Accounting for Uncertainty in Discounted Cash Flow Valuation of Upstream Oil and Gas Investments
Article from: TDM 6 (2007), in Compensation and Damages in International Investment Arbitration
Introduction
Valuing future income streams from the production of oil and gas is a well-developed discipline within the industry and among sophisticated investors. Valuations drive companies' investment decisions and market transactions every day. In the context of resolving disputes, especially international ones, arbitral tribunals are frequently called on to perform a similar exercise: to determine a lump-sum damages award to compensate for the loss of an income-producing asset. Both the arbitrators' decision and the industry's evaluation entail converting projected future net revenues of ...