Impacts of reserve and decommissioning disclosures on value and performance of oil and gas firms listed in the UK

Alshahmy, Suliman; Abdo, Hafez

Abstract

Oil and gas reserves and asset decommissioning are the most significant cash flow indicators of the oil and gas industry. Investors use disclosures by oil and gas firms to estimate future cash flows. Thus, this study examines impacts of oil and gas reserve disclosures and disclosures of decommissioning costs of oil and gas assets on the financial performance and value of listed oil and gas companies in the UK. We survey data from 52 listed firms. We conclude that whilst mandatory and voluntary reserve disclosures negatively impact firms’ performance, they positively impact value. Mandatory decommissioning disclosures are positively related to performance and value. Voluntary decommissioning disclosures negatively correlate with firms’ value, but positively relate with firms’ performance. These findings contribute to the debate around the usefulness and impacts of oil and gas reserves disclosures and disclosures of decommissioning costs of oil and gas assets on companies values and performance.

Citation

Alshahmy, S., & Abdo, H. (2023). Impacts of reserve and decommissioning disclosures on value and performance of oil and gas firms listed in the UK. International Journal of Disclosure and Governance, 20, 168-184. https://doi.org/10.1057/s41310-022-00155-3

• Journal Article Type: Article
• Acceptance Date: Aug 11, 2022
• Online Publication Date: Aug 26, 2022
• Publication Date: 2023-06
• Deposit Date: Aug 15, 2022
• Publicly Available Date: Aug 27, 2023
• Journal: International Journal of Disclosure and Governance
• Print ISSN: 1741-3591
• Electronic ISSN: 1746-6539
• Publisher: Palgrave Macmillan
• Peer Reviewed: Peer Reviewed
• Volume: 20
• Pages: 168-184
• DOI: https://doi.org/10.1057/s41310-022-00155-3
• Keywords: Strategy and Management; Economics and Econometrics; Finance; Accounting; Business and International Management
• Public URL: https://nottingham-repository.worktribe.com/output/10074005
• Publisher URL: https://link.springer.com/article/10.1057/s41310-022-00155-3
• Additional Information: This version of the article has been accepted for publication, after peer review (when applicable) , but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: https://link.springer.com/article/10.1057/s41310-022-00155-3