Valuation of investment projects by an international oil company: A new proof of a straightforward, rigorous method
Axel Pierru () and
Additional contact information
Denis Babusiaux: IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles
Working Papers from HAL
The problem studied is that of valuing investment projects of an international oil company subject to tax schemes that vary from one country to another. The existing disparities in the tax treatment of interest paid can lead the firm to seek an optimal allocation of its debt capacity among the various projects. In this context, the generalized ATWACC (After-Tax Weighted Average Cost of Capital) method presents numerous advantages over standard methods and is particularly well suited to the valuation of oil-field development projects where debt financing differs from the amount that would correspond to the debt ratio targeted by the firm at the corporate scale. In this paper, we discuss adapting the generalized ATWACC method to the specificities of the oil industry and offer new proof of its validity, based on a model that maximizes, under constraints, the firm's equity value.
Note: View the original document on HAL open archive server: https://hal-ifp.archives-ouvertes.fr/hal-02469498
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-02469498
Access Statistics for this paper
More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().