This paper presents an examination of fair market value concepts as they pertain to producing petroleum properties. Conventional petroleum economic theories of fair market value are examined in light of recent work on the market value of long-life reserves. Their work is expanded to show that sellers rely on comparable sales data for estimating FMV. Both results are used to suggest that current practices over-emphasize the discounted cash flow approach to estimating fair market value.

Keywords:
transaction, marketplace economics, valuation, investor, market-based method, hickman, spe 22620, fair market value, economics, asset and portfolio management
Subjects:
Asset and Portfolio Management
Copyright 1991, Society of Petroleum Engineers
You can access this article if you purchase or spend a download.