Journal of Energy Finance & Development最新文献

This study focuses on the world oil industry since the relevant markets are global. Mergers and acquisitions (M&As) in the petroleum industry reflect the accelerating rate of M&A activity worldwide. The basic change forces are: technological advances, globalization, deregulation, industry dynamics, pressure for economies, and favorable economic environments. The change forces have blurred the boundaries of industries and have multiplied the forms and sources of competition. M&As and restructuring have had positive influences in the performance of the economy. Since the 1980s, real GDP growth in the U.S. has been strong with only short interruptions. During the past 2 decades, almost 2 million new jobs per year have been created. Patterns in the oil industry have mirrored these changes in the economy as a whole, emphasizing technological improvements and cost reductions. Instabilities of prices and other increased risks in the oil industry have triggered M&As and restructuring. Financial analysis of the BP acquisition of Amoco demonstrates that even if a fraction of the estimated cost savings are achieved, market values will be increased. If five major mergers are completed, the HHI for the world oil industry will rise from a very low 389 to 581, still well below the 1,000 critical level specified by the regulatory authorities. Analysis suggests that the BP Amoco acquisition will have positive economic effects on the economy of Alaska.

Our objective is to assess the economic performance of Middle Eastern oil-exporting countries over the past 25 years based on their general economic characteristics (economic dependence on a depletable resource) and attendant policy requirements (transforming to a non-depletable resource-based economy). As oil-exporting countries, we assess the macroeconomic and development policies that they should have implemented and have actually implemented over time. We find that their policies have rarely been consistent with the requirements of exhaustible resource-based economies. This has resulted in a widespread misallocation of resources and a divergence from their essential goal of economic transformation.

Investors and other users of financial statements often analyze financial statement information to evaluate the exploration efficiency of oil and gas firms. One approach commonly employed is to calculate an average per-unit cost of finding and developing oil and gas reserves using data disclosed by oil and gas firms in the footnotes to their financial statements. These average finding costs ratios, while widely used, are by no means universally accepted as providing meaningful insight into the exploration efficiency and potential profitability of an oil and gas firm. In fact, a number of financial analysts who specialize in oil and gas firms have argued that these finding costs ratios in fact provide no useful insights into how well a company has done. The purpose of our paper is to evaluate the usefulness of these finding costs measures as indicators of exploration efficiency and potential profitability. Our approach involves comparing the statistical association between various finding costs measures to a benchmark measure of exploration efficiency derived from a Cobb-Douglas regression. We also compare these finding costs measures to two commonly used financial statement measures of profitability—return on sales and return on assets—to evaluate whether finding costs are useful as indicators of profitability. Our results indicate that finding costs ratios calculated from readily available financial statement data provide useful insight into both exploration efficiency and the potential profitability of an oil and gas firm. Our findings are important because they provide empirical evidence useful in resolving a debate within the financial analyst community concerning the utility of these finding costs ratios.

Financial losses incurred in trading petroleum futures by Metallgesellschaft have been viewed as a mistake that occurred because the firm's Supervisory Board overreacted. However, these conclusions have been based on an incomplete analysis of the firm's business and petroleum markets. Metallgesellschaft's futures market position was excessively large, poorly distributed, and in the wrong products when the firm's long-term, fixed-price supply arrangements are balanced against its obligations to customers. Furthermore, Metallgesellschaft was unprotected financially against its long-term purchase obligations if its customers triggered the so-called “blowout” option. Finally, Metallgesellschaft's trading practices exposed the firm to the risk that the specifications of the commodities it had agreed to deliver would change and to the risk of manipulation by other firms. At least one large company has reported publicly that it profited at Metallgesellschaft's expense.

The euro has the potential to put an end to the U.S. dollar hegemony in world trade and finance, so far not disputed. The euro has, however, little chance of establishing its own hegemony comparable to that of the U.S. dollar. After a period of competitive substitution, there will be a competitive coexistence between the euro and the dollar. Oil trade could play an important part in this game, but any serious challenge to the position of the dollar raises huge risks for the oil industry. Oil producers will only have an interest in pricing their crude in euro if it appreciates against the dollar. Even if European demand does not count much in the formation of oil prices, the North Sea production and the Brent market have an important role. The Brent market largely determines oil prices in the Atlantic, the Mediterranean, the Gulf, and even Asia. For the establishment of the euro as a currency of international trade, a conversion of the Brent market to euro would be an important victory. The game is, however, as much political as economic. Within OPEC, Iran, Iraq, and Libya could have a political interest in hurting the United States by pricing their oil in euro. In the North Sea, Britain and Norway could have an economic interest in pricing their oil in euro, but their political links with the United States could weigh in the opposite direction. The stakes are enormous. The North Sea and the Gulf producers will essentially decide the outcome.

The primary aim of this paper is to investigate the sensitivity of Australian industry equity returns to an oil price factor over the period 1983–1996. The paper employs an augmented market model to establish the sensitivity. The key findings are as follows. First, a degree of pervasiveness of an oil price factor, beyond the influence of the market, is detected across some Australian industries. Second, we propose and find significant positive oil price sensitivity in the Oil and Gas and Diversified Resources industries. Similarly, we propose and find significant negative oil price sensitivity in the Paper and Packaging, and Transport industries. Generally, we find that long-term effects persist, although we hypothesize that some firms have been able to pass on oil price changes to customers or hedge the risk. The results have implications for management in these industries and policy makers and enhance our understanding of the “Dutch disease.”

The Energy Charter Treaty is assessed as an international regime for the promotion of investment in petroleum among participating states. Like any other international regime, the eventual effectiveness of this treaty will depend more on the convergence of interests of the parties than on legal niceties and enforcement. These parties include not only the signatory states but also state and private enterprises and subnational authorities. This analysis concludes that a high degree of convergence of interests exists among the signatory states, and this is underpinned by the need for transnational transport of petroleum. Set against this convergence is the undoubted divergence of interests in many states between the national governments on the one hand and companies and subnational authorities on the other. Political reform towards democracy will be needed for these conflicts of interests to be reconciled and for the Energy Charter Treaty regime to become fully effective.

The purpose of this paper is to provide a unique perspective on the new electricity futures contracts in an effort to understand the future development of this particular market. In this paper, we provide a brief overview of the electricity futures market and focus on how to understand general arbitrage trading in the electricity futures market. After illustrating basis cost of carry and reverse cost of carry approaches to arbitrage, we compare the electricity futures pricing behavior with Eurodollar futures, copper, and gold. We find evidence that the electricity futures market is still trading as a virtually unarbitraged market. We expect this will change soon.

Exploration for oil or gas reserves consists of searching for and finding new reserves. It begins with the study of the geology of an area followed by exploratory or wildcat drilling in promising areas. How much oil or gas is found or the supply of new reserves is a function of exploration, the geology of the area drilled along with a random component measuring the fickleness of mother nature in yielding up her treasures to mere mortals. Knowing how oil and gas prices affect this process (price elasticities) is valuable to those who are involved with this strategic industry. Economic theory suggests that the search for petroleum is affected by prices and can be characterized by functions representing geophysical activities and drilling while the finding of reserves can be characterized by some sort of discovery process. The earliest econometric approach to modeling oil and gas exploration, which yielded price elasticities, was to estimate the search process using a function for wildcat wells drilled (Ww). For example, the discovery process for oil was represented using two equations: a success rate equation % of wells that are commercially successful (W/Ww) and an average oil reserve per successful well equation (O/W). Each of these three dependent variables were dependent on price and other relevant variables. The product of these three variables (Ww^∗W/Ww^∗O/W) yields the supply of oil reserves (O). In this paper we survey all U.S. exploration models for oil and gas that include wells drilled, share of successful wells, average reserves per well, or total reserve equations. We focus our survey on price elasticities to capture the effect of market price on the exploration process. Drilling equation results tend to be good with drilling strongly influenced by oil price and we suspect the long run drilling oil price elasticity to be greated than 1. It is much less clear how natural gas prices have affected drilling but their effect seems to be increasing. The most important issue in drilling equations besides including the correct economic variables is more work to clarify what geological variables provide the best forecasts. The econometric estimates for successful wells and average reserves per wells are much poorer and we would recommend more systematic work on discovery models to determine which perform the best.