Brattle Principals Coauthor Article on Importance of Real Options in Valuation in the ABI Journal
Published in the American Bankruptcy Institute (ABI) Journal
Principals Anul Thapa and Jake Zahniser-Word recently coauthored an article for the American Bankruptcy Institute (ABI) Journal discussing the importance of considering the value of real options when valuing oil and gas exploration and production (E&P) companies during the bankruptcy and restructuring process.
There are multiple methodologies that can be used to value a company, including various market-based approaches, the income-based approach, and the asset-based approach. However, typical valuation approaches relying on single-point outlooks often fail to capture the uncertainty in price projections for E&P companies fully. Real-option valuation incorporates forecast uncertainty and recognizes the additional value of flexibility to capitalize on new information and market conditions over time.
The full article, “Recognizing the Value of Real Options,” can be found below.
