Discussion of 'Are petroleum market values a triumph of economics over accounting?' (comment on Tommi Johnsen, Dean A. Paxson and Ronald J. Rizzuto in this issue, p. 243)(Special Issue: Selected Papers from the Conference on Empirical Research in Business Finance and Accounting, May 1995)

Article Abstract:

Valuations attributed to the 'proven petroleum reserves' under four alternative measures of firm value in a comparison of the value of accounting disclosures and supplementary and proprietary data in the valuation of oil and gas companies are assessed. First, the classification of the book value and present value of proven petroleum reserves as 'accounting values' and their hotelling and proprietary valuation as 'economic values' may not be valid. The proprietary valuation should also exclude 'unproved oil and gas assets.' Also, bivariate correlations are presented, though no multivariate analysis iis reported.

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Are petroleum market values a triumph of economics over accounting?

Article Abstract:

No close relationship exists between accounting values and stock market values of petroleum companies, since the market apparently consolidates economic estimates into the valuation of oil and gas firms. No evidence was thus uncovered that the market directly reflects 'ad hoc accounting' standardized present value disclosures. This was gleaned from an analysis of a unique data base of US oil companies to examine the status of the debate concerning the value of accounting disclosures as against supplementary and proprietary data in the valuation of oil and gas firms.

PETROLEUM AND COAL PRODUCTS, Petroleum, Petroleum and Coal Products Manufacturing, Disclosure statements (Accounting)

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Arbitrage-free evaluation of exhaustible resource firms

Article Abstract:

The appropriate valuation and pricing of exhaustible natural resources has long been a controversial subject of debate among economists. Within this context, therefore, an arbitrage-free approach to the valuation of firms with exhaustible resources has been developed. The approach makes use of observed futures prices to value petroleum reserves along a production schedule, which is derived and provides an innovation in four areas.

Crude Petroleum and Natural Gas Extraction, Crude petroleum and natural gas, Oil & Gas Fields, Natural gas fields, Nonrenewable natural resources, Nonrenewable resources

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• Abstracts: Discussion of 'The impact of investor sophistication on price responses to earnings news.' (comment on Ashraf Elsharkawy and Neil Garrod in this issue, p. 221)(Special Issue: Selected Papers from the Conference on Empirical Research in Business Finance and Accounting, May 1995)
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