PV10

What is 'PV10'

PV10 is the 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.

BREAKING DOWN '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. Energy Sector

    A category of stocks that relate to producing or supplying energy. ...
  2. Discounted Future Earnings

    A method of valuation to estimate the value of a firm.
  3. Estimated Ultimate Recovery - EUR

    A production method commonly used in the oil and gas industry. ...
  4. Present Value - PV

    The current worth of a future sum of money or stream of cash ...
  5. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  6. EIA Natural Gas Report

    A weekly report provided every Thursday by the Energy Information ...
Related Articles
  1. Investing Basics

    5 Reasons Why Private Equity Investors Like Oil and Gas Companies

    Oil and gas companies may look like a risky industry on the outside, but private equity investors have found reasons to regularly invest in these firms.
  2. Active Trading

    Unearth Profits In Oil Exploration And Production

    Drill down into financial statements to tap into the right companies and let returns flow.
  3. Investing

    The US Is Becoming More Energy Independent

    Rising production and abundant shale oil and gas reserves are moving the US towards energy independence, which could happen by 2020
  4. Stock Analysis

    Chesapeake Energy Sees History Repeating Itself

    Chesapeake was on the wrong side of natural gas when its price plunged in 2012, and it appears to be repeating itself after the price of oil plummeted.
  5. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  6. Fundamental Analysis

    5 Biggest Risks Faced By Oil And Gas Companies

    Before investing in gas and oil stocks, consider such factors as political and geological risks.
  7. Mutual Funds & ETFs

    DBE: PowerShares DB Energy ETF

    Explore information about the PowerShares DB Energy Fund ETF, and learn how investors utilize it to obtain exposure to the oil and gas industry.
  8. Mutual Funds & ETFs

    The Top 5 Oil and Gas Equity Mutual Funds for 2016 (VGENX, FSENX)

    Discover detailed analyses of the top oil- and gas-related mutual funds to consider, and learn about the characteristics of these mutual funds.
  9. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  10. Stock Analysis

    The 7 Biggest Canadian Energy Companies (IMO.TO, TRP)

    Read about the largest seven Canadian energy companies as measured by market capitalization, and learn more about their energy operations.
RELATED FAQS
  1. What developed countries have the greatest exposure to oil & gas drilling?

    Find out which countries have the largest proven reserves of oil and gas, and learn how the energy landscape has changed ... Read Answer >>
  2. What are average operating expenses for the oil and gas sector?

    Learn about the average operating expenses and average operating expenses margin for the oil and gas sector and how they ... Read Answer >>
  3. What economic indicators are important to consider when investing in the oil and ...

    Find out more about economic indicators and which ones are important when investing in companies in the oil and gas sector. Read Answer >>
  4. How are oil reserves accounted for on an oil company's balance sheet?

    Oil reserves are estimated quantities of crude oil that have a high degree of certainty, usually 90%, of existence and exploitability. ... Read Answer >>
  5. What factors are the primary drivers of share prices in the oil and gas sector?

    Learn the primary drivers behind changes in the share prices of the oil and gas sector. The oil and gas sector is a cyclical ... Read Answer >>
  6. What percentage of the global economy is comprised of the oil & gas drilling sector?

    Read about a rising industry that already composes as much as one-twentieth of total global economic output: the oil & gas ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center