The relative information content of the components of the reserve disclosures: reserve quantities vs. the standardised measure

Berry, Kevin; Wilcox, William E.; Wright, Charlotte J.

doi:10.1504/ijaape.2004.005922

Cited by 5 publications

(3 citation statements)

References 9 publications

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“…She uses book equity, net income and a measure of the net present value of oil and gas reserves (proxy for other information) as her primary explanatory variables. However, since recent evidence has indicated that the amount of proven oil and gas reserves is more value-relevant than the values of reserves (Berry, Wilcox and Wright, 2004), we use the former measure. The resulting econometric model is estimated as follows: 7…”

Section: Research Design Econometric Specification and Hypothesis Dementioning

confidence: 99%

Vertical Integration and Valuation of International Oil Companies

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper studies financial statement information from the 50 largest international oil and gas companies during 1992 to 2011 and evaluates their relation to market values. In particular, we examine how this relationship is affected by accounting method choice (successful efforts versus full cost accounting) and vertical integration. We find that net income is more value relevant for full cost companies compared to companies that use the successful efforts accounting method. Furthermore, the value relevance of oil and gas reserves is different among successful efforts and full cost companies. Larger reserves among successful efforts companies are awarded a premium by stock markets. The value relevance of book value is significantly lower for integrated companies than for pure upstream companies. We also find that the value relevance of oil and gas reserves is different for upstream and integrated companies. Terms of use: Documents inJEL-Code: F230, G000, L710, M410.

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Section: Research Design Econometric Specification and Hypothesis Dementioning

confidence: 99%

Vertical Integration and Valuation of International Oil Companies

2014

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“…Early researchers (Magliolo, 1986;Harris and Ohlson, 1987;Shaw and Weir, 1993) are hampered by the lack of access to oilfield data and applicable contractual terms. Only recently, using revised methodologies have Berry et al (2004); Bryant (2003) and Boone (2002) provided compelling evidence supporting the value relevance of reserves.…”

Section: Contractual Contingenciesmentioning

confidence: 99%

Market risks and oilfield ownership—Refining oil and gas disclosures

2007

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Market risk exposures of balance sheet asset values are becoming an increasingly important accounting issue. In oil and gas, oilfield exposures to oil prices are specific and contractual, presenting a contingency problem for investors, financial analysts, standard setting bodies and government agencies. Our paper uses an extensive sample of 292 oilfields to provide evidence that the US Securities and Exchange Commission (SEC) supplementary disclosures do not capture the price sensitivities of oil and gas disclosures implicit in the two main forms of oilfield ownership, concession and production sharing contracts (PSCs). Current asset disclosures neither distinguish between global variations in oilfield ownership terms, nor on market risk implications for the value of oilfield assets.Importantly, we show that unlike concessions, reserve and production disclosures vary in response to oil price movements for PSC regimes. Our results highlight the need to differentiate PSC disclosures from concession fields, and to fully reflect price risks implicit in oilfield ownership contracts. We extend findings by Rajgopal [1999. Early evidence on the informativeness of the SEC's market risk disclosures: the case of commodity price risk exposure of oil and gas producers. The Accounting Review 74, 251-280] and propose refinements to capture market risk in financial reporting. r

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“…Several studies on accounting disclosures by oil and gas companies investigate oil and gas reserves disclosures (e.g., Cooper et al 1979;Dharan 1984;Lys 1986;Craswell and Taylor 1992;Boone 1998;Berry and Wright 2001;Mirza and Zimmer 1999;Berry et al 2004;Taylor et al 2012;McChlery et al 2015;Odo et al 2016). Studies-related decommissioning cost disclosures addressed compliance, quality, and limitations of such disclosures (e.g., Russell et al 1998;Ekins et al 2006;Rogers and Atkins 2015;Abdo et al 2017.…”

Section: Introductionmentioning

confidence: 99%

Impacts of reserve and decommissioning disclosures on value and performance of oil and gas firms listed in the UK

Alshahmy

Abdo

2022

Int J Discl Gov

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Oil and gas reserves and asset decommissioning are the most significant cash flow indicators of the oil and gas industry. Investors use disclosures by oil and gas firms to estimate future cash flows. Thus, this study examines impacts of oil and gas reserve disclosures and disclosures of decommissioning costs of oil and gas assets on the financial performance and value of listed oil and gas companies in the UK. We survey data from 52 listed firms. We conclude that whilst mandatory and voluntary reserve disclosures negatively impact firms' performance, they positively impact value. Mandatory decommissioning disclosures are positively related to performance and value. Voluntary decommissioning disclosures negatively correlate with firms' value, but positively relate with firms' performance. These findings contribute to the debate around the usefulness and impacts of oil and gas reserves disclosures and disclosures of decommissioning costs of oil and gas assets on companies values and performance.

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The relative information content of the components of the reserve disclosures: reserve quantities vs. the standardised measure

Cited by 5 publications

References 9 publications

Vertical Integration and Valuation of International Oil Companies

Vertical Integration and Valuation of International Oil Companies

Market risks and oilfield ownership—Refining oil and gas disclosures

Impacts of reserve and decommissioning disclosures on value and performance of oil and gas firms listed in the UK

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