Simple Analytics of Valuing Producing Petroleum Reserves

Graham Davis and Robert D. Cairns

The Energy Journal, 1998, vol. 19, issue 4, 133-142

Abstract: We modify the approach to valuing mineral reserves that is current in economic literature by considering a net present-value rule under uncertainty. Direct application of Hotelling's rule is found to be inappropriate. The modification is such that the present value is approximately half that proposed by the Hotelling Valuation Principle.

Keywords: Oil prices; Hotelling model; oil reserve valuation; oil production (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:19:y:1998:i:4:p:133-142

DOI: 10.5547/ISSN0195-6574-EJ-Vol19-No4-6

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