The effect of non-fiscal clauses in Host Government Instruments on the Fair Market Value of upstream opportunities

2019 ◽  
Vol 12 (6) ◽  
pp. 480-501
Author(s):  
Christopher Robertson Kinley Moore ◽  
Christopher Peter Moyes ◽  
Paul Dee Patterson
Keyword(s):  
Market Value ◽  
Petroleum Exploration ◽  
Due Diligence ◽  
Data Set ◽  
Production Sharing ◽  
Exploration And Production ◽  
History Of ◽  
Fair Market ◽  
Host Government ◽  
Fair Market Value

Abstract We identify nine categories of clauses in Host Government Instruments (HGIs, ie licences, concessions, production sharing contracts (PSCs), etc.) that potentially affect the Fair Market Value of petroleum exploration and production rights, in addition to the clauses quantifying the fiscal terms. The categories comprise state participation, performance bonds and penalties for failing to perform minimum work programmes, local content, decommissioning, natural gas terms, stabilization, assignment and change of control, renewals and extensions and governance issues. For each category, we review and summarize global practice in the top 50 oil-producing countries. We quantify our analysis using statistics from a data set of 55 representative HGIs, including contemporary alternative types for five countries. The age of each HGI used varies, guided by the history of oil production in each country. Texts are available for 53 HGIs and published summaries are available for the other two. The discussion provides a checklist for use in negotiating new HGIs or performing due diligence for transactions involving existing HGIs. Our choice of representative HGIs and our characterizations of some clauses are both in part subjective. Nevertheless, we suggest the statistics provide a useful guide to trends in global practice.

Negotiating upstream petroleum granting instrument terms with a state—what to do when the spider meets the fly

2020 ◽  
Vol 13 (4) ◽  
pp. 300-311
Author(s):  
Peter Roberts
Keyword(s):  
Petroleum Exploration ◽  
Production Sharing ◽  
Single Term ◽  
Exploration And Production ◽  
Host Government ◽  
Licence Contract

Abstract This article considers the key considerations to be borne in mind by an investor when negotiating the terms of an upstream petroleum granting instrument with a host government. In this article the term ‘granting instrument’ is used generically as a single term for ease of reference, intended to encompass all the different forms of petroleum concession, licence, contract or permit, but the article’s analysis is focused on the terms of a production sharing contract (PSC) simply because the PSC is the form of granting instrument which by far is the most widely used worldwide today for petroleum exploration and production. Despite this focus, many of the terms of the PSC which are considered in this article will also be relevant to other forms of petroleum granting instrument.

scholarly journals Maximizing The Value Of Your Small Business

2011 ◽  
Vol 4 (10) ◽  
Author(s):  
Terry Mullins ◽  
Michael Adam ◽  
Barry Thornton
Keyword(s):  
Small Business ◽  
Market Value ◽  
Business Owners ◽  
Due Diligence ◽  
Font Size ◽  
Valuation Process ◽  
Fair Market ◽  
Fair Market Value

<p class="MsoNormal" style="margin: 0in 36.3pt 0pt 34.2pt;"><span style="font-size: 10pt; mso-bidi-font-weight: bold;"><span style="font-family: Times New Roman;">This paper offers business owners a step-by-step valuation process for establishing the fair market value of their firms and stresses the importance of preparing for the due diligence process. </span></span></p>

The Impact of S Corporation Status on Fair Market Value

CFA Digest ◽  
2002 ◽  
Vol 32 (1) ◽  
pp. 89-90
Author(s):  
Frank T. Magiera
Keyword(s):  
Market Value ◽  
Fair Market ◽  
Fair Market Value ◽  
The Impact

Initial Observations on Valuation and Valuation Terminology

2019 ◽  
pp. 99-113
Author(s):  
Nicolaes Tollenaar
Keyword(s):  
Cash Flow ◽  
Market Value ◽  
Option Value ◽  
Enterprise Value ◽  
Going Concern ◽  
Asset Value ◽  
Fair Market ◽  
High Level ◽  
Key Steps ◽  
Fair Market Value

This chapter looks at valuation. It explains that in a restructuring a paper valuation exercise is needed to establish who still is entitled to value and who is not. In a liquidation, where the business is sold to the highest bidder in the market through a proper sale process, a valuation exercise is not required. In liquidation, the value available for distribution is determined by the market. The chapter then offers a high-level outline of the key steps of the valuation exercise in the context of a restructuring. Terminology is defined, such as asset value, cash flow value, going concern value, goodwill, enterprise value, reorganization value, liquidation value, fair market value, and option value.

Introducing Evidence of Contamination and Offsetting Cost of Remediation in Determining Fair Market Value for Eminent Domain Awards: A Review of Interrelationship between Environmental and Acquisition Law

1996 ◽  
Vol 1527 (1) ◽  
pp. 21-30
Author(s):  
Leona D. Jochnowitz
Keyword(s):  
Environmental Remediation ◽  
Environmental Law ◽  
Market Value ◽  
Eminent Domain ◽  
Third Party ◽  
Environmental Laws ◽  
Environmental Liability ◽  
Fair Market ◽  
Procedural Rights ◽  
Fair Market Value

The issue is whether evidence of contamination is admissible and remediation costs may be offset in determining fair market value in eminent domain proceedings. The answer will depend on an analysis of methods of valuation and local acquisition statutes; economic impact of environmental regulation; effectiveness of attempts to resolve issues of environmental liability in the context of eminent domain proceedings; preclusive or nonpreclusive effect of the determination of value on future liability for environmental remediation; and use of the property. To understand these issues, an acquiring agency should view an eminent domain proceeding from the clear vantage point of a potential defendant or plaintiff in an environmental case. How these questions can be decided consistently with both local acquisition law and the other bodies of state and federal environmental law is the subject of a variety of recent court decisions. The theme that arises from the cases is that it appears fair to discount the valuation of property if the owner's procedural rights are satisfied, including determinations as to liability and third-party actions. Nevertheless, once payment is discounted, it is critical that the transferee does not have to pay twice for the same remediation but should be liable under the environmental laws for new or newly discovered contamination. A partial indemnification may be appropriate. In addition, issues regarding just compensation may be raised when an acquiring agency not only values a compensation award at zero but also seeks compensation for remediation costs that exceed the value of the property. Alternatives should be explored for escrowing the remediation costs, inviting the owner to clean up the property now or indemnifying the owner to the extent of the discount against future liability. One solution will not fit all cases, but these and other alternatives will make owners and states more thoughtful when property is acquired and better able to plan for the uncertainties that can arise in environmental liability.

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