Appraisal Economics has valued equity interests in a joint venture between a petroleum company and a private equity firm. The joint venture owns and operates various interests in oil and gas wells in the Bakken Formation. Located in the Williston Basin, which encompasses North Dakota and Montana in the U.S. and parts of Saskatchewan and Manitoba in Canada, this formation of shale, siltstone, and sandstone has emerged as an important region for U.S. oil and gas production. The joint venture explores, drills, and produces oil and gas from tracts of property operated under non-operating working interests (“NOWIs”) and overriding royalty interests (“ORRIs”). NOWIs do not operate the oil and gas wells, but are responsible for their share of the drilling and production costs. ORRIs are similar to royalty interests in mineral ownership but are limited by the term of the lease. When the lease expires, all rights to the minerals revert to the landowner. ORRIs do not bear the cost of drilling or production. Our client has a portfolio of NOWIs and ORRIs in shale formations such as the Bakken. Appraisal Economics has been engaged for several years to value partnership interests in this joint venture.
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