PPA of Midstream Oil and Gas Assets for Financial Reporting Purposes

March 2023
TOP was engaged by a midstream oil and gas industry MLP with an estimated enterprise value in excess of $3.5 billion to prepare a purchase price allocation in relation to a business combination with a purchase price of approximately $600.0 million.

Our analysis included estimates of the fair value of acquired personal property, real property, rights-of-way, and customer relationships of a crude oil and natural gas gathering and processing and transportation business with operations in the Delaware basin in New Mexico.  The personal property assets in our scope included gathering system pipelines and associated equipment, processing facilities and equipment, fleet vehicles, software, and office equipment.  The personal property assets were valued using a combination of the indirect and direct methods of the cost approach.  The real property assets in our scope included four parcels of land that were valued using the sales comparison approach.  The acquired company’s rights-of-way were also valued using a form of the sales comparison approach.  Customer relationships were valued using the multi-period excess earnings method under the income approach.

As part of the services, TOP also assisted the client with certain estimates related to incremental borrowing rates (IBR), credit adjusted risk-free rates (CARFR), and other inputs related to the assumed asset retirement obligations (ARO).

About Tall Oaks Partners

Based in Houston, TX, Tall Oaks Partners provides valuation and financial advisory services to corporate management of public and private companies, investment and fund managers, and stakeholders in businesses of a variety of scale. The Tall Oaks Partners team has significant experience assisting clients with a multitude of valuation matters for strategic, tax, and financial reporting purposes. Our services and deliverables are tailored to client needs and prevailing industry and economic trends.


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