Impact of reserve and decommissioning disclosures on value and performance of listed oil companies in the UKTools Alshahmy, Suliman Salem (2021) Impact of reserve and decommissioning disclosures on value and performance of listed oil companies in the UK. PhD thesis, University of Nottingham.
AbstractOwing to risk and uncertainties, and the significant capital investments required for oil and gas investments, companies operating in the oil and gas industry are unique in comparison with companies in other industries. Oil and gas reserves and decommissioning of oil and gas assets represent the most significant cash flow in the oil and gas industry. Thus, with uncertainty of reserves and decommissioning, investors have to rely on the disclosures of oil and gas firms to determine an estimated value that would translate into future cash inflows to the company. The aim of this study is to examine the impact of oil and gas reserve disclosures and disclosures of decommissioning costs of oil and gas assets on the financial performance and value of oil and gas companies listed in the UK. This study uses qualitative and quantitative approaches to address the main research objective. The total sample included 52 companies under upstream exploration and production of oil and gas. Both descriptive statistics and inferential statistics were used to test the hypotheses developed. The findings revealed that mandatory and voluntary decommissioning and reserve disclosures influence the value and performance of oil and gas companies listed in the UK. In addition, firm-specific characteristics impact on the relationship between disclosure level and the firm’s value and performance. The results were verified by interviews with experts from the oil and gas industries. The interview outcomes supported the study’s statistical results and provided even deeper and logical explanation for reserves and decommissioning disclosures influencing oil and gas firms’ performance and value. The findings contribute to the bridging of gaps in the literature and provide ways potentially to increase the level of disclosure among oil and gas companies. In addition, the findings enable better valuation of companies and increase investors’ support to oil and gas firms leading to long-term sustainable performance.
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