IDEAS home Printed from
   My bibliography  Save this paper

Petroleum Property Valuation


  • James L. Smith


The term “petroleum property valuation” refers to the analytical procedure by which the commercial value of oil and gas fields is assessed. This assessment provides to prospective buyers and sellers, and other interested parties such as lenders and tax assessors, an estimate of the fair market value of underground deposits of oil and gas— the amount for which they might be bought or sold. The value of an underground deposit is directly related to the ultimate value of whatever petroleum may be extracted in the future, but because the future is uncertain, the value of the property is subject to various sources of risk that stem from geological as well as economic factors. To be useful, the valuation procedure must take proper account of the unpredictable fluctuations that would cause field development, operations, and performance to deviate from the expected outcome. This task represents a complex analytical problem that has challenged traditional valuation methods. To meet the challenge, new and highly innovative techniques have been developed in recent years, and are now finding increasingly widespread use.

Suggested Citation

  • James L. Smith, 2003. "Petroleum Property Valuation," Working Papers 0311, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  • Handle: RePEc:mee:wpaper:0311

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mee:wpaper:0311. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sharmila Ganguly). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.