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Probable Oil and Gas Reserves and Shareholder Returns: The Impact of Shale Gas

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  • Misund, Bård

    (UiS)

  • Osmundsen, Petter

    (UiS)

Abstract

Oil and gas reserves are the most important assets of oil and gas companies. A source of confusion for investors in oil companies is that reserves quantities and values are uncertain estimates. Reserves are typically classified according to probabilities of recovery from underground reservoirs. All U.S. listed companies have to disclose proved reserves but not probable reserves, thus leaving out potentially important information for investors and financial analysts. This study addresses the impact on market valuation of various classifications of reserves amounts. Using a data sample of 94 companies that do disclose information on probable reserves, we compare the relation between three classifications of reserves and oil company returns. While we find that information on probable reserves do not have an impact on stock returns measured over the entire time period, this is not the case since 2009, coinciding with the onset of the shale gas revolution.

Suggested Citation

  • Misund, Bård & Osmundsen, Petter, 2015. "Probable Oil and Gas Reserves and Shareholder Returns: The Impact of Shale Gas," UiS Working Papers in Economics and Finance 2015/17, University of Stavanger.
    • Handle: RePEc:hhs:stavef:2015_017
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    Cited by:

    1. Misund, Bård, 2015. "Reserves Replacement and Oil and Gas Company Shareholder returns," UiS Working Papers in Economics and Finance 2015/11, University of Stavanger.

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    More about this item

    Keywords

    Oil and gas reserves; probably reserves; value relevance; accounting figures;
    All these keywords.

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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