Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions

Anita Bressan Bocardo; Ruud Weijermars

doi:doi:10.11648/j.jfa.20160406.16

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Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions

Anita Bressan Bocardo, Ruud Weijermars

Published in Journal of Finance and Accounting (Volume 4, Issue 6)

Received: 17 September 2016 Accepted: 25 October 2016 Published: 17 November 2016

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Abstract

This study compares the long-term shareholder returns of diversified oil and gas majors, Canadian oil sands producers, US shale oil and gas producers and oilfield services companies during a decade of volatile oil and gas prices (2004-2014). Total shareholder returns (TSR) are analyzed for individual companies, for each peer group, and for the petroleum sector as a whole. We attempt to identify the factors that contributed to TSR growth and decline over the performance period 2004-2014. We specifically compare the performance of each peer group during two relatively stable periods, namely 2004-2007 (Period 1), and 2009-2013 (Period 2). In Period 1, the average TSR for all peer groups was higher than in Period 2. The increase or loss of TSR is in our study broken down into capital gains and dividends. The observed decline of TSR during Period 2 was mainly influenced by stock prices that reflected a slower growth in retained earnings that supports the capital gains. All peer groups had slower increases in retained earnings in 2009-2013 as compared to 2004-2007. Remarkably, during the two oil price crises of 2008 and 2014 all companies maintained an increase in retained earnings. For the 20 companies evaluated, further in-depth analyses of speculative investor valuations are included in our study, as well as implications for future corporate strategies and investor decisions.

Published in	Journal of Finance and Accounting (Volume 4, Issue 6)
DOI	10.11648/j.jfa.20160406.16
Page(s)	351-366
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Total Shareholder Return, Capital Gains, Dividends, Retained Earnings, Speculative Valuation

References

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[2]	Wright, C. J., and Gallun, R. A., 2008. Fundamentals of Oil & Gas Accounting. Fifth edition, Penwell, Tulsa, Oklahoma, 770 pages.
[3]	Weijermars, R., 2010. Bigger is better when it comes to capital markets and oil company liquidity. First Break, 28 (6), 37-41.
[4]	Weijermars, R., 2011. Credit ratings and cash-flow analysis of oil and gas companies: competitive disadvantage in financing costs for smaller companies in tight capital markets. SPE Economics & Management, 3 (02), 54-67. SPE-144489. doi: 10.2118/144489-PA.
[5]	Olsen, E., Plaschke, F., & Stelter, D. 2010. Threading the Needle – Value Creation in a Low-Growth Economy. The 2010 Value Creation Report. BCG Report, The Boston Consulting Group, Boston, Massachusetts (September 2010). http://www.bcg.com/documents/file59590.pdf. Page 11 of 52.
[6]	Rappaport, A., 1986. Creating Shareholder Value: The New Standard for Business Performance. New York, NY: The Free Press. Institute of Management accountants. IMA, 1997. Measuring and Managing Shareholder Value Creation. Statements on Management Accounting., 39 pages. http://www.imanet.org/docs/default-source/thought_leadership/management_control_systems/measuring_and_managing_shareholder_value_creation.pdf?sfvrsn=2 (accessed 22 July 2015)
[7]	Weijermars, R., and Watson, S., 2011. Unconventional Natural Gas Business: TSR Benchmark and Recommendations for Prudent Management of Shareholder Value. SPE Economics & Management, 3 (4) p. 247-261, SPE-54056-PA. http://dx.doi.org/10.2118/154056-PA.
[8]	Chartered Institute of Management Accountants (CIMA), 2004. Maximizing Shareholder Value Achieving clarity in decision-making. Technical Report. The Chartered Institute of Management Accountants, 28 pages. http://www.cimaglobal.com/Documents/Thought_leadership_docs/MigratedDocsMarch2010/Resouces%20(pdfs)/Technical%20reports/Maximising_shareholder_value_achieving_clarity_in_decision-making.pdf (accessed 22 July 2015).
[9]	Pirog, R. 2012. Financial performance of the Major Oil Companies, 2007-2011. U.S. Congressional Research Service. February 17, 2012. https://www.fas.org/sgp/crs/misc/R42364.pdf (accessed 22 July 2015)
[10]	Wallace, J. S., 2003, Value Maximization and Stakeholder Theory: Compatible or not? Journal of Applied Corporate Finance, 15 (3), Spring. http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6622.2003.tb00466.x/pdf
[11]	Burgman, R., and Van Clieaf, M., 2012.Total shareholder return and management performance: A performance metric appropriately used, or mostly abused? Rotman International Journal of Pension Management, 5 (2): 1-8 (Fall). DOI: 10.3138/rijpm.5.2.26
[12]	Canadian Association of Petroleum Producers (CAPP), 2015. What Are Oil Sands? Canadian Association of Petroleum Producers (CAPP), http://www.oilsandstoday.ca/whatareoilsands/Pages/WhatareOilSands-.aspx. (accessed 22 July 2015)
[13]	Skuce, N., 2012. Who Benefits? An Investigation Of Foreign Investment In The Tar Sands. http://www.forestethics.org/sites/forestethics.huang.radicaldesigns.org/files/FEA_TarSands_funding_briefing.pdf (accessed 22 July 2015).
[14]	Rodrigues, R. and Weijermars, R., 2016. Assessing the impact of two recessions on the oil and gas industry: severity of declines and future outlook. First Break, vol. 34 (1), 79- 85.
[15]	Weijermars, R. and Bressan Bocardo, A., 2016. Shareholder Valuations of Petroleum Companies and Oilfield Services During the 2008 and 2014 Oil Price. Journal of Finance and Accounting, in press.

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Anita Bressan Bocardo, Ruud Weijermars. (2016). Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions. Journal of Finance and Accounting, 4(6), 351-366. https://doi.org/10.11648/j.jfa.20160406.16

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ACS Style

Anita Bressan Bocardo; Ruud Weijermars. Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions. J. Finance Account. 2016, 4(6), 351-366. doi: 10.11648/j.jfa.20160406.16

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AMA Style

Anita Bressan Bocardo, Ruud Weijermars. Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions. J Finance Account. 2016;4(6):351-366. doi: 10.11648/j.jfa.20160406.16

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@article{10.11648/j.jfa.20160406.16,
  author = {Anita Bressan Bocardo and Ruud Weijermars},
  title = {Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions},
  journal = {Journal of Finance and Accounting},
  volume = {4},
  number = {6},
  pages = {351-366},
  doi = {10.11648/j.jfa.20160406.16},
  url = {https://doi.org/10.11648/j.jfa.20160406.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160406.16},
  abstract = {This study compares the long-term shareholder returns of diversified oil and gas majors, Canadian oil sands producers, US shale oil and gas producers and oilfield services companies during a decade of volatile oil and gas prices (2004-2014). Total shareholder returns (TSR) are analyzed for individual companies, for each peer group, and for the petroleum sector as a whole. We attempt to identify the factors that contributed to TSR growth and decline over the performance period 2004-2014. We specifically compare the performance of each peer group during two relatively stable periods, namely 2004-2007 (Period 1), and 2009-2013 (Period 2). In Period 1, the average TSR for all peer groups was higher than in Period 2. The increase or loss of TSR is in our study broken down into capital gains and dividends. The observed decline of TSR during Period 2 was mainly influenced by stock prices that reflected a slower growth in retained earnings that supports the capital gains. All peer groups had slower increases in retained earnings in 2009-2013 as compared to 2004-2007. Remarkably, during the two oil price crises of 2008 and 2014 all companies maintained an increase in retained earnings. For the 20 companies evaluated, further in-depth analyses of speculative investor valuations are included in our study, as well as implications for future corporate strategies and investor decisions.},
 year = {2016}
}

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TY  - JOUR
T1  - Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions
AU  - Anita Bressan Bocardo
AU  - Ruud Weijermars
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N1  - https://doi.org/10.11648/j.jfa.20160406.16
DO  - 10.11648/j.jfa.20160406.16
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 351
EP  - 366
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20160406.16
AB  - This study compares the long-term shareholder returns of diversified oil and gas majors, Canadian oil sands producers, US shale oil and gas producers and oilfield services companies during a decade of volatile oil and gas prices (2004-2014). Total shareholder returns (TSR) are analyzed for individual companies, for each peer group, and for the petroleum sector as a whole. We attempt to identify the factors that contributed to TSR growth and decline over the performance period 2004-2014. We specifically compare the performance of each peer group during two relatively stable periods, namely 2004-2007 (Period 1), and 2009-2013 (Period 2). In Period 1, the average TSR for all peer groups was higher than in Period 2. The increase or loss of TSR is in our study broken down into capital gains and dividends. The observed decline of TSR during Period 2 was mainly influenced by stock prices that reflected a slower growth in retained earnings that supports the capital gains. All peer groups had slower increases in retained earnings in 2009-2013 as compared to 2004-2007. Remarkably, during the two oil price crises of 2008 and 2014 all companies maintained an increase in retained earnings. For the 20 companies evaluated, further in-depth analyses of speculative investor valuations are included in our study, as well as implications for future corporate strategies and investor decisions.
VL  - 4
IS  - 6
ER  -

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Author Information

Anita Bressan Bocardo

Harold Vance Department of Petroleum Engineering, Texas A&M University, College Station, USA; State University of Santa Catarina (UDESC), Balneário Camboriú, Santa Catarina, Brazil
Ruud Weijermars

Harold Vance Department of Petroleum Engineering, Texas A&M University, College Station, USA

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APA Style

Anita Bressan Bocardo, Ruud Weijermars. (2016). Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions. Journal of Finance and Accounting, 4(6), 351-366. https://doi.org/10.11648/j.jfa.20160406.16

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ACS Style

Anita Bressan Bocardo; Ruud Weijermars. Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions. J. Finance Account. 2016, 4(6), 351-366. doi: 10.11648/j.jfa.20160406.16

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AMA Style

Anita Bressan Bocardo, Ruud Weijermars. Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions. J Finance Account. 2016;4(6):351-366. doi: 10.11648/j.jfa.20160406.16

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@article{10.11648/j.jfa.20160406.16,
  author = {Anita Bressan Bocardo and Ruud Weijermars},
  title = {Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions},
  journal = {Journal of Finance and Accounting},
  volume = {4},
  number = {6},
  pages = {351-366},
  doi = {10.11648/j.jfa.20160406.16},
  url = {https://doi.org/10.11648/j.jfa.20160406.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160406.16},
  abstract = {This study compares the long-term shareholder returns of diversified oil and gas majors, Canadian oil sands producers, US shale oil and gas producers and oilfield services companies during a decade of volatile oil and gas prices (2004-2014). Total shareholder returns (TSR) are analyzed for individual companies, for each peer group, and for the petroleum sector as a whole. We attempt to identify the factors that contributed to TSR growth and decline over the performance period 2004-2014. We specifically compare the performance of each peer group during two relatively stable periods, namely 2004-2007 (Period 1), and 2009-2013 (Period 2). In Period 1, the average TSR for all peer groups was higher than in Period 2. The increase or loss of TSR is in our study broken down into capital gains and dividends. The observed decline of TSR during Period 2 was mainly influenced by stock prices that reflected a slower growth in retained earnings that supports the capital gains. All peer groups had slower increases in retained earnings in 2009-2013 as compared to 2004-2007. Remarkably, during the two oil price crises of 2008 and 2014 all companies maintained an increase in retained earnings. For the 20 companies evaluated, further in-depth analyses of speculative investor valuations are included in our study, as well as implications for future corporate strategies and investor decisions.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - Total Shareholder Returns from Petroleum Companies and Oilfield Services (2004-2014): Capital Gains and Speculation Dissected to Aid Corporate Strategy and Investor Decisions
AU  - Anita Bressan Bocardo
AU  - Ruud Weijermars
Y1  - 2016/11/17
PY  - 2016
N1  - https://doi.org/10.11648/j.jfa.20160406.16
DO  - 10.11648/j.jfa.20160406.16
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 351
EP  - 366
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20160406.16
AB  - This study compares the long-term shareholder returns of diversified oil and gas majors, Canadian oil sands producers, US shale oil and gas producers and oilfield services companies during a decade of volatile oil and gas prices (2004-2014). Total shareholder returns (TSR) are analyzed for individual companies, for each peer group, and for the petroleum sector as a whole. We attempt to identify the factors that contributed to TSR growth and decline over the performance period 2004-2014. We specifically compare the performance of each peer group during two relatively stable periods, namely 2004-2007 (Period 1), and 2009-2013 (Period 2). In Period 1, the average TSR for all peer groups was higher than in Period 2. The increase or loss of TSR is in our study broken down into capital gains and dividends. The observed decline of TSR during Period 2 was mainly influenced by stock prices that reflected a slower growth in retained earnings that supports the capital gains. All peer groups had slower increases in retained earnings in 2009-2013 as compared to 2004-2007. Remarkably, during the two oil price crises of 2008 and 2014 all companies maintained an increase in retained earnings. For the 20 companies evaluated, further in-depth analyses of speculative investor valuations are included in our study, as well as implications for future corporate strategies and investor decisions.
VL  - 4
IS  - 6
ER  -

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