Equipment Appraisal Blog | Understanding Machinery Appraisals

How an oilfield equipment appraisal helps you compete in a changing market

Posted by Equipment Appraisal Services on Tue, May 23, 2017 @ 10:23 AM


When you're in the oil industry, the changing market means  you might be looking at black gold or just a plain crude mess. How can you compete with rapidly changing market conditions? Fortunately, current market projections are looking favorable to the gas and oil industry. But are you in a good position to take advantage of this market upswing? Here are some more details on how an oilfield equipment appraisal can help you gain ground faster.

How an oilfield equipment appraisal helps you compete in a changing market

The past few years have been hard on roughnecks, roustabouts, drillers, operators and just about everyone in the industry. The low barrel prices of the past few years have moved many oil companies from the boom years of the best of Bakken's offerings to the most stripped-down survival mode. Many companies have been bought out by competitors or sold off at auction to the highest bidder - not very high with low oil prices. But if 2016 was a year of making tough decisions, as summarized in a recent Deloitte report, 2017 is expected to be the beginning of the long road back to productivity and profitability, especially following the election of President Trump, who has made strong promises to bring back domestic energy production.

But how can you get there? If your business is like many oilfield companies, you've had to make major sacrifices to get by during the tight years. Equipment that was sold for pennies on the dollar during the worst of times may now have an increased value as the market recovers and begins to climb once again. Having your equipment appraised provides you with a wide range of information beyond the simple price you can expect to receive for it. For example, a good equipment appraiser will look at the overall industry and adjust the equipment's value accordingly. Just as you might see equipment priced sky-high during the peak of a boom, that same equipment may be significantly lower when the market is flooded with used machinery during a severe downturn.

But what else do they look at? What condition is your equipment in overall? Because an experienced oilfield equipment appraiser spends significant time every day looking at equipment, they can often see issues that your mechanics or other personnel may have missed. This in turn allows you to catch problems earlier on, before they become much more expensive problems. Has your equipment been well maintained or has it been abused or neglected? Well-maintained equipment will often last significantly longer and enjoy a higher value than poorly-maintained machinery. This in turn can give you collateral when you need to secure financing for additional expansion during a boom year.

With the expected improvement in the market, having an oilfield equipment appraisal performed ensures that you'll know the value of your assets. This knowledge, in turn, can give you a strong leg up on the competition when it comes to financing additional equipment, operations or manpower. But don't expect that your local equipment dealer is going to just give you an appraisal that represents fair market value.

Tags: oilfield equipment appraisal, oilfield equipment appraisers

Protect Against a Volatile Market with an Oilfield Equipment Appraisal

Posted by Equipment Appraisal Services on Tue, Jan 26, 2016 @ 10:30 AM


Though the current price at the pumps may have most Americans smiling, those in the petroleum business know just how difficult a downturn in this volatile market can be to their business. From keeping the crew happy to making fast decisions on whether a possibility is a go or a no-go, the fast changes in this market is enough to make anyone a little stressed. In this post, we'll take a good look at how you can protect your company against volatile changes in the market  and position yourself for the next boom by making wise business decisions based on a proper oilfield equipment appraisal.

Protect your interests with an oilfield equipment appraisal

Know your bottom line

By knowing exactly what your equipment values are, you're able to know exactly where you sit in terms of assets. A qualified equipment appraiser can include an estimated remaining useable life as part of your machine appraisal, giving you a good heads-up on when you can expect to replace aging equipment. They can also point out areas where you may want to start the replacement process, by leaving long-term machine equity until the last for replacement, ensuring you'll get more from your machinery in the used equipment market.

Have a solid grasp of your business' actual worth

Equipment appraisals provide you with a better idea of what your equipment is actually worth, rather than the depreciated value counted on your taxes. During a market upswing, the cost of a particular piece of equipment can rapidly increase, which a qualified appraisal specialist takes into account when providing you with a quality oilfield equipment appraisal. Because you know exactly where your assets stand, you know exactly where you stand to make better business decisions. Even better, a quality machine appraisal is prepared to a specific set of standards, which makes it easier to secure financing using your machinery as collateral, because the bank knows it can trust the machine appraisal as part of an accurate picture of your business' net worth.

Avoid risky propositions

When the guy on the next rig comes along to tell you he's quitting and ask if you're interested in buying him out, do you know whether it's a good idea or not? A machinery valuation is a great way to determine your bottom line, so you know whether you're in a good or bad financial position to take advantage of these situations as they arise. Depending on how your books are set up, you may have a financial picture that is either too optimistic that puts you in danger of losing your business to a bad investment or is too conservative, keeping you from taking advantage of new business and business expansion opportunities when they arise.  Knowing your financial state helps you make intelligent business decisions.

The oil & gas industry is volatile, but your business doesn't need to be. Instead of risking everything on a gut feeling gamble, why not look at having a quality equipment appraisal performed on your oilfield machinery? Position yourself to take advantage of the next upturn and you'll be ready to go while your competitors are still catching up with the market change. By using an ASA-certified appraiser who has received the standards board's Machinery & Technical Specialties, you're ensuring that you'll get a professional machinery valuation that will meet your needs. Contact us today for more details on getting started on the path to making wise and informed business decisions.

Tags: machinery appraisal, oilfield equipment appraisal

How to Determine Fair Value in an Oilfield Equipment Appraisal

Posted by Equipment Appraisal Services on Mon, Dec 28, 2015 @ 10:30 AM


Whether you need a machine appraisal for insurance purposes or want to better evaluate the worth of a used oil rig up for auction, an oilfield equipment appraisal can help determine the fair value of equipment in the current market. Learn how an equipment appraiser might value a piece of machinery to better understand the equipment values of assets you own or are considering purchasing. 

How Fair Value is Determined for Oil and Gas Equipment 

  • Physical deterioration - An appraiser will review the piece of equipment, taking note of its physical condition. The old adage about never judging a book by its cover applies well to machinery appraisals. Even if an oil rig engine looks old and shows visible wear and tear, these are not necessarily an indication of a low value. Appraisers will typically review maintenance records and inventory for oil and gas equipment before making a value determination. Equipment that was well maintained, or has spare parts on hand in the warehouse, might receive a higher value accordingly. 
  • Replacement cost - An appraiser might gauge how much it would cost to purchase an equivalent rig or tanker new, and then deduct from this cost based on the condition of the used equipment. When oil and gas equipment is being appraised for insurance or resale process, equipment values are often calculated in this manner. 
  • Useful life - The appraiser may estimate the useful life of the machinery by reviewing the age, physical condition, and depreciation of equipment. By consulting a chart showing the useful life of the particular object, and deducting time for age and wear and tear, an appraiser can calculate how many years of "useful life" a given piece of oil and gas equipment might have left. 
  • Market approach - In a market-based approach to oil and gas equipment valuations, appraisers look at recent sales prices of comparable equipment. While this is considered a highly reliable way to value machinery, the method only works when equipment like that in question has been recently sold, is comparable in condition and value, and was sold in a similar manner and location. It would not be fair to compare the price of a frack tank sold at auction to one up for private sale, for example.  


Appraisers will typically employ one or more of these methods to determine the value for a piece of oilfield equipment. The appraisal report should list which method was used, explain the criteria under which the fair value was determined, and provide additional evidence used to support these conclusions. 

If you are considering buying a used rig engine, it is well worth the appraisal cost to know the equipment's fair value on the market. Taking the extra step of having an appraisal done can help you avoid spending money on equipment that is in bad shape and would be expensive to repair or confirm that a piece of used equipment is a good value, enticing you to bid on it. 

When it comes to something as specialized as oilfield equipment, it is important to find an appraiser who understands the oil and gas industry and can value the machinery accordingly. When your business assets and worth are on the line, never settle for a general appraiser who lacks industry experience. For help finding an experienced appraiser of oil and gas equipment in your area, look to Equipment Appraisal Services. 

Tags: equipment appraisers, oilfield equipment appraisal