Oil & Gas Business: Value – Is it ruled by the head or the heart?



Rig Writer
02/05/2010

I am buying a house at the moment. I am sure if you have ever bought your own house (and not to be completely stereotypical but especially if you also happen to be a woman) you will know that it is all consuming. I literally eat sleep and, much to the annoyance of all my friends, constantly talk about buying my house.

I have found the perfect one, I love it, it is the most perfect specimen of a house there has ever been, but unfortunately my shiny new house’s current owners think so too. As ever in these cases, this leads to what can only be called a ‘difference of opinion’ on the valuation of the property. I thought one thing (backed by the estate agent, I hasten to add) and the vendor thought another, rather larger, figure.

Why am I blithering on about ‘my’ (it wont officially be mine until we exchange contracts according to my better and more level headed half) house? Not just because it has become the centre of my entire universe over the last 3 months but I also happen to be in the middle of researching and bringing together the VIP speaker line-up for our brand new conference looking at financing and growing independent and junior oil & gas companies. And this conference has brought up one key question - how should you value a company?

Should it be based on hard facts? Or do you (like the vendors of ‘my’ house) bring in qualitative factors as well? How can you put a value on the experience or strength of the management team for example? Or does it simply depend on how much you want it?

A fantastic news story this week has come from the Falkland Islands and the story of Desire Petroleum. Desire is a company with no production and only one paid employee but now has a market capitalisation of £400million.

So I guess sometimes ‘taking a punt’ (as Ian Duncan CEO of Desire actually describes it himself) and going with the heart really does pay off.

By Jen Draper

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