Report Creation Process
DecomWorld’s Offshore Decommissioning Report 2015,Gulf of Mexico is the culmination of four months of research and years of expertise within the offshore oil & gas decommissioning market in the GOM OCS. The content, focus and direction of the report is based upon extensive discussions within the decommissioning community. This includes client research with service providers, operators and decommissioning thought leaders to ensure that this report, the 6th edition published by DecomWorld, continues to meet the business critical needs of the community. The report has been written and esearched by Dr. Mark J. Kaiser, the foremost researcher in Offshore Decommissioning in the Gulf of Mexico. The report will be peer reviewed by industry experts to ensure that information included is of the highest standard and truly adds value to the decommissioning community.
Operators report structure installation and removal activity, drilling and wellbore abandonments in the Outer Continental Shelf of the United States electronically to the BOEM/BSEE. After review and quality control, which may take anywhere between three to six months, the BOEM/BSEE uploads the data to the Technical Information Management System database. Wellbore data was assembled from the BOEM Borehole database (BOEM 2014a). Structures were identified using the BOEM Platform Masters and Platform Structures databases (BOEM 2014b; BOEM 2014c). Public companies disclose asset retirement obligations and liabilities settled on their financial statements according to FASB No. 143 on a proportionate share (i.e., net working interest) basis. Parent companies and subsidiaries keep separate books, but at the end of the year, the parent company issues consolidated statements that reflect the financial results of the consolidated entity. It is at this point in time reserves, production, revenues and liabilities are combined across all companies and subsidiaries and reported to shareholders.
Company annual reports are available on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K on internet websites and the EDGAR database on the Security and Exchange Commission’s website. Annual and quarterly reports summarize asset retirement obligations information and Form 8-K report on the completion of acquisition or disposition of assets on pro forma consolidated financial statements. Subsidiaries for public companies are listed in Form 10-K Exhibit 21 for domestic companies and 20-F Exhibit 8 for foreign companies. Data assessment was performed in January and February 2015 based on BOEM/BSEE records circa January 2015.
The most common approach to estimate market size is to group annual activity statistics (e.g., structures removed, wells abandoned, pipeline miles decommissioned, sites cleared, etc.) according to a meaningful categorization (e.g., water depth, structure type, etc.), multiply activity levels by average unit cost, and adjust for inflation and special conditions, as required. Using this “bottom-up” approach, market size can be estimated in a direct and transparent manner. The drawback to this approach is that average unit cost is difficult to reliably estimate on an annual basis, and the few published cost studies that are available may not be representative of industry cost. Further, significant market activities often preclude accurate estimation (e.g., hurricane clean-up, deepwater decommissioning), and activities not identified (e.g., pipeline abandonment, hurricane clean-up) will not be included in the market valuation.
To overcome these drawbacks, an alternative “top-down” approach utilizing settled liability data was applied in this report. Settled liabilities represent decommissioning expenditures and property sales for a company and all its subsidiaries as required by FASB No. 143. Settled liabilities are not broken out by geographic region, work activity, subsidiary, or sales, and therefore, detailed processing is required to match settled liabilities with owner decommissioning activity, and then to correlate decommissioning cost with activity levels. Settled liabilities were applied to derive a generalized multifactor relationship over a short-term time window. This approach has the advantage of using expenditures reported by industry and avoids the bias incurred in small datasets.
Months of market research compiled in an easy to digest format:
- Pages: 90
- Tables: 31
- Figures: 42
- Publication Date: March 2015
- Format: Secure PDF
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