Jack-up drilling complex valuation for insurance

Client

An engineering company that provides design and construction services for the oil and gas industry.

Objective

To assess the jack-up drilling complex market and replacement (COR / CRN) value for insurance purposes.

Approach

The market value of the drilling complex was estimated using a cost approach.

The cost approach is based on the analog-parametric method of an identical object value. The prices of comparable producers and dealers were used for valuing. Linear method estimation showed the correlation of the comparable prices with the production year, and as a result the base value of the drilling complex as of the valuation date was appraised. Furthermore, the base value of the valuation object was added with the individual cost components of the equipment.

To estimate the replacement value (COR / CRN) of the drilling complex, market value, depreciation and obsolete equipment were calculated. The effective age method was applied in determining physical depreciation. There was no economic obsolescence for this facility due to the active demand for the use of Jack-up Drilling Complexes, and the optimum utilization of the production facility.

Results

Swiss Appraisal derived the replacement value of the object through market value, which was subsequently used by the insurer to determine the size of the policy and the insurance rate.



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