Ryder Scott tests and incorporates a variety of economic scenarios into models to evaluate relative effects. Modeling is especially vital in analyzing how projects pay out under various, complex production-sharing contracts and concession and service agreements. Ryder Scott constructs discounted cashflow (DCF) valuation models that allow for the input of various production/cost scenarios. We also customize DCF model layouts for alignment with internal modeling platforms.
The DCF model enables an evaluator to perform financial analyses of the project at different points in its lifecycle. Ryder Scott performs incremental analysis when evaluating two complementary cases — a base case and upside case. Our DCF models incorporate price and inflation rate assumptions, working interest, taxation items, working capital adjustments, net present values, internal rates of return, payback, HSE (health, safety and environment) impact, abandonment costs, charts and outputs to profit-and-loss statements and balance sheets. Ryder Scott also provides clients with instructions detailing the architecture of the models. The firm conducts in-depth economic evaluations using the latest proprietary and commercial software programs. Ryder Scott also receives economic models from clients and reviews them for compliance with all the terms of contract agreements.
Ryder Scott has extensive experience in determining fair market values (FMVs) to be used in property transactions, tax liability, law suits, royalty and gift-tax cases, private-estate settlements, and dispute resolution involving government agencies. Our methods for determining FMV guidelines have been empirically derived from hundreds of industry transactions involving properties worth billions of dollars. The determination of FMV begins with a thorough study of all the geological, geophysical, petrophysical, engineering, and marketing data available to make projections of reserves, future production and income attributable to the properties. Ryder Scott considers several parameters in estimating the FMV of oil and gas properties. We escalate prices and costs, risk adjust the reserves, estimate return on capital, analyze rate of return and return on investment, and review political risks. The actual FMV or price paid for a property is set in the marketplace and includes many more considerations than those shown.