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ИД «Финансы и кредит»






Financial Analytics: Science and Experience

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

Vol. 16, Iss. 1, MARCH 2023

Received: 28 February 2022

Received in revised form: 10 March 2022

Accepted: 19 March 2022

Available online: 28 February 2023


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

Pages: 37–64


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. The article focuses on ratios of market capitalization to production and market capitalization to proved reserves of the twenty five leading publicly traded oil and gas companies within 2008 through 2018.
Objectives. The study aims to trace the key trends in ratios of market capitalization to production and market capitalization to proved reserves of corporations in the oil and gas industry, as well as identify the ones in their change within the studied period and identify the factors that have caused these changes.
Methods. For the study, I used comparative, and financial and economic analyses, and generalization of materials of the companies' consolidated financial statements.
Results. The article finds that the multipliers under study are suitable for estimating the value of oil and gas corporations. It was determined that the presence of segments of oil refining and petrochemistry in the structure of the company affects the level of coefficients favorably. It has been established that higher profitability compared to the competitors' one is a positive factor. On the contrary, the growth of the debt component has a negative impact. The impact of the country factor, which is required to be taken into account when assessing the value, is manifested in the performance of domestic companies. The availability of proved reserves is reflected in the coefficient values. This characteristic has the most significant impact on the value of the ratio of market capitalization to proved reserves. Therefore, its use is appropriate for similar availability of proved reserves of compared companies. Therefore, it is preferable to use a multiplier of the market capitalization-to-production ratio.
Conclusions. It is acceptable to use the multiplier with reference to the information on production even if the profitability goes down and the debt burden increases in the stock market sector of the global oil and gas industry, while the ratio based on proved reserves is more reasonable as an auxiliary indicator.

Keywords: valuation, market capitalization, production, proved reserves, oil and gas industry


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