THE OBJECTIVES AND GOALS IN INVESTMENT ACTIVITIES OF OPERATING COMPANIES FOR THE OIL AND GAS INDUSTRY

Abstract

This study paper is focused on the current system of investment activities conducted by operating companies for the oil and gas industry in order to highlight the key models driving the effectiveness of the investment projects. The accounting and cost models are benchmarked in terms of their analysis of the objective, methodology and selection of the object of the analysis and that includes the cost model key specifics and benefits. The cost model analysis implies highlighting market valuation of the business; therefore, the attracted resources and funds are evaluated at a specific point in time (then current) in terms of the opportunity of using fixed net worth resources and assets for continued company operations. There are different mathematical models and methods being used for assessing financial position and predicting potential of bankruptcy of companies, based on the calculation of individual financial ratios and combinations thereof. The most famous multifactor models for predicting insolvency of companies include both international (Altman Z-score two-factor; the five-factor Altman model; the four-factor Tafler and Tishaw model; the four-factor Liese model), and national (five-factor Seifullin and Kadykov model; the four-factor Irkutsk bankruptcy prediction model; the five-factor Savitskaya model) analysis models. In keeping with the cost management approach a decision-making process must be focused on value maximization across all levels of company operations management. Financial and economic performance parameters are the targeted objects ensuring that objectives for strategic effectiveness and cost management can be achieved. The use of financial model for evaluation of company’s net is also highlighted. The study paper features a balanced scorecard (BSC) developed by r. Kaplan and Norton that became the most widely-used prediction tool because this concept combines company’s long-term development assessment ratings and its current financial performance during the operations. The BSC metrics are company-specific being used to assess and measure the operating company’s activities depending on its mission, vision and strategy based on the following important factors: internal processes, customers, finances, personnel training and development.