Equipment Appraisal Blog | Understanding Machinery Appraisals

Energy Equipment Appraisal Benefits for Your Fossil Fuel Business

Posted by Equipment Appraisal Services on Fri, Aug 21, 2015 @ 06:30 AM


Let's face it, working in the fossil fuels industry is hard. There are long hours, tough work and solid risk that your latest well or construction project may not work out as well as you hope it will. But there is no other industry where the potential rewards can so strongly outweigh the risks, if you're running your business right. After all, there's a reason why people refer to a sudden windfall as "striking oil". In today's post, we're going to take a solid look at how you can help keep your oil field, fracking, transportation or processing business running in the black and reducing financial risk through a energy equipment appraisal.

What an Energy Equipment Appraisal Is:

A machine appraisal involves having an equipment appraiser look over your industrial machinery to determine its equipment value. A trained appraiser will spend time investigating the machine's value by looking at the marketplace and what equipment is selling for. They'll provide a documented report that states the machine's specifications and value conclusions.

What an Energy Equipment Appraisal Isn't:

Having equipment appraisers valuate your machinery doesn't necessarily guarantee that you'll get the appraised value when you're buying or selling a machine, because economic conditions, timing, and supply and demand will play a role in the final selling price. Consider the local economy around Williston, North Dakota when the oil field there was first being worked seriously. Rent, groceries, entertainment - all these items skyrocketed in price because of high demand, as did any local heavy machinery or fossil fuels equipment. By comparison, when a place has been closed down because a field is no longer economically feasible to extract fossil fuels from, the fossil fuels machinery in the area will rapidly go down in price because of low demand.

How an Energy Equipment Appraisal Protects Your Business' Bottom Line:

Having a proper appraisal performed on your equipment ensures that you have documentation of your machinery's value and how that value was determined. If you need a loan to expand your operation quickly in response to higher market demand or a new discovery, you'll be able to provide documentation of your business' assets to help speed up the process and provide collateral. An appraisal also helps provide documentation of fair market value for your energy equipment when it's time to upgrade or replace that machinery.

With these concepts in mind, it's time to take action. Instead of hoping that everything will work out well for your business, get a machinery valuation performed by a well-qualified machine appraiser who is certified by the American Society of Appraisers using the Uniform Standards of Professional Appraisal Practice to ensure your valuation provides proper documentation of your operation's assets whether for tax purposes, insurance claims or to back up equipment values for a sale price when it's time to upgrade or replace your used oil and gas equipment.

Tags: Equipment Appraisal, energy equipment appraisal