• For Q3 the balance sheet is provided in thousands

3. Valuing Oil Corp (OC) Oil Corp (OC) is an American company focusing in drilling for, and producing natural gas in the newly-rediscovered shale deposits of PA and NY. Review the following balance sheet for OC and note: GAAP rules for valuing natural gas reserves are considered inaccurate throughout the natural gas industry. Proved and Probable" reserves, as estimated by a reliable engineering firm are the industry-standard measure for the amount of natural gas under a given piece of land. OC owns $900MM worth development rights to 400 million (MM) cubic feet of reliably- estimated "Proved and Probable" natural gas in PA and NY. OC's "Other Current Assets" could be sold today for $275,000 and its "Other Long-term Assets" are worth $5,000,000. OC 6/30/21 Balance Sheet (000) FOR PERIOD ENDING Assets Current Assets Cash And Cash Equivalents Net Receivables Other Current Assets Total Current Assets 1,250 3,856 725 5,831 Oil Development Rights Other Long-term Assets Total Assets 412,414 9,120 427,365 Liabilities Accounts Payable Long Term Debt Other Liabilities Total Liabilities 63,580 286,520 8,275 358,375 Stockholders' Equity Liabilities + Equity 68,990 427,3651 Find: a. Using the Balance Sheet Valuation method, what would OC report as Total Assets. Show all work. b. PA and NY are working on new might limit development of the fields for which OC has sole rights. OC determined that there is a 35% chance that PA and NY will enact the laws because the technique for extracting gas from this geology is environmentally damaging. In this case, the market value of OC's equity would be a third. What is the weighted average value of OC? {The formula for weighted average is: (Probability of case 1 * case 1 value) + (Probability of case 2 * case 2 value)} 3. Valuing Oil Corp (OC) Oil Corp (OC) is an American company focusing in drilling for, and producing natural gas in the newly-rediscovered shale deposits of PA and NY. Review the following balance sheet for OC and note: GAAP rules for valuing natural gas reserves are considered inaccurate throughout the natural gas industry. Proved and Probable" reserves, as estimated by a reliable engineering firm are the industry-standard measure for the amount of natural gas under a given piece of land. OC owns $900MM worth development rights to 400 million (MM) cubic feet of reliably- estimated "Proved and Probable" natural gas in PA and NY. OC's "Other Current Assets" could be sold today for $275,000 and its "Other Long-term Assets" are worth $5,000,000. OC 6/30/21 Balance Sheet (000) FOR PERIOD ENDING Assets Current Assets Cash And Cash Equivalents Net Receivables Other Current Assets Total Current Assets 1,250 3,856 725 5,831 Oil Development Rights Other Long-term Assets Total Assets 412,414 9,120 427,365 Liabilities Accounts Payable Long Term Debt Other Liabilities Total Liabilities 63,580 286,520 8,275 358,375 Stockholders' Equity Liabilities + Equity 68,990 427,3651 Find: a. Using the Balance Sheet Valuation method, what would OC report as Total Assets. Show all work. b. PA and NY are working on new might limit development of the fields for which OC has sole rights. OC determined that there is a 35% chance that PA and NY will enact the laws because the technique for extracting gas from this geology is environmentally damaging. In this case, the market value of OC's equity would be a third. What is the weighted average value of OC? {The formula for weighted average is: (Probability of case 1 * case 1 value) + (Probability of case 2 * case 2 value)}