Abstract
During the period of the 1980's and 1990's the oil business endured or, at times, benefitted from several economic cycles which brought about extreme fluctuation in the prices for oil and gas, changes in interest rates from as low as 3% to over 20%, substantial declines in domestic U.S. production and continually increasing regulation of the physical and economic aspects of the industry worldwide. This paper will examine the effects of the cycles in prices, interest rates, regulation and other economic factors on the process and component of the valuation of oil properties for sale/acquisition, taxes and litigation and other purposes. The paper will draw on information developed as part of recent analysis work as well as published studies and SPE papers from the past 30 years. Specific areas of study and discussion will include the effects of various methods to identify and account for risk and the influence of interest rates on discount rates.
