risked volumes and
values for around 30,000 IHS Markit prospects and has a methodology
to estimate the yet to be discovered prospects. It uses machine
learning driven by exploration history and a measure of exploration
efficiency.
Customers can use their own prospects, edit all key inputs and
re-run calculations to make their own global ranking of
opportunities.
All companies struggle with consistent risking of global
opportunities, as it is always subject to the influence of
local/human bias. This human trait is impossible to eliminate
entirely but to Portfolio Opportunity Ranker mitigates its impact
by using a systematic map and data-based methodology for estimating
prospect risking. This methodology incorporates the exploration
history of the area together with local aspects of each prospect as
detailed in the HIS Markit prospect database. This transparent
methodology is applied to 19 stratigraphic play intervals and
incorporates many spatial elements such as charge/seepage presence,
seismic datasets and local trap type descriptors. It is structured
so that companies can modify the base assumptions and match their
in-house risking methodologies to the global evaluation.
Economic evaluations are complex at an asset-by-asset level and
are controlled by the local fiscal regimes and assumptions
regarding commodity prices, production profiles, OPEX, CAPEX and
well costs. It is impossible to do this systematically for
+/-100,000 features. Portfolio Opportunity Ranker uses a base
calibration dataset to establish the volumetric cut-offs for oil
fields and gas fields in polygons that have common water
depth/elevation ranges, distance to infrastructure and fiscal
terms. Value metrics ($/boe) for low, base and high cases for oil
fields and gas fields are then stochastically applied to the post
cut-off risks and volumetric estimates to calculate risked values
(EMVs). When convolved with the well costs and tax factors, a
stochastic assessment is made for economic volumes and values.
Standardized datasets for better results
The new Portfolio Opportunity Ranker tool from IHS Markit and
GIS PAX provides a standardized, spatial dataset of the value,
volume, risk and rank of the entire world's oil and gas prospects,
making it easier and faster to calculate fair valuation.
The data product is built solely on IHS Markit spatial E&P
data and is delivered on a GIS database platform with software that
enables subscribers to modify key exploration and commercial inputs
and then recalculate the volumes and value calculations. The
workflow is simple and industry standard and is not a black
box.
Make better decisions with fair valuation
A robust estimation of fair valuation allows companies to deploy
and use their resources wisely in areas with the most perceived
value. These value predictions can be customized to include
proprietary data, local knowledge, and range of risk
tolerances.
Before investing in an asset or company, E&Ps evaluations
aim to understand the remaining exploration potential. Comparing
and ranking real and predicted future prospects in any set of
blocks or basins in a systematic way should quickly identify the
best opportunities and provide a consistent estimate of relative
value.
Before divesting assets, companies should make sure they are
selling the right asset for the right price. Knowing the fair
market value for every asset in their portfolio will help determine
which assets have potential and are aligned with their risk
tolerance. In divestitures and farm-outs, fair valuation allows
companies to sell the asset for its true worth.
Our new Clean Energy Technology report examines the levelized cost of CO2 avoided (LCCA) for #CCUS projects in key… https://t.co/VXwETPMJ6N
May 18
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