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Economic Analysis: Theory and Practice
 

Profitability ratios of the world's leading publicly traded oil and gas corporations as an indicator of the investment attractiveness of domestic vertically integrated oil and gas companies

Vol. 21, Iss. 8, AUGUST 2022

Received: 24 February 2022

Received in revised form: 1 March 2022

Accepted: 11 March 2022

Available online: 30 August 2022

Subject Heading: BUSINESS PERFORMANCE

JEL Classification: G31, L25, L71, M41, O12

Pages: 1506–1517

https://doi.org/10.24891/ea.21.8.1506

Oleg V. SHIMKO Institute of Economics of the Russian Academy of Sciences, Moscow, Russian Federation
shima_ne@mail.ru

https://orcid.org/0000-0002-0779-7097

Subject. The article focuses on the key profitability ratios of twenty five leading publicly traded oil and gas companies from 2006 through 2018. The analysis encompasses ExxonMobil, Chevron, ConocoPhillips, Occidental Petroleum, Devon Energy, Anadarko Petroleum, EOG Resources, Apache, Marathon Oil, Imperial Oil, Suncor Energy, Husky Energy, Canadian Natural Resources, Royal Dutch Shell, BP, TOTAL, Eni, Equinor (Statoil), PetroChina, Sinopec, CNOOC, Petrobras, PAO Gazprom, PAO NK Rosneft, and PAO LUKOIL.
Objectives. The aim of the study is to trace key trends in key profitability ratios of corporations in the oil and gas industry, to identify the key trends in their change within the studied period, and to establish those factors that led to this transformation.
Methods. The study is based on methods of comparative and financial-economic analysis, summarizing financial reporting data.
Results. I determined the dynamics of changes in key profitability indicators in the stock market sector of the industry and established the main factors that contributed to this transformation, based on the results of a comprehensive analysis of balance sheets of 25 oil and gas companies. I revealed a decrease in the profitability of the leading publicly traded oil and gas companies within the studied period, which was especially clearly manifested in the midst of the global financial and industry crises. The most difficult situation is observed in a number of independent US companies. The main reason for the drop in the profitability of the stock market sector of the industry is that the costs of core activities outstrip the corresponding revenue in terms of growth, mainly due to the costs of depreciation, depletion, and amortization. Another important factor was a significant increase in the book value of non-current assets. The study unveils that the specific burden of income tax per unit of net revenue from core activities is gradually decreasing in the stock market sector of the oil and gas industry.
Conclusions. The profitability of the oil and gas stock market sector is deteriorating, however, the current price level allows the leading companies to generate net income.

Keywords: net profit to revenue ratio, return on assets, return on equity, publicly traded company, oil and gas industry

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