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ИД «Финансы и кредит»






Digest Finance

Multipliers based on EBITDA and DACF as an indicator of the investment attractiveness of domestic vertically integrated oil and gas companies

Vol. 28, Iss. 4, DECEMBER 2023

PDF  Article PDF Version

Received: 28 February 2022

Received in revised form: 24 March 2022

Accepted: 19 April 2022

Available online: 28 December 2023


JEL Classification: G32, L25, L71, M41, O12

Pages: 362–385


Oleg V. SHIMKO Center for Innovative Economics and Industrial Policy, Institute of Economics of Russian Academy of Sciences (IE RAS), Balashikha, Moscow Oblast, Russian Federation


Subject. This article focuses on ratios of enterprise value to EBITDA and enterprise value to DACF of the twenty five leading publicly traded oil and gas companies within 2008 through 2018.
Objectives. The article aims to trace key trends in ratios of enterprise value to EBITDA and enterprise value to DACF of corporations in the oil and gas industry, as well as identify key trends in their change within the studied period and identify the factors that caused those changes.
Methods. For the study, I used the methods of comparative, financial and economic analyses, summarizing financial reporting data.
Results. The article finds that EV/EBITDA and EV/DACF multiples are acceptable for valuing oil and gas companies. The EV level depends on profitability, proved reserves and a country factor. It is required to adjust EBITDA for information on impairment, revaluation and write-off for assets that are reported separately from depreciation, depletion and amortization costs, as well as for income or expenses arising after the sale of fixed assets and as a result of effective court decisions or settlement agreements. It is advisable to adjust DACF for income, expenses and changes in assets and liabilities, which are caused by events that are unusual for oil and gas companies. Adjustment for interest payments can come to the fore in the DACF when the adjustment factor is significantly outside the standard range, and then it is better to limit to the EV/CF multiple.
Conclusions and Relevance. The application of EV/EBITDA and EV/DACF multiples requires a detailed analysis and if necessary, adjustments of their constituent components. However, they are quite relevant in the context of declining profitability and growing debt burden in the stock market sector of the global oil and gas industry. The findings can help appraise the value of oil and gas assets as part of a comparative approach and decide on actions for raising the market capitalization of publicly traded oil and gas corporations.

Keywords: valuation, multiplier, EV/EBITDA, EV/DACF, oil and gas industry


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December 2023