Risk and return in petroleum investment: what does the evidence show. [Monograph]

Book · Thu Jan 01 04:00:00 EST 1981

OSTI ID:5744860

Rose, P S; Riener, K D

This study examines recent trends in the profitability, risk, and funds sources and uses of major private petroleum firms, most of which are based in the US. The study finds little evidence that major oil and gas producers and their investors earned excessive or windfall returns above normal market levels during and after the 1973-74 oil embargo. It also produces evidence that financial risks in the petroleum sector are increasing, spurred on by heavier use of debt financing and the search for oil and gas in more-remote locations. A growth in capital investment has been made possible by sharply increasing the industry's drawings on external funds, principally through the issuance of debt securities, and reducing asset liquidity. Financial trends of this nature bear close watching because they have a direct bearing on the long-run growth and viability of individual petroleum producers. The pursuit of increased independence from foreign sources of oil and gas requires that industry net earnings be sufficient to cover growing domestic needs. 33 references. 5 tables.

• OSTI ID: 5744860
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
COST BENEFIT ANALYSIS
FINANCING
INCOME
INDUSTRY
INVESTMENT
PETROLEUM INDUSTRY
PROFITS
RISK ASSESSMENT