Thorndon Cook Power
   
Thorndon Cook Power
Thorndon Cook Power
Nam Theun 2 Hydropower Project

Valuation of Rotokawa wells RK6 and RK8

Valuation of Rotokawa wells

The Project

Thorndon Cook was engaged by the NZ Treasury to produce a non-binding independent valuation of the wells RK6 and RK8 and associated assets. These Crown owned geothermal wells had been included as an option in the Ngāti Tūwharetoa Hapu Forum’s Agreement in Principle to settle its historical Treaty of Waitangi claims with the Crown. A value needed to be ascribed to the wells.

Our Role

The value was determined in accordance with NZ IAS 16: Property, Plant and Equipment accounting standard. An income and depreciated replacement cost (DRC) approach was applied, which depended on replacement cost to replicate the service potential of the wells. This in turn depends on the potential uses of the wells, and a comprehensive study was undertaken considering:

  • Integration with existing Rotokawa Joint Venture operation by supplying fluid across the river
  • Use in an independent commercially viable development

Issues of land access and rights, consents and permits to use the land and resource, and to construct and operate the facilities are of paramount importance and were comprehensively studied by specialist subconsultants.

Results

Each option was evaluated to a preliminary feasibility level and a project NPV developed, to provide an implied value of the wells. This evaluation included all technical requirements, such as plant siting, roading, piping, transmission lines as well as a suitable power plant configuration itself.

A key part of the valuation was also the risks and uncertainties, with particular evaluation of the future electricity price path, drilling risks and potential project enhancements that may change the economics such as parallel or cascade processes.

Capabilities

Advice:
asset evaluation and valuation

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