SumZero member Nicholas Snyder (Union Square Research Group) offers deep, energy-related insight in this PDF which focuses on wide-spread inefficiencies in the valuation of shale assets. Using his considerable industry knowledge, Snyder offers what can be described as a how-to primer for those attempting to truly understand the value of shale plays in the US and beyond. He asserts that the current environment of asset mispricing will soon yield to improved efficiency as new information becomes available and new methods for valuation become more widely-adopted.
In the words of the author, “an opportunity currently exists to buy hundred-million to multi-billion dollar assets for a fraction of what they are worth. For the first time, the value of oil and gas shale assets can be calculated on an NPV basis due to an increase in publicly available data and improved disclosures. As these assets reach the tipping point in development, when there is visibility into future free cash flow and an NPV can be calculated, the market will adjust and this opportunity will disappear.”
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