...issued by the International Accounting Standards Board (IASB). This means that we are required to make estimates and assumptions. We believe that, of the company's significant accounting policies (see note 2 - Significant accounting policies to our Consolidated Financial Statements included in this report), the following may involve a greater degree of judgement and complexity, which in turn could materially affect the net income if various assumptions were changed significantly. Critical judgements in applying accounting policies The following are the critical judgements, apart from those involving estimations (see below), that the Group has made in the process of applying the accounting policies and that have the most significant effect on the amounts recognised in the financial statements: Revenue recognition - gross versus net presentation of traded SDFI volumes of oil and gas production As described under Transactions with the Norwegian State (see note 2 - Significant accounting policies to our Consolidated Financial Statements included in this report), the Group markets and sells the Norwegian State's share of oil and gas production from the NCS. The Group includes the costs of purchase and proceeds from the sale of the SDFI oil production in its Cost of goods sold and Revenue, respectively. In making the judgement the Group considered the detailed criteria for the recognition of revenue from the sale of goods set out in...
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...Did lower oil price change our world? In the article named “Look what lower oil prices do to company profits” written by Bob Pisani, the writer try to tell us that the lower oil price not just make people’s life easier, but also did some unknown effects on companies in many different industries. Bob emphasize those consequences from the aspect of stock market prices’ changing of some typical companies in their industries. Not like most people’s imagination, the lower price actually not improve most relative business’s development, but make them backward. Some of those companies, such as oil companies, energy and transportation business, and construction business were being through a hard time in the last year and trying to recover themselves now. And the only news in his report is that the airline companies seem to be the winner in this game. In some way, I agree with this lecture. In my opinion, stock prices can not simply stand for the business’s change, but it still has its limitation. And this analysis is base on a short term data, it can not represent the future of companies’ long term development. First of all, I don’t think lower price could benefit human society in any way. Lower price means people are more likely to use fossil fuels, instead of spending money on finding a renewable alternative. Also, it will cause air and water pollution and green house gas. On the contrary, if the oil price go up, people like you and me will try to avoid using it, and find an alternative...
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...THE EFFECT OF ENERGY PRICES ON TRANSPORTATION AND STORAGE SECTOR’S EQUITY RETURNS: THE IRANIAN CASE by ABSTRACT The purpose of this study is to examine the effect of oil and gas prices on transportation and storage sector’s equity returns in Iran. To this end, we analyze Iranian transportation and storage sector index for the period from the first week of January 2005 until the third week of March 2010. Based on the multifactor model and using time-series regression, our findings indicate that oil price is not an important determinant of returns in transportation and storage sector. Similarly, the findings suggest that gas price movements do not seem to play a role for transportation and storage sector. However, consistent with the capital asset pricing model (CAPM), the market portfolio is a significant pricing factor in the sector’s stock returns. In addition, the estimated regression indicates that the exchange rate is not priced for this sector’s stock returns. The results of this study help domestic and potential foreign investors to understand the effect of energy price changes on transportation and storage sector stock returns in order to manage their portfolio effectively. KEYWORDS Energy prices, Transportation and storage sector, Equity returns, Iran INTRODUCTION Recent years have witnessed massive price movements of the energy markets. The price of energy has a large impact on economy of the world (Huang et al., 1996; Nandha & Brooks, 2009; Chen et al., 1986; Nandha...
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...organizations Oil and gas sector Contents Introduction Executive summary Part 1: Risks Ernst & Young sector risk radar The top 10 risks 1. Access to reserves: political constraints and competition for proven reserves 2. Uncertain energy policy 3. Cost containment 4. Worsening fiscal terms 5. Health, safety and environmental risks 6. Human capital deficit 7. New operational challenges, including unfamiliar environments 8. Climate change concerns 9. Price volatility 10. Competition from new technologies 1 3 6 7 8 8 10 12 14 16 18 20 21 22 23 24 25 26 26 28 29 30 32 34 36 38 39 40 42 Part 2: Opportunities Ernst & Young opportunity ladder The top 10 opportunities 1. Frontier acreage 2. Unconventional sources 3. Conventional reserves in challenging areas 4. Rising emerging market demand 5. NOC-IOC partnerships 6. Investing in innovation and R&D 7. Alternative fuels, including second generation biofuels 8. Cross-sector strategic partnerships 9. Building regulatory confidence 10. Acquisitions or alliances to gain new capabilities Methodology Introduction While risk continues to dominate the business agenda, competition is also becoming just as dominant a feature. Market volatility, pricing pressure, variations in market performance, demanding stakeholders — all have contributed to a global economy that encourages competitive drive. And with that drive comes opportunity. For that reason, we have broadened the scope of what has traditionally been our Business Risk...
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...Hussain (3780) 5. Muhammad Ansaar (3824) 6. Abdul Sami khan (3825) ABSTRACT Electricity Crisis in Pakistan is one of the severe challenges the country is facing today. Electricity is essential part of our daily life and its outage has severely affected the economy and overall living of ours. Thousands have lost their jobs, businesses; our daily life has become miserable. Pakistan is currently facing upto 18 hours of electricity outage a day, is expected to face more if not dealt with in time. The purpose of this study is to analyze the nature of this crisis and to propose some short-term as well as long-term solutions to this problem. This study is exploratory in nature. We have done our best to conclude and sketch up some recommendations in the light of identified hurdles in the way of implementing the appropriate solution to our problem. Our study finds some major wholes in our system if they are covered up we can not only overcome the deficiency of electricity in our systems but also we can be able to export it to our neighboring countries. The basic flaws that our study identified are related to circular debt, and the inadequate capacity of our electricity production and distribution systems. Also we emphasized on some prospective alternatives to our electricity production that are cheaper and they provide more clean electric energy as compared to fossil fuel run energy plants. INTRODUCTION * Background of the study: Pakistan has been facing an unprecedented...
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...Factors - Governments controlling world hydrocarbon reserves → significant impact - OPEC controlling 75.5% of world reserves → highly influential - Political risks: Instability, expropriation/nationalization of property, terrorism, civil conflicts, strikes, wars, etc. → adverse effect - Environmental treaties (Kyoto protocol) → negative impact Economic Factors - Interdependence between world economy and oil industry: economic growth → growing demand for oil; but also: continual supply of oil at reasonable prices → stable economy - Inelastic demand → positive effect - US dollar (and US economy) →significant impact - Exchange rates → impact on buyers and suppliers Socio-cultural Factors - Values and beliefs shape preferences for energies → energy mix changing towards greener energies - Need for companies to show social responsibility → supporting sustainable human development through investments in education, training, social and environmental activities Technological Factors - Extremely technology-driven: improved upstream technologies →better recovery of hydrocarbon, recovering oil from reserves considered exhausted → improved profitability (gains) - Breakthrough technology in ultradeep-water extraction →competitive advantage for Petrobras - Advanced technology → profound impact on long-term sustainability . Industry Competition Analysis (Porter’s five forces) In order to create a profitable competitive strategy, a firm must first examine the basic competitive structure of its...
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...brand names. |Cost of environmental hazards. | |Diverse and huge operations. |Legal issues. | |PETRONAS has grown to be an integrated international oil and gas |Employment scam. | |company with business interests in 50 countries. |Rising investment requirement. | |Sponsored education to Malaysian students. (PESP, PSIP) | | |Opportunity |Threats | |Increasing fuel/oil prices. |Government regulations. | |Increasing natural gas market. |High Competition. | |More oil well discoveries. |Long-term falls in domestic oil production. | |Expand export market. |Competition in regional LNG supply. | 1 EFE Matrix of PETRONAS |Key External Factors ...
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...Royal Dutch Shell PLC RDS.A [pic][pic][pic][pic][pic] [pic][pic] [pic] | | |[pic][pic] | |[pic] | |[pic] | |[pic] | | | | | | | |[pic] | |[pic] ...
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...With the rapid advancement in wind technology, reliable product quality and more than 95% feasibility rates, wind power has become a safe and reliable energy source. With ever-increasing economization of generating electricity using wind power, the costs are becoming comparable to that for coal-fired generators and are lower than petroleum-fired and nuclear generators. Taking into account the intermediary investments in environmental protection and transportation, it is more economical to use wind power in place of coal to generate electricity. In addition, the construction of wind power stations takes a relatively shorter amount of time. The installation and adjustment of a wind turbine system takes a few weeks, and the whole process of land construction, installation and commencement of productions will only take 6 months to one year – a feat which coal-fired or nuclear stations cannot match up to. The investment scope is also flexible; one can chose to install as much capacity as possible based on the available capital. For offshore islands, remote highlands which are inaccessible, vast but thinly-populated grasslands and pastures, and rural villages and frontier regions which are far away from power supply networks and will continue to remain unreached, wind power can be an effective energy source for production and survival, which further enhances its significance. bad aspects The spinning blades kill and maim birds and bats Noise like "brick wrapped in a towel turning...
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...The North Sea: vital to the future of the oil and gas industry Contents 3 Foreword 14 Section seven: Forecasts and financials 4 Section one: A new dawn 16 Section eight: Interview with Robin Watson 5 Section two: Growth and investment 18 Section nine: Conclusion 8 Section three: Workforce 19 Section ten: Key takeaways 10 Section four: Foreign ownership 20 About the author 11 Section five: Unconventionals 12 Section six: The road ahead The survey which underpins this report was conducted by B2B International on behalf of Barclays. All charts, data and statistics featured in this report are the product of the results of this survey. Interviews were conducted with 80 oil and gas operators between May and July 2013. T: +44 (0)161 440 6000 b2binternational.com 2 of 21 Foreword The North Sea success story continues. Investment is at a 30-year high and exploration and production activity levels indicate supply for decades to come. Investment from UK and foreign companies alike, coupled with welcome government tax incentives, support this positive outlook. With global demand strong and substitutes so few, Barclays shares this optimism. The United Kingdom Continental Shelf (UKCS) remains a region rich in opportunities and ripe for investment, not least because of the high commodity price. In fact, investment in the North Sea has reached a 30-year high1 and plans are being drawn up to ensure exploration and production...
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...GAS IN 2020 Phillip Lang BUS 308 Nicholas Bergan 02/13/12 Part 1: Data Analysis The data that will be analyzed in this report is the consumer price index for fuel prices from the year 1982 to 2011. In this report we will be analyzing trend of gasoline prices and were they will take us in the future. Also this report will be help companies dealing with the oil industry and the expected price increases from a statistical perspective. Scatterplot: This chart shows us over time (x-axis) and the average price of fuel (y-axis) per year and explains the rate at which fuel prices are increasing. Without outside variables we can easily see the correlation of fuel prices now and what they will be in the future. The graph shows there is a positive correlation between price and time. The regression line and the positive slope explains that positive correlation. The slope: The slope as indicated by that diagram is .065, the value represents that the fuel price will increase over time, if the all assosiated variables are constant, by .065 units. So all of this information explains the increase in fuel prices as time elaspses. The y intercept: The y intercept from the results is -127.643. Regression model: y = 0.065x - 127.643 Estimating Fuel prices for 2020: When estimating fuel for 2020 within the model we are using we simply have x equal the year to come to the conclusion of where fuel prices will be. If the fuel price rises on average .065 units per year then...
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...There is a lot of conflict today about the United States drilling for oil off shore. Oil is a huge commodity of the entire world and is hugely demanded. However, off shore drilling is hazardous to both the economy and the environment and could potentially get worse. Oil spills are a largely known negative externality that is related with offshore development. There will always be pros and cons about drilling for oil. The big question is: should we or should we not drill off shore? Literature Review One reason we should not drill for oil in the United States is because it is dangerous and could be disastrous to the environment. The recent BP spill in 2010 killed 11 workers and caused months of leakage into the ocean. Per Katherine Goldstein “This oil spill has obtained the dubious distinction of being the worst oil spill in US history.” This spill was caused by an explosion while drilling off shore in the Gulf of Mexico. This caused leaking of about 5,000 barrels of oil a day. To try to stop the leaking, several attempts were made which included controlled burning and plugging the leak, both unsuccessful. This has a huge impact on our ecosystems even though it can take months or possibly years to surface. Louisiana was most impacted by this spill. They are the closest to the leaking well and over 100 miles of the coast had been polluted. Per David Adam “State officials have reported sheets of oil soiling wetlands and seeping into marine and bird nurseries, leaving...
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...Earnings Management Study Oil & Gas Industry Abstract This study mainly focused on the earnings management in oil and gas industry and we used Jones model to detect discretionary accruals in the subject companies. Specifically, we examined three oil and gas sample companies that have been required to restate their financial reports due to the oil reserve overestimation. After running the regression and comparing statistics with other oil and gas companies, we found that the sample companies do revise oil reserves to manipulate the DDA expenses, thus achieving their goals of earnings management. Some recommended auditing guidance to detect such manipulation were given at the end. Introduction/Assumption Earnings management, in accounting, is the act of intentionally influencing the process of financial reporting to obtain some private gain. Earnings management involves the manipulation of company earnings towards a pre-determined target. This target can be motivated by a preference for more stable earnings, in which case management is said to be carrying out income smoothing. Management may also overstate the income for personal interests. Other possible motivations for earnings management include the need to maintain the levels of certain accounting ratios due to debt covenants, boost earnings to beat analyst targets, or intentionally understate the earnings to get rid of the...
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...9-201-113 REV: AUGUST 27, 2001 D O LISA MEULBROEK Risk Management at Apache N Introduction O By March of 2001, managers at Apache Corporation, an independent oil and gas exploration and production company, had reason to be optimistic. While oil prices had softened somewhat recently, at $27 a barrel they were much higher than the pernicious levels of 1998, when oil bottomed out at $11 per barrel. Apache had just closed on the acquisition of Repsol in Egypt's Western desert and, along with its partner Shell Overseas Holdings, had also acquired Fletcher Challenge Energy, for a combined cost of $1 billion. The value of such acquisitions, however, depended in large part on the future prices of oil and gas. To decrease its exposure to oil and gas price volatility, Apache had begun a limited hedging program centered mostly on its recently acquired properties. Apache’s managers knew that hedging could create its own risks, and so it seemed prudent to re-evaluate the success of the new program. The decision facing Apache’s managers was whether the firm should continue hedging, and if so, should its current program be extended beyond hedging the revenues from acquisitions? T CO Apache Corporation PY Apache Corporation was founded in 1954 by Raymond Plank, its current Chairman and Chief Executive Officer. Mr. Plank’s son, Roger, was the company’s current CFO, but the company was not controlled by the Plank family, and in fact, officers and...
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...UCLA EXTENSION – BUSINESS VALUATION MGMNT X 430.132 – Professor Walton WALTON DRILLING LLC VALUATION REPORT By James Lin & Lea Jovanovic for ‘Mike’ (a seller) Spring Quarter 2013 TABLE OF CONTENTS 1. Identification of the Interest Appraised page 4 2. Date of the Report page 4 3. Standard of Value page 4 4. Intended Use of the Report page 4 5. Name of Client page 4 6. Names of Appraisers page 4 7. Valuation Approaches Considered and Used page 4 8. Sources of Information Relied On page 4 9. Description of Business & Recent Developments page 6 10. Relevant Economic and Industry Analysis page 6 11. Risk Factors page 7 12. Disclosure Regarding Forward Projections page 8 13. Financial Outlook page 8 14.1 Selected Financial Data from 10K (2008-2012) page 8 14.2 Income Statement (2008-2012) page 9 14.3 Cash Flow (2010-2012) page 9 14. The Income Approach page 10 15.4 Net Cash Flow page 10 15.5 Discounting page 10 15.6 The Build-Up Model page 10 15.7 Risk-Free Rate page 10 15.8 Equity Risk Premium page 10 15.9 Size Premium page 11 15.10 Industry Adjustment page 11 15.11 Company-Specific Risk Adjustment page 11 15.12 Estimated Equity Discount Rate page 11 ...
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