Oilfield Equipment Appraisals

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CAODC Canadian Rig Utilization August 2016

Welcome to Aestimo Services Ltd.

Alberta based – Aestimo Services Ltd. is an professional appraisal firm specializing in oilfield equipment appraisal services, with established proficiency in Asset Based Loans (ABLs), insurance claims and financial reporting.

Appraisal services have been provided to many clients; banks, investment firms, government agencies, insurance brokers, drilling contractors, receivers, private and public companies.

  • Asset Based Loan (ABL) Appraisal focusing on equipment condition, design popularity, utilization patterns, remarketing potential and global market influences. Aestimo’s extensive work history with Asset Based Lenders (ABLs) specifically in Western Canada, has enabled Aestimo to develop an appraisal process unrivalled in creditability, function and clarity.
  • Financial Reporting Appraisals for oilfield equipment contractors, on-site inspections (desktop available) ranging from Alaska to central Africa, the Artic to Australia for both internal and external reports.
  • Insurance Appraisals specifically geared for broker support, Aestimo will ensure fluid procurement in all phases, from initial “ball park” hedges to in-house professional presentation of numerical conclusions, complete support – storage to salvage.

Aestimo offers a unique and comprehensive perspective in oilfield equipment appraisals, a global top-down understanding (achieved through worldwide appraisal and consulting activities) balanced with Alberta grass roots familiarity with contractors and manufacturers… Aestimo blends global influences with local providence.

Major drilling and servicing contractors has entrusted Aestimo year after year, to make sense of ever-changing and otherwise confusing asset lists and to consistently issue appraisal reports which are well received by the major audit groups such as; PWC, MNP, Ernst & Young etc. Aestimo’s reports consistently stand up to rigid audit scrutiny, this is partly due to Aestimo’s well established relationships with all major audit groups and familiarity with financial reporting.

All appraisal reports are International Financial Reporting Standards (IFRS) and Universal Standards Professional Appraisal Practice (USPAP) compliant. Gordon is a candidate member of the American Society of Appraisers (ASA) and a member of the Canadian Personal Property Appraisers Group (CPPAG). Gordon is in good standing and adherence with the code of ethics for both ASA and CPPAG.

 

We Have Only One Service – One Quality
The Best

Definition of Appraisal Terms

Unique circumstances may dictate specific definitions not found below. Many terms are used to describe notions of value. The definitions offered here are to provide the fundamental concepts and are not the only acceptable definitions, since contracts may dictate a somewhat different notion. Therefore, these definitions may be expanded or redefined as the purpose and function of the appraisal may dictate as long as the fundamental concept is not altered.

Here you can create the content that will be used within the module.

Replacement Cost – New
The current new cost of replacement of identical property, or property of like kind, capable of producing equivalent benefits (results) for the owner. Determination is made from manufacturer’s sales of same or similar property and from the owner’s invoices. The values also reflect the cost of freight, and installation, but do not include any applicable taxes.
Replacement Cost – Market
The current cost of replacement of identical property, or property of like kind, capable of producing equivalent benefits (results) for the owner. For equipment packages such as rigs, replacement can be based on a combination of used equipment in equivalent condition (where available) and new equipment. The values also reflect the cost of freight, and installation, but do not include any applicable taxes.
Fair Market Value
The estimated amount expressed in terms of money, that may be reasonably be expected for property in exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts… in the most common market. This value assumes the equipment has been maintained according to the manufacturer’s recommendations and performance standards. Determination is based on the comparable method that is comparing past sales of same or similar property. Further consideration is based on the appraiser’s specific knowledge of the subject property and reflects the condition found based on the physical inspection performed and the information provided.
Fair Market Value in Continued Use
The estimated amount, expressed in terms of money, that may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of the relevant facts, including installation, as of a specific date and assuming that “the business earnings support the value reported”.
Liquidation Value in Place
The estimated gross amount, expressed in terms of money, which is projected to be obtainable from a failed facility assuming the entire facility would be sold intact within a limited time to complete the sale.
Orderly Liquidation Value
The estimated gross amount, expressed in terms of money which could be typically realized from a sale, given a reasonable period of time to find a purchaser(s), with the seller being compelled to sell on an as is-where-is basis.
Forced Liquidation Value
Normally associated with auctions, is the estimated gross amount, expressed in terms of money which could be typically realized from a properly advertised and conducted public sale, with the seller being compelled to sell with a sense of urgency on an as-is where-is basis.

Valuation Methodology

There are three primary methods of valuation methodology; the income approach, the comparable method and the depreciation method.

The Income Approach
The income approach is one of the three methods of machinery and equipment valuation.  While it is usually the driving approach for business valuations since an entire enterprise is being valued based on it income generating past and future, the income approach is not an approach that is typically selected by equipment appraisers as the method to base value.  The reason that it is not widely used in machinery appraisal is because it is difficult to calculate the future benefit that a specific machine or piece of equipment will bring to an owner since there are many factors as well as supporting assets, both tangible and intangible, possibly affecting the future income.  USPAP requires that the income approach be considered in every equipment valuation, however it is often found that this approach is not as reliable as the sales comparison approach or the cost approach.
The Comparable Method
The Comparable Method is the most reliable and common method of equipment valuation. Aestimo’s extensive b equipment owner is keenly aware of these considerations as well as any remarketing agent.
The Depreciation Method
The depreciation method is also commonly used on oilfield equipment, most appraisal firms us a straight line charged equally over the entire useful life of an asset, this is common mistake. Due to upfront high capital expenditures many equipment groups realize a multi-life cycle, i.e. rather than replace the whole asset there are patterned and anticipated, sometimes mandated refurbishment intervals. It is crucial to precisely identify; true chronological age and refurbishment age then the two must be blended with actual physical condition to establish accurate current value. Aestimo has provided official Appraisal Review services of opposing competitor’s reports for insurance purposes and found this consideration to always be missing, much to the dismay and right of the vested parties.

Valuation Conclusions

The specific definition of value reported must be relative to the weighting and interpretation of the methods, true pragmatic understanding of all factors is essential.

Aestimo has visited Alberta’s primary oilfield manufacturing facilities for the sole purpose of gaining insight, not only in their manufacturing process but also patterned refurbishment cycles, costs, quality assurance etc. This upfront investment in due diligence has proved to be an invaluable asset during preliminary discussions with potential lenders, when determining the likely hood of an appraisal aiding in a prospect deal, one of many advantages had when partnering with Aestimo.

Aestimo has taken traditional straight-line deprecation and expanded to make allowance for multi-life cycles in all appraised categories where applicable.

Throughout the years Aestimo has completed varied assignments for clients from tax agencies and investment firms to insurance companies, the different valuation techniques and reporting format requirements has helped Aestimo to incorporate a repertoire of reporting styles, illustrations and formulas to ensure appropriate comprehension of numerical conclusions and process. Exemplar formulas would include; Actual Cash Value, Normal Useful Life, Remaining Useful Life etc. Exemplar illustrations would include; bar graphs, pie charts, third party reporting summaries and references.

Aestimo’s valuation methodology goes outside the primary three valuation methods, as does the considerations and realities of actual equipment owners and remarketing agents. Aestimo feels it is essential to understand and weight all contributing factors from fundamentals such as year, make & Model to local and international politics, be assured the more intelligence weighted the more accurate the valuation. Aestimo’s extensive international appraisal experience and local grass roots has positioned Aestimo to provide full spectrum and connectivity when determining valuation conclusions.

Compression Equipment

Deep Well Coil Tubing

Geological Drill Rig

Heavy Double Rig

Horizontal Drill Rig

Nitrogen Pumper

Triple AC Rig

Super Single Drill Rig

Seismic Drill Rig

Service Rigs

Nitrogen Transport Tanker

P-Tank

Wireline Equipment

Shallow Well Coil Tubing

Corporate Profile

Aestimo Services Ltd. ASL is an independent consulting firm specializing primarily in appraisal and business management reporting. ASL is owned and managed by Gordon I. Hollett. Gordon got his start in the appraisal business in 1997 as a contractual appraiser at DM Consulting and Appraisals Ltd. (DM).

DM was retitled Aestimo Services Ltd. in 2004, Aestimo today provides multi-industry capabilities to clients both domestic and international, primarily as an seasoned appraisal firm with established creditability in business management reporting. Thorough knowledge of equipment from a manufacturing and operational perspective ensures equipment owner confidence in asset knowledge, balanced with corporate confidence in numerical conclusions.

Strategic Management Services have been provided to many clients. Working with banks, investment firms, government agencies, insurance brokers, drilling contractors, private companies, public companies and receivers, services have been provided for:

  • Appraisals specifically designed for Asset Based Loans (ABL), focusing on equipment condition, design popularity, utilization patterns, remarketing potential and global market influences.
  • Appraisals for oilfield equipment contractors with international operations, on-site inspections ranging from Alaska to central Africa for both internal and external reporting purposes.
  • Workout, windup & shutdown services for banks and receivers both in Canada & US, including recovery and protection of fixed assets.
  • All appraisal reports are International Financial Reporting Standards (IFRS) and Universal Standards Professional Appraisal Practice (USPAP) compliant. Gordon is a candidate member of the American Society of Appraisers (ASA) and a member of the Canadian Personal Property Appraisers Group (CPPAG). Gordon is in good standing and adherence with the code of ethics for both ASA and CPPAG.

Both at home and abroad Aestimo offers professional and confidential consulting services to a growing clientele.

The Expertise

The validity of an appraisal is the result of the quality of research performed by the appraisal firm. Aestimo Services Ltd. appraisal reports are particularly valuable because of three things, which characterize our approach, as follows:

  1. No single equation or formula is adequate to measure the individual qualities of equipment. Each situation is approached with an appreciation for its uniqueness, to be judged on its own merits.
  2. The process of appraisal relies heavily on individual judgment; Aestimo Services Ltd. is committed to obtaining all the concrete facts available to make that judgment as precise as possible. Supporting data is gathered, details are checked and verified, and then all the facts are weighted to provide supportable appraisals.
  3. The commitment to excellence sets Aestimo Services Ltd. apart from the ordinary. The factors that make one appraisal better or more accurate than another include the research and documentation upon which the appraiser exercises his judgment, his experience in weighing the facts, and his devotion to accurate details.

We Have Only One Service – One Quality
The Best

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