Oil-field valuation and expert-witness testimony
Oil & gas

Valuing an oil field which had been allegedly sold at less than full-market value, following its contract termination for a dispute in Azerbaijan


Challenge

  • One key challenge in this project was to assess the likelihood of success of a water-flood programmed for this mature oil field. We conducted various pieces of technical analysis to consider what a reasonable field development program would have been. 
  • We were asked to value the business until the end of the contract, in 2030, under a range of assumptions.
     

Approach

  • Our analysis included a DCF methodology, using contemporaneous forecasts of oil prices, costs, and contract terms. 
  • We also considered comparable transactions in the region, and were able to demonstrate the increasing value of mature oil fields in Azerbaijan, as the oil price was increasing, coupled with a lack of available assets on the market.
     

Value

  • We provided an expert witness, who gave testimony at the High Court in London. 
  • We were able to successfully demonstrate that it would have been reasonable for our client to expect to receive around $1 billion in value for the oil field, compared with $250 million, which was achieved by the investment bank.