Elastic Oil. A primer on the economics of exploration and production

,Oil; Exploration: Production

Asymmetry and uncertainty in capital formation: An application to oil investment

,Oil; Investment

Performance appraisal and career opportunities: A case study

,Performance; Career

Valuation of International Oil Companies –The RoACE Era

High oil prices are normally expected to stimulate exploration and the development of new oil and gas fields. But over the last few years, financial analysts have focused strongly on short-term accounting return (RoACE) for benchmarking and valuation, and this has led to high capital discipline among oil and gas companies. We analyse how high oil prices can be explained in terms of an implicit capacity game between the oil companies, and explore the stability of the current equilibrium. Our approach is an investigation of a key assumption among financial analysts, namely the presumed positive relation between RoACE and stock market valuation. Based on panel data for 11 international oil and gas companies, we seek to establish econometric relations between market valuation on one hand, and simple financial and operational indicators on the other. Our findings do not support the perceived positive relation between reported RoACE and market-based multiples. Recent evidence also suggests that the stock market is increasingly concerned about reserve replacement and sustained profitable growth. The current high-price equilibrium is therefore hardly stable.

Financial market pressures, tacit collusion and oil price formation

,Oil Market; Investment behaviour; market power; collusion; equilibrium model

Spin waves in a Bose Ferromagnet

It is shown that the ferromagnetic transition takes place always above Bose-Einstein condensation in ferromagnetically coupled spinor Bose gases. We describe the Bose ferromagnet within Ginzburg-Landau theory by a "two-fluid" model below Bose-Einstein condensation. Both the Bose condensate and the normal phase are spontaneously magnetized. As a main result we show that spin waves in the two fluids are coupled together so as to produce only one mixed spin-wave mode in the coexisting state. The long wavelength spectrum is quadratic in the wave vector ${\bf k}$, consistent with usual ferromagnetism theory, and the spin-wave stiffness coefficient $c_s$ includes contributions from both the two phases, implying the "two-fluid" feature of the system. $c_s$ can show a sharp bend at the Bose-Einstein condensation temperature.Comment: 4 pages, 1 figur

Valuation of international oil companies : RoACE era

High oil prices are normally expected to stimulate exploration and the development of new oil and gas fields. But over the last few years, financial analysts have focused strongly on shortterm accounting return (RoACE) for benchmarking and valuation, and this has led to high capital discipline among oil and gas companies. We analyse how high oil prices can be explained in terms of an implicit capacity game between the oil companies, and explore the stability of the current equilibrium. Our approach is an investigation of a key assumption among financial analysts, namely the presumed positive relation between RoACE and stock market valuation. Based on panel data for 11 international oil and gas companies, we seek to establish econometric relations between market valuation on one hand, and simple financial and operational indicators on the other. Our findings do not support the perceived positive relation between reported RoACE and market-based multiples. Recent evidence also suggests that the stock market is increasingly concerned about reserve replacement and sustained profitable growth. The current high-price equilibrium is therefore hardly stable

Industry restructuring, OPEC response – and oil price formation

Abstract: Increased focus on shareholder returns, capital discipline and return on capital employed (RoACE) caused a slowdown in investment rates and production growth among international oil companies around the turn of the century. Focusing on supply side dynamics of the oil market, we explore a hypothesis that the restructuring in the international oil industry towards the end of the 1990s had long-lived effects on OPEC strategies – and on oil price formation. Based on a partial equilibrium model for the global oil market, we examine the effects of the industry restructuring on oil supply and oil prices, compared with a counterfactual reference scenario characterised by industrial stability and unchanged price ambitions within OPEC. A key result is that important factors behind the currently high oil price can be traced back to the industrial restructuring and to the Asian economic crisis. This suggests that temporary economic and financial shocks may have a long-term impact on oil price formation. Keywords: Oil market, investment behaviour, market power, equilibrium mode