Abstract
Market risk exposures of balance sheet asset values are becoming an increasingly important accounting issue. In oil and gas, oilfield exposures to oil prices are specific and contractual, presenting a contingency problem for standard setting bodies. In this paper we use 292 oilfield contracts to explore the effects of market risk on sector financial reporting. Asset disclosures do not distinguish between global variations in oilfield ownership terms, nor on market risk implications for the value of oilfield assets. We provide evidence that disclosures do not capture price sensitivities implicit in oilfield ownership contracts and propose refinements to capture market risk in financial reporting.
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