Oil and gas stock prices and Reserve Recognition Accounting

Thesis/Dissertation · Wed Jan 01 04:00:00 EST 1986

OSTI ID:7013383

Magliolo, J III

This thesis analyzes a method of oil and gas accounting known as Reserve Recognition Account (RRA). Registrants of the Securities and Exchange Commission engaged in oil and gas exploration must present RRA information as a component of their published financial statements. Unlike traditional oil and gas accounting techniques, RRA attempts to place a value directly on oil and gas reserves owned by the firm. Although RRA explicitly focuses on the valuation of oil and gas reserves, prior accounting research has not directly liked RRA to an economic model of oil and gas firm valuation. The thesis makes this linkage, and provides empirical evidence on the characteristics of RRA as a reserve valuation method. The thesis begins by constructing a valuation model of oil and gas producing firm in which firms extract oil and gas at constant unit cost and acquire new reserves through discovery. Tests of specification of the model are operationalized as regressions of the market values of firms' oil and gas operations on the model's predicted values. Market values are inferred from the market values of sample firms, and predicted values are obtained from RRA data. Test results suggest that RRA data do not measure well the values of firm's oil and gas operations.

• Research Organization: Stanford Univ., CA (USA)
• OSTI ID: 7013383
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
03 NATURAL GAS
030600 -- Natural Gas-- Economic
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002 -- Energy Planning & Policy-- Petroleum
ACCOUNTING
DATA
FINANCIAL DATA
INDUSTRY
INFORMATION
MARKET
MATHEMATICAL MODELS
MATHEMATICS
NATURAL GAS INDUSTRY
PETROLEUM INDUSTRY
REGRESSION ANALYSIS
RESERVES
RESOURCES
STATISTICS