Our client was in dispute with a co-venturer over the value of an exploration permit in New Zealand containing an equivocally commercial gas condensate discovery. We were engaged as an Expert Witness to provide an independent view of value for an Arbitration Tribunal.
A combination of paucity and indifferent quality and inconsistencies with data from wells drilled in the permit made it difficult to opine with confidence beyond a level of superficiality. Although conscious our clients position, we also recognised our primary obligation of independence and technical integrity to the court. We also had to construct our report in a language and format that could be readily understood by lawyers and others with limited technical knowledge of our industry.
Our approach was to apply our standard business processes to the valuation of the permit. We utilised our knowledge of the NZ domestic gas market (supply, demand and pricing), statutory and regulatory approvals and compliance requirements, rig availability and associated mob and demob costs, third party infrastructure capacity and contemporary NZ capital and operating costs for upstream facilities. We also used our knowledge of the range of basin petrophysical and fluid compositions to “sanity check” a number of prima facie spurious results from the wells drilled in the permit.
Our comprehensive ‘business’ approach to the valuation provided a robust foundation to convincingly critique the expert witness report of the other party in the arbitration.
The parties reached a settlement, very favourable to our client, and hence avoided the not insubstantial costs of arbitration. We understand that the comprehensive nature and quality of our report played a significant role in this outcome. The lawyers acting for our client stated that they “were delighted with the quality of our report, which essentially destroyed the case of the opposing party.”Back to previous page