Evaluation of influential factors on market values of five major international oil companies, using the method of panel data with two-way error components and its application in oil and gas industries of Iran

Abstract

Market value is one of the important indices for evaluating a company's financial operation. Profit from, and volume of oil and gas reserves of companies are the most important factors that influence the market value of large international oil companies. In this study, two-way error component regression with fixed effects is used to estimate influential factors on market value of five major oil companies. Accordingly, the effect of oil and gas reserves volume on the financial value of big oil companies is about 1.73 times more than the effect of companies’ profit. With more profitability from buy-back contracts of Iran, big oil companies have enough reason to be selective with production contracts in which to participate. To solve this, it is proposed that smaller international contractors be used to help the national oil company develop the country's oil and gas fields but that project management be handled by oil and gas industry managers within the country.