Replies to This Discussion

Permalink Reply by Zack Smith, Geologist/Appraiser on July 24, 2014 at 2:25pm

Unless wells are placed on a choke limiting produced volume the wells decline very quickly as free gas is depleted and as time goes on desorption becomes increasingly important, but production does continue to decline. There are a variety of decline curves or type curves, but they exhibit exponential declines then level off as time goes on.

The notion of Fair Market Value is predicated upon the concepts of substitution and anticipation. The methods of valuing mineral rights are the Sales Comparison Approach, illustrating substitution, and the Income Approach, illustrating anticipation. Increasing value of land, as observed in the Sales Comparison, is predicated upon knowledgeable market participants' anticipation of future income stream. The anticipated income streams are discounted based upon the market-perceived risk.

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page