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Finance and Credit
 

Applying asset-and equity-based multipliers in the valuation of oil and gas corporations

Vol. 27, Iss. 1, JANUARY 2021

Received: 5 November 2020

Received in revised form: 19 November 2020

Accepted: 3 December 2020

Available online: 28 January 2021

Subject Heading: BUSINESS VALUE

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

Pages: 129–167

https://doi.org/10.24891/fc.27.1.129

Oleg V. SHIMKO Institute of Economics of Russian Academy of Sciences (IE RAS), Moscow, Russian Federation
shima_ne@mail.ru

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

Subject. This article explores the ratios of the company's market capitalization and value to the balance sheet value of assets and equity of the twenty five leading public oil and gas companies between 2008 and 2018.
Objectives. The article aims to identify key trends in the changes in market capitalization and value ratios of the company to the balance sheet value of assets and equity of the largest public oil and gas companies, identify the factors that have caused these changes, and establish the applicability of these multipliers to estimate the value of the business within the oil and gas industry.
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 establishes that the multipliers studied are acceptable for assessing the value of oil and gas companies, but it is preferable to use asset-based ratios.
Conclusions and Relevance. The overall decline in profitability and the increase in debt load in the stock exchange sector of the global oil and gas industry should be taken into account when using multipliers based on assets and shareholder capital in the assessment of the value of oil and gas corporations through a comparative approach. The results of the study can be used to assess the possible value of oil and gas assets as part of a comparative approach and develop measures to increase the market capitalization of public oil and gas companies.

Keywords: assets, equity, valuation, comparative approach, oil and gas industry

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