 The choice of strategic core – impact of financial volumeMagne Emhjellen, Kjell Hausken and Petter Osmundsen International Journal of Global Energy Issues, 2006, vol. 26, issue 1/2, 136-157 Abstract: Recent trends among major oil companies and independents have been consolidation through mergers and acquisitions and focus on key strategic core areas. The expressed goals have been to achieve synergy, reduce costs, and concentrate on areas with maximum expected value creation. This paper provides a model that endogenously determines the optimal numbers of projects to implement in an optimal number of areas. The decision of whether to invest in a project cannot be seen in isolation but must be linked with portfolio optimisation and the strategic core of the firm. Accounting for excess opportunity costs and monitoring costs, we demonstrate how financial volume, i.e., materiality, is decisive for companies' investment allocation decision and how implementing marginally profitable projects in low-tax areas may be part of an optimal solution. Keywords: financial volume; materiality; oil industry; portfolio models; neutral taxes; finance; investment allocation; projects; excess opportunity costs; monitoring costs; mergers; acquisitions; strategic core areas; portfolio optimisation; low-tax areas; marginal profitability; energy finance. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:ijgeni:v:26:y:2006:i:1/2:p:136-157 Access Statistics for this article More articles in International Journal of Global Energy Issues from Inderscience Enterprises Ltd |
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