Probable Oil and Gas Reserves and Shareholder Returns: The Impact of Shale Gas

38 Pages Posted: 5 Feb 2016

See all articles by Bard Misund

Bard Misund

University of Stavanger

Petter Osmundsen

University of Stavanger; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: December 2015


Oil and gas reserves are the most important assets of oil and gas companies. A source of confusion for investors in oil companies is that reserves quantities and values are uncertain estimates. Reserves are typically classified according to probabilities of recovery from underground reservoirs. All U.S. listed companies have to disclose proved reserves but not probable reserves, thus leaving out potentially important information for investors and financial analysts. This study addresses the impact on market valuation of various classifications of reserves amounts. Using a data sample of 94 companies that do disclose information on probable reserves, we compare the relation between three classifications of reserves and oil company returns. While we find that information on probable reserves do not have an impact on stock returns measured over the entire time period, this is not the case since 2009, coinciding with the onset of the shale gas revolution.

Keywords: oil and gas reserves, probably reserves, value relevance, accounting figures

JEL Classification: Q330, Q350, G120

Suggested Citation

Misund, Bard and Osmundsen, Petter, Probable Oil and Gas Reserves and Shareholder Returns: The Impact of Shale Gas (December 2015). CESifo Working Paper Series No. 5687, Available at SSRN:

Bard Misund (Contact Author)

University of Stavanger ( email )

PO Box 8300 Forus


Petter Osmundsen

University of Stavanger ( email )

4036 Stavanger

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679

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