Valuation of International Oil Companies
According to economic theory, exploration and development of new oil and gas fields should respond positively to increasing petroleum prices. But since the late 1990s, stock market analysts have focused strongly on short-term accounting return measures, like RoACE¹, for benchmarking and valuation of...
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| Veröffentlicht in: | The Energy journal (Cambridge, Mass.) Mass.), 2006-07, Vol.27 (3), p.49-64 |
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| container_title | The Energy journal (Cambridge, Mass.) |
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| creator | Osmundsen, Petter Asche, Frank Misund, Bård Mohn, Klaus |
| description | According to economic theory, exploration and development of new oil and gas fields should respond positively to increasing petroleum prices. But since the late 1990s, stock market analysts have focused strongly on short-term accounting return measures, like RoACE¹, for benchmarking and valuation of international oil and gas companies. Consequently, exaggerated capital discipline among oil and gas companies may have reduced their willingness to invest for future reserves and production growth. Based on panel data for 14 international oil and gas companies for the period 1990—2003, we seek to establish econometric relations between market valuation on one hand, and simple financial and operational indicators on the other. Our findings do not support the general perception of RoACE as an important valuation metric in the oil and gas industry. We find that the variation in company valuations is mainly explained by the oil price, oil and gas production, and to some extent reserve replacement. |
| doi_str_mv | 10.5547/ISSN0195-6574-EJ-Vol27-No3-4 |
| format | Article |
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But since the late 1990s, stock market analysts have focused strongly on short-term accounting return measures, like RoACE¹, for benchmarking and valuation of international oil and gas companies. Consequently, exaggerated capital discipline among oil and gas companies may have reduced their willingness to invest for future reserves and production growth. Based on panel data for 14 international oil and gas companies for the period 1990—2003, we seek to establish econometric relations between market valuation on one hand, and simple financial and operational indicators on the other. Our findings do not support the general perception of RoACE as an important valuation metric in the oil and gas industry. We find that the variation in company valuations is mainly explained by the oil price, oil and gas production, and to some extent reserve replacement.</description><identifier>ISSN: 0195-6574</identifier><identifier>EISSN: 1944-9089</identifier><identifier>DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No3-4</identifier><identifier>CODEN: ENJODN</identifier><language>eng</language><publisher>Los Angeles, CA: Energy Economics Education Foundation, Inc</publisher><subject>Accounting ; Accounting and auditing ; Applied sciences ; Business metrics ; Business structures ; Capital assets ; Cash flow ; Coefficients ; Debt restructuring ; Econometric models ; Econometrics ; Economic data ; Energy ; Energy economics ; Exact sciences and technology ; Financial investments ; Fossil fuels ; Fossil fuels and derived products ; Gas ; Gas industry ; General, economic and professional studies ; Industrial market ; Industry forecasts ; International ; Investments ; Methodology. 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But since the late 1990s, stock market analysts have focused strongly on short-term accounting return measures, like RoACE¹, for benchmarking and valuation of international oil and gas companies. Consequently, exaggerated capital discipline among oil and gas companies may have reduced their willingness to invest for future reserves and production growth. Based on panel data for 14 international oil and gas companies for the period 1990—2003, we seek to establish econometric relations between market valuation on one hand, and simple financial and operational indicators on the other. Our findings do not support the general perception of RoACE as an important valuation metric in the oil and gas industry. We find that the variation in company valuations is mainly explained by the oil price, oil and gas production, and to some extent reserve replacement.</description><subject>Accounting</subject><subject>Accounting and auditing</subject><subject>Applied sciences</subject><subject>Business metrics</subject><subject>Business structures</subject><subject>Capital assets</subject><subject>Cash flow</subject><subject>Coefficients</subject><subject>Debt restructuring</subject><subject>Econometric models</subject><subject>Econometrics</subject><subject>Economic data</subject><subject>Energy</subject><subject>Energy economics</subject><subject>Exact sciences and technology</subject><subject>Financial investments</subject><subject>Fossil fuels</subject><subject>Fossil fuels and derived products</subject><subject>Gas</subject><subject>Gas industry</subject><subject>General, economic and professional studies</subject><subject>Industrial market</subject><subject>Industry forecasts</subject><subject>International</subject><subject>Investments</subject><subject>Methodology. Modelling</subject><subject>Methods</subject><subject>Natural gas reserves</subject><subject>Natural gas utilities</subject><subject>Oil</subject><subject>Oil companies</subject><subject>Oil prices</subject><subject>Oil recovery</subject><subject>Oil reserves</subject><subject>Petroleum industry</subject><subject>Prices</subject><subject>Prices and rates</subject><subject>Production costs</subject><subject>Return on capital</subject><subject>Securities markets</subject><subject>Studies</subject><subject>Valuation</subject><issn>0195-6574</issn><issn>1944-9089</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2006</creationdate><recordtype>article</recordtype><sourceid>8G5</sourceid><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>AZQEC</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><sourceid>GNUQQ</sourceid><sourceid>GUQSH</sourceid><sourceid>M2O</sourceid><recordid>eNqNkU9rGzEQxZfSQt20H6Fg2qa0B6X6t6sV9BKM0zqEBOo2VzGWR2aNvHKlXUi_feRsmuDgQ6SD0Oj3noZ5RfGJ0ZOylOrbbD6_pEyXpCqVJNNzch08V-QyCCJfFCOmpSSa1vplMXrAXhdvUlrTvKSqR8WXa_A9dE1ox8GNZ22Hsb27gh9fNX48CZsttA2mt8UrBz7hu_vzqPhzNv09-Ukurn7MJqcXxFa16oiQoLlVTIBbahR1xVE61JKVasGdrJeUcU2XFheyWtQ1lxJBMJSQ36CUThwVnwffbQx_e0yd2TTJovfQYuiTEZVgquYqgx-egOvQ5-Z9MpxzqmgGM_RxgFbg0TStC10Eu3M0p0wqJetSlZkiB6gVthjBhxZdk8t7_MkBPu8lbhp7UPB1T5CZDm-6FfQpmdn81z77fWBtDClFdGYbmw3Ef4ZRs4vd_I_d7PI003NzF7vJsRuZ5cf3Y4FkwbsIrW3So4fSPGtp5vTAJVjh4-ie-cf7QbtOXYgP3lxwXensfQsqz8cU</recordid><startdate>200607</startdate><enddate>200607</enddate><creator>Osmundsen, Petter</creator><creator>Asche, Frank</creator><creator>Misund, Bård</creator><creator>Mohn, Klaus</creator><general>Energy Economics Education Foundation, Inc</general><general>SAGE Publications</general><general>International Association for Energy Economics</general><general>Sage Publications Ltd. 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But since the late 1990s, stock market analysts have focused strongly on short-term accounting return measures, like RoACE¹, for benchmarking and valuation of international oil and gas companies. Consequently, exaggerated capital discipline among oil and gas companies may have reduced their willingness to invest for future reserves and production growth. Based on panel data for 14 international oil and gas companies for the period 1990—2003, we seek to establish econometric relations between market valuation on one hand, and simple financial and operational indicators on the other. Our findings do not support the general perception of RoACE as an important valuation metric in the oil and gas industry. We find that the variation in company valuations is mainly explained by the oil price, oil and gas production, and to some extent reserve replacement.</abstract><cop>Los Angeles, CA</cop><pub>Energy Economics Education Foundation, Inc</pub><doi>10.5547/ISSN0195-6574-EJ-Vol27-No3-4</doi><tpages>16</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0195-6574 |
| ispartof | The Energy journal (Cambridge, Mass.), 2006-07, Vol.27 (3), p.49-64 |
| issn | 0195-6574 1944-9089 |
| language | eng |
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| source | Access via SAGE; EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing |
| subjects | Accounting Accounting and auditing Applied sciences Business metrics Business structures Capital assets Cash flow Coefficients Debt restructuring Econometric models Econometrics Economic data Energy Energy economics Exact sciences and technology Financial investments Fossil fuels Fossil fuels and derived products Gas Gas industry General, economic and professional studies Industrial market Industry forecasts International Investments Methodology. Modelling Methods Natural gas reserves Natural gas utilities Oil Oil companies Oil prices Oil recovery Oil reserves Petroleum industry Prices Prices and rates Production costs Return on capital Securities markets Studies Valuation |
| title | Valuation of International Oil Companies |
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