Oil price and reserve location--Effects on oil and gas sector returns

Gavin L. Kretzschmar and Axel Kirchner

Global Finance Journal, 2009, vol. 20, issue 3, 260-272

Abstract: We provide market evidence of the effects of reserve location on oil and gas (O&G) company returns. Prior studies have shown that commodity sector stock returns are affected by commodity prices. In a new contribution to natural resource valuation literature, returns for 51 O&G companies are shown to be directly and negatively affected by exposures to (location specific) progressive fiscal terms. We add a reserve location proxy--'R'--to the Fama-French framework; differentiating between companies' performances based on the proportion of oilfield assets subject to progressive tax terms. Companies with oilfield assets owned under progressive production sharing fiscal terms are unable to capture the benefits of oil price increases--and as result significantly under-perform companies with concession asset holdings.

Keywords: Oil; price; Stock; returns; Portfolio; performance (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1044-0283(09)00057-X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:20:y:2009:i:3:p:260-272

Access Statistics for this article

Global Finance Journal is currently edited by Manuchehr Shahrokhi

More articles in Global Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().