PV10

AAA

DEFINITION of 'PV10'

Present value of estimated future oil and gas revenues, net of estimated direct expenses, discounted at an annual discount rate of 10%. This nomenclature is most commonly used in the energy industry, and is used to estimate the present value of a company's proved oil and gas reserves.

INVESTOPEDIA EXPLAINS 'PV10'

In order to calculate PV10, an energy company's reservoir engineers develop a reserve report for every existing well and proved undeveloped well location. The reserve report takes into account each well's current production rate and forecast decline rate, and also its unique production costs and expenses to develop reserves. Future gross revenues are estimated by either using prevailing energy prices or applying an appropriate escalation rate. Non-property related and indirect expenses such as general and administrative overhead, debt service, and depletion and amortization are not considered in the computation of PV10.

RELATED TERMS
  1. Net Present Value - NPV

    The difference between the present value of cash inflows and ...
  2. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  3. Proved Reserves

    A classification used in mining sectors that refers to the amount ...
  4. Value-Based Pricing

    The setting of a product or service's price, based on the benefits ...
  5. Internal Rate Of Return - IRR

    The discount rate often used in capital budgeting that makes ...
  6. Present Value - PV

    The current worth of a future sum of money or stream of cash ...
Related Articles
  1. Calculating The Present And Future Value ...
    Investing Basics

    Calculating The Present And Future Value ...

  2. DCF Valuation: The Stock Market Sanity ...
    Investing Basics

    DCF Valuation: The Stock Market Sanity ...

  3. Understanding The Time Value Of Money
    Investing Basics

    Understanding The Time Value Of Money

  4. Internal Rate Of Return: An Inside Look
    Fundamental Analysis

    Internal Rate Of Return: An Inside Look

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center