Estimating Fair Market Value of Petroleum Assets in Nigeria: A Risk-Based Approach

2021 ◽  
Author(s):  
Kelechi Ojukwu ◽  
Omowumi Iledare ◽  
Joseph Ajienka ◽  
Adewale Dosunmu ◽  
Chidi Ibe
Keyword(s):  
Political Risk ◽  
Market Value ◽  
Risk Premiums ◽  
Oil Companies ◽  
Political Risks ◽  
Conventional Analysis ◽  
Analysis Technique ◽  
Acquisition Costs ◽  
Fair Market Value ◽  
First Time

Abstract Many independent Nigerian oil & gas companies have emerged over the last decade out ofthe divestments of ageing petroleum assets by multinational oil companies. Thesetransactions are marked by pervasive cases of overvaluation and huge gap in offers that leadto unnecessarily high acquisition costs. Petroleum analysts around the world adopt the Discounted Cashflow Analysis method forestimating present value of future oil production revenues. Unfortunately, project economicsusing conventional analysis does not de-risk the reserves components appropriately oraccount for the excess and political risk premiums. Even when analysts derive the NetPresent Value from conventional evaluation, say at discount rates of say 10% or 15%, theyface the dilemma of extracting offer price from that figure. Some post a conservative offerbased on 50% NPV, while others throw in all the NPV in a scheme to win the bid at all cost. Some also start by guesstimating value by rule of thumb and then offer the NPV that is leftbehind. The decision to offer a given percentage of the NPV is entirely subjective and variesamongst investors and as such does not depict a logical perception of market value, or therisks thereof. Furthermore, by omitting political risk, buyers are invariably ignoring the mostcrucial risk of all. The adoption of different bases of reserves tend to compound the problemby yielding NPVs that are few and far between each other. They are usually based on un-risked ‘proved plus probable’ (2P) reserves, which is highly speculative and unrealistic forvaluation. For the first time, the concerns of high purchase price and offer gaps were debuggedleveraging the new Risk-Based Valuation approach which is based on a modified Discounted Cashflow model. A research deeply investigates the problems first by reconstructing originaltransaction to identify the root causes. Furthermore, the study concludes that buyers arepaying on average 4 times the value and that regulating reserves base is fundamental inorder to minimize offer gaps that sometimes tend to a billion dollars for large deals. Thus, the Risk-Based Discounted Cashflow Analysis technique can help prevent overpricing orunderpricing of Nigerian assets, minimize offer gaps in the market as well as account for theimpact of political risks (or its mitigation) in valuation.

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

The effect of the 2018 Giro d’Italia on Israel’s tourism firm value

2019 ◽  
Vol 25 (7) ◽  
pp. 1070-1083 ◽  
Author(s):  
Juan Luis Nicolau ◽  
Abhinav Sharma ◽  
Tal Zarankin
Keyword(s):  
Conceptual Model ◽  
Firm Value ◽  
Market Value ◽  
The Impact ◽  
First Time

On September 18, 2017, the organizers of the 2018 Giro d’Italia announced that for the first time in its history, this world famous event would begin outside of Europe—in Israel. This article contributes to the literature by taking advantage of this unique opportunity of analysis; in particular, it tests the effect that this announcement had upon Israeli tourism companies’ market value. The results show that on the very same day the announcement was made, there was an increment in the firm value of these companies. We propose a conceptual model and argue that the hype generated helps enhance the country’s image, leading to higher expectations of incoming tourism. This article presents a contribution to the growing evidence regarding the impact of such announcements upon actual market value of tourism companies.

scholarly journals Features of Political Risk Management of Transnational Corporations in the Context of Economic Globalization

2021 ◽  
pp. 162-168
Author(s):  
Ye. Bolotina ◽  
◽  
O. Shubna ◽  
A. Borodai ◽  
N. Steshenko ◽  
...  
Keyword(s):  
Risk Management ◽  
Political Risk ◽  
Transnational Corporations ◽  
Mitigation Measures ◽  
The Political ◽  
Negative Consequences ◽  
Investment Activity ◽  
Political Risks ◽  
Degree Of Risk ◽  
Foreign Trade Turnover

The article considers the specifics of the functioning of TNCs, their current activities in the investment market. TNCs are currently one of the most important actors in international economic relations. The investment activity of transnational corporations has a direct impact on the balance of payments, production volumes, foreign trade turnover, employment, and the competitiveness of the host economy. The key features of political risk management of TNCs are identified and characterized. The political risks of TNCs are related to their interpretation, classification and methods. The means of reducing the degree of risk include: risk avoidance, retention, risk transfer. Ways to reduce the degree of risk include: diversification, acquisition of additional information, limitation, insurance, hedging. It has been proven that the main advantage of risk communications as an effective ancillary way to manage the political risks of TNCs at the state level, especially in the early stages of public policy making, is that it allows decision makers to better and timely inform stakeholders about risks. and to effectively exchange data between different parts of the public administration system, including effective mitigation measures. The main directions for TNC investment in 2018 are analyzed. The negative consequences of TNCs and ways to overcome them are identified.

scholarly journals Analisis Faktor-Faktor Yang Mempengaruhi Produktivitas Tenaga Kerja Panen Kelapa Sawit Di Kebun Batee Puteh PT. Agro Sinergi Nusantara

2018 ◽  
Vol 3 (2) ◽  
pp. 183-194
Author(s):  
Arham Arham ◽  
Edy Marsudi ◽  
Azhar Azhar
Keyword(s):  
Regression Analysis ◽  
Multiple Regression Analysis ◽  
Palm Oil ◽  
Household Income ◽  
Random Sampling ◽  
Total Sample ◽  
Total Income ◽  
Oil Companies ◽  
Analysis Technique ◽  
Total Household Income

Abstrak. Produktivitas tenaga kerja memegang peranan penting pada perusahaan kelapa sawit,penelitian ini bertujuan untuk mengetahui seberapa besar jumlah tanggungan keluarga,pendapatan total rumah tangga, premi, umur dan pengalaman mempengaruhi produktivitastenaga kerja panen kelapa sawit di Kebun Batee Puteh PT. Agro Sinergi Nusantara (ASN).Penarikan sampel dilakukan dengan metode proportional random sampling dari 7 afdeling diKebun Batee Puteh PT. ASN dengan jumlah populasi 157 orang diambil 20% per afdeling jaditotal sampel pada penelitian ini berjumlah 32 orang. Teknik analisis yang digunakan padapenelitian ini adalah analisis regresi berganda. Hasil penelitian menunjukkan secara parsialjumlah tanggungan keluarga, pendapatan total rumah tangga dan premi berpengaruh secarasignifikan terhadap prosuktivitas tenaga kerja panen kelapa sawit di Kebun Batee Puteh PT.ASN.Kata Kunci : Produktivitas tenaga kerja, jumlah tanggungan keluarga, pendapatan total rumahtangga, premi, umur, pengalaman.Abstract. Labor productivity plays an important role in palm oil companies, this study aims tofind out how big the number of family dependents, total household income, premiums, age andexperience affect the productivity of palm oil harvest work in Kebun Batee Puteh PT. AgroSinergi Nusantara (ASN). Method that used to take sample is proportional random samplingmethod from 7 afdeling at Kebun Batee Puteh PT. ASN with a population of 157 people taken20% each afdeling so the total sample in this study 32 people. The analysis technique used inthis research is multiple regression analysis. The results showed partially the number of familydependents, the total income of households and premiums significantly influence theprocurement of labor harvest of palm oil in Kebun Batee Puteh PT. ASN.

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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