I haven't ready too many independent valuation reports, but most...

I haven't ready too many independent valuation reports, but most obvious thing that sticks out to me is the use of 14% discount rate to get net present value of future earnings.  This seems high to me.  And it's selection somewhat arbitiary.  If they choose say 10% it would give a radically different valuation on DTE and make the deal seem much less favourable to DTE shareholders.  From what I understand, the discount rate is equivalent to the opportunity cost of having your capital held in DTE versus another form.  So at 14% discount rate, they are saying that DTE is worth the 200-odd mill if we assume cost of capital is 14%.  If cost of capital is 10% for example, the figure grows, as 100 mill recieved over next 10 years becomes discounted less to get the NPV in todays dollar terms.  I'll try and crunch some numbers using a different 'assumed' discount rate over the weekend.

From Deloitte themselves, 10% rate for oil and gas is generally considered appropriate:

http://www.google.co.nz/url?url=htt...MQFjAA&usg=AFQjCNEmt59k2ZpEzxZpmNlGDLKrBSx8SA