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End of attention
Record keeping for production titles
In the process of valuing petroleum titles or interests in petroleum titles, the valuer will source their information from various documents held by the taxpayer which may include:
- the petroleum reserves and petroleum resource statements
- feasibility studies, and
- a project lifecycle, field of development plan and/or similar contemporaneous plans for the development of the project.
Specifically, valuing a petroleum tenement using the discounted cash flow (DCF) method typically utilises the documents above (collectively known as 'planning tools and documents'). Based on the reserves and resource statements, the planning tools and documents typically deliver a number of scenarios of project designs, by which the planners decide which of the wells of the resource inventory they will extract from and in which sequence.
Furthermore, the planning tools and documents may provide, for each scenario, a calculated value of the project based on estimation of the petroleum extracted, final product recovery figures, production costs and sales and marketing information such as price, demand, and risk parameters. The planning tools and documents are the primary source document when valuing a project using the DCF method.
As the planning tools and documents may be regularly updated, it would be prudent for taxpayers to retain a version of the plan that was current as at 1 May 2010. The taxpayer may use information from planning tools and documents created post 1 May 2010 to the extent that the information could have been reasonably known as at 1 May 2010. The taxpayer may be required to produce planning tools and documents to support their valuation.