Revisions of international firms’ energy reserves and the reaction of the stock market

Scholtens, Bert; Wagenaar, Robert

doi:10.1016/j.energy.2011.03.060

Cited by 10 publications

(6 citation statements)

References 26 publications

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“…If a change in oil prices is expected to persist, it will be fully incorporated into the long-run oil price and this change will generate a corresponding change in the equity price of an oil producing firm (the correlation coefficient between returns to crude oil and ConocoPhillips ρ 3 = 1.0). Consistent with large effects, revisions in proved reserves affect the equity price of oil firms (Scholtens and Wagenaar, 2011). Conversely, ρ 3 = 0 suggests that a price change has no effect on the long-run price for crude oil, and so this change will have no effect on the price for an oil-producing firm.…”

Section: Discussionmentioning

confidence: 92%

Crude oil: Commodity or financial asset?

et al. 2014

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Section: Discussionmentioning

confidence: 92%

Crude oil: Commodity or financial asset?

et al. 2014

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“…Surprisingly, the authors find a negative relationship between oil stock returns and changes in production of oil and gas. Scholtens and Wagenaar (2011) examine how revisions of petroleum reserves impact oil and gas company returns. Analyzing a total of 100 revisions in several countries between 2000 and 2010, the authors find that revisions significantly impact shareholder values.…”

Section: What Explains Oil and Gas Stock Returns?mentioning

confidence: 99%

“…In January 2004, when Shell announced a 28% downward revision of their proved oil and gas reserves, 1 their share price fell 12% over the 3-4 weeks following the announcement. Moreover, Scholtens and Wagenaar (2011), analyzing 100 reserves revisions globally, found a significant impact on share prices.…”

Section: Oil and Gas Reservesmentioning

confidence: 99%

Exploration vs. acquisition of oil and gas reserves: Effect on stock returns

Misund

2018

Cogent Economics & Finance

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This paper examines how oil and gas companies' reserves growth affects their share price returns. In particular we examine three issues affecting the relation between reserves changes and oil and gas firm returns. First, we examine if investors value reserves replacement as a result of exploration activities differently to reserves growth through acquisitions. In the second analysis, we test if reserves replacement of oil reserves impacts stock returns differently than changes in gas reserves do. Third, we examine the impact of the Shale gas revolution and the subsequent oil and gas price divergence on the association between returns and replacement of oil versus gas reserves. The results suggest that investors seem to be indifferent to reserves replacement strategy (exploration or acquisition). However, we find that changes in oil reserves impact oil and gas company returns differently than changes in gas reserves does. Moreover, we find that there has been a structural shift in the relation between returns and changes in gas reserves (but not changes in oil reserves) after 2008, coinciding with the Shale gas revolution and the break in the oil-gas price link. This latter result can be relevant for understanding the impact of the recent fall in oil prices on investor valuation of oil and gas reserves.

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“…Previous literature on the relationship between energy reserve and energy stock is analyzed in different dimensions. Some studies examine the effect of changes in energy reserves on energy stocks (Scholtens and Wagenaar, 2011; Misund, 2018). Energy price is another subject of impact on energy stocks (Arouri, 2011; Pham, 2019).…”

Section: Introductionmentioning

confidence: 99%

The impact of unproved reserve news on the energy stock volatility: an empirical investigation on Turkey

Arzova

Koy

Şahin

2023

RBF

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PurposeThis study investigates the effect of unproven energy reserve news on the volatility of energy firms' stocks. Thus, investors' perception of unproven energy reserves is revealed. Additionally, the study aims to determine whether the effect of the news changes according to time and volatility level.Design/methodology/approachThe general autoregressive conditional heteroskedasticity (GARCH) and exponential generalized autoregressive conditional heteroskedasticity (EGARCH) models consist of the energy reserve exploration news in Turkey for the period 2009–2022 and the volatility of 14 energy stocks.FindingsThe results indicate energy exploration news's negative and significant effect on volatility. According to empirical results, energy stock volatility is most affected in the first ten days. Besides, the results show that the significant models of energy reserve news in low-volatility stocks are proportionally higher than in high-volatility stocks.Research limitations/implicationsOnly unproved reserve news is included in the analysis, as sufficient confirmed reserves could not be reached during the sampling period. Further studies can compare proven and unproved reserve news effects. Additionally, a similar analysis can be conducted between Turkey and another country with a similar socio-economic character to examine different investor behaviors.Practical implicationsThis research includes indications on managing investors' reactions to unproven energy reserve news.Originality/valueThis study contributes to the literature by analyzing unproven reserves. Contrary to previous studies, examining stock volatility also makes the study unique.

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Revisions of international firms’ energy reserves and the reaction of the stock market

Cited by 10 publications

References 26 publications

Crude oil: Commodity or financial asset?

Crude oil: Commodity or financial asset?

Exploration vs. acquisition of oil and gas reserves: Effect on stock returns

The impact of unproved reserve news on the energy stock volatility: an empirical investigation on Turkey

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