# The Share Price and Investment: Current Footprints for Future Oil and Gas Industry Performance

^{*}

## Abstract

**:**

## 1. Introduction

## 2. Research Methodology

#### 2.1. Research Hypotheses

**Hypothesis**

**1.**

**Hypothesis**

**2.**

#### 2.2. Valuation Model

#### 2.2.1. Ordinary Least Squares (OLS) Model

- PRICE
_{t,i}—share price for the year t of the company i; - EQUITY
_{t,i}—book value of equity per share for the year t of the company i; - EPS
_{t,i}—annual earnings per share for the year t of the company i; and - CE
_{t,i}—capital expenditure per share for the year t of the company i.

- μ
_{i}—individual specific effect of all other variables that affect share price cross-sectionally, but do not vary over time; and - v
_{t,i}—the remainder disturbance error that varies over time and companies.

#### 2.2.2. Company Fixed Effects Model

- λ
_{t}—time specific effect of all other variables that affect share price in time but are constant between companies; and - v
_{t,i}—the remainder disturbance error that varies over time and companies.

#### 2.2.3. Time Fixed Effects Model

#### 2.2.4. Two-Way Error Component Model

- Z
_{μ}—matrix of the companies dummy; and - Z
_{λ}—matrix of the time dummy.

_{i}is part of the error term.

#### 2.2.5. Random Effects Model

#### 2.3. Data Collection

## 3. Results and Discussion

#### 3.1. Descriptive Statistics

#### 3.2. Correlation Analysis

#### 3.3. Data Testing

#### 3.4. Results

## 4. Conclusions

## Acknowledgments

## Author Contributions

## Conflicts of Interest

## Appendix A

No. | Profit Companies | No. | Loss Companies |
---|---|---|---|

1 | ELAND OIL & GAS | 1 | 88 ENERGY |

2 | EMPYREAN ENERGY | 2 | AMINEX |

3 | EXILLON ENERGY | 3 | ASCENT RESOURCES |

4 | GAIL (INDIA) | 4 | BAHAMAS PETROLEUM COMPANY |

5 | GAZPROM NEFT PJSC | 5 | BARON OIL |

6 | PAO NOVATEK | 6 | BORDERS & SOUTHERN PETROLEUM |

7 | PJSC GAZPROM | 7 | BOWLEVEN |

8 | PJSC TATNEFT | 8 | CADOGAN PETROLEUM |

9 | RELIANCE INDUSTRIES | 9 | CAIRN ENERGY |

10 | ROSNEFT OIL COMPANY | 10 | CANADIAN OVERSEAS PETROLEUM |

11 | SOCIETATEA NAT.DE GAZE NAT.ROMGAZ | 11 | CHARIOT OIL & GAS |

12 | COLUMBUS ENERGY RESOURCES | ||

13 | ECHO ENERGY | ||

14 | FALCON OIL & GAS | ||

15 | FAROE PETROLEUM | ||

16 | GENEL ENERGY | ||

17 | GLOBAL PETROLEUM | ||

18 | HARDY OIL & GAS | ||

19 | JKX OIL & GAS | ||

20 | LEKOIL LIMITED | ||

21 | MAYAN ENERGY LIMITED | ||

22 | MOSMAN OIL AND GAS LIMITED | ||

23 | NIGHTHAWK ENERGY | ||

24 | NOSTRA TERRA OIL&GAS COMPANY | ||

25 | OILEX | ||

26 | PANTHEON RESOURCES | ||

27 | PETREL RESOURCES | ||

28 | PHOENIX GLOBAL RESOURCES | ||

29 | QUADRISE FUELS INTERNATIONAL | ||

30 | RED EMPEROR RESOURCES | ||

31 | ROSE PETROLEUM | ||

32 | SAVANNAH PETROLEUM | ||

33 | SOLO OIL | ||

34 | SOUND ENERGY | ||

35 | SPITFIRE OIL | ||

36 | STERLING ENERGY | ||

37 | TOMCO ENERGY | ||

38 | TOWER RESOURCES | ||

39 | TULLOW OIL | ||

40 | UNION JACK OIL |

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Specifications | MM | AIM |

Listed companies | 35 | 79 |

(−) Companies without share price information | (6) | (12) |

(−) Companies without financial information | (1) | (6) |

(−) Companies without capital expenditure in one or more years | (0) | (9) |

All companies | 28 | 52 |

80 | ||

(−) Companies that obtain profit in two years and loss in one year | (10) | |

(−) Companies that obtain profit in one year and loss in two years | (13) | |

Types of companies | Profit companies | Loss companies |

Companies that obtain profit/loss in all three years | 13 | 44 |

(−) Outliers | (2) | (4) |

Analyzed companies that obtain profit/loss in all three years | 11 | 40 |

Types of Companies | Variables | Mean | StDev | Minimum | Median | Maximum |
---|---|---|---|---|---|---|

Profit Companies | PRICE | 35.6881 | 41.5848 | 0.6331 | 24.5000 | 150.0000 |

EQUITY | 3.4195 | 1.8523 | 0.1100 | 3.3360 | 7.7853 | |

EPS | 0.4118 | 0.2730 | 0.0037 | 0.3670 | 1.1595 | |

CE | 0.5695 | 0.4664 | 0.0346 | 0.3863 | 1.4072 | |

Loss Companies | PRICE | 37.1270 | 83.9948 | 0.1450 | 9.1375 | 700.0000 |

EQUITY | 0.6371 | 1.4581 | −0.1491 | 0.1638 | 11.0690 | |

EPS | −0.2587 | 0.6914 | −4.0559 | −0.0313 | −0.00003 | |

CE | 0.1064 | 0.2897 | 0.0001 | 0.0078 | 1.8748 |

Types of Companies | Variables | PRICE | EQUITY | EPS | CE |
---|---|---|---|---|---|

Profit Companies | PRICE | 1.00 | - | - | - |

EQUITY | 0.34 | 1.00 | - | - | |

EPS | 0.45 ** | 0.89 *** | 1.00 | - | |

CE | 0.00 | 0.71 *** | 0.66 *** | 1.00 | |

PRICE: logarithm of the market value of equity per share at the end of the year; EQUITY: logarithm of the book value of equity per share at the end of the year; EPS: logarithm of the earnings per share for the year; CE: logarithm of the capital expenditure per share for the year. | |||||

Loss Companies | PRICE | 1.00 | - | - | - |

EQUITY | 0.57 *** | 1.00 | - | - | |

EPS | −0.34 *** | −0.53 *** | 1.00 | - | |

CE | 0.50 *** | 0.30 *** | −0.34 *** | 1.00 | |

PRICE: logarithm of the market value of equity per share at the end of the year; EQUITY: book value of equity per share at the end of the year; EPS: earnings per share for the year; CE: capital expenditure per share for the year. |

Tests | Profit Companies | Loss Companies | |
---|---|---|---|

Linear Relationship | R square | 35.44% | 44.11% |

F statistic | 5.307 | 30.525 | |

Multivariate Normality— Jarque-Bera Test | Residuals | 0.340 | 2.220 |

PRICE | 0.563 | 1.237 | |

EQUITY | 4086 | 36.272 | |

EPS | 1799 | 28.618 | |

CE | 2414 | 2.639 | |

No Multicollinearity—VIF | EQUITY | 20.44 | 4.35 |

EPS | 18.05 | 4.50 | |

CE | 7.28 | 3.57 | |

Homoscedasticity | Breusch-Pagan-Godfrey test | 1.304 | 1.207 |

White test | 0.343 | 0.186 |

Tests | Profit Companies | Loss Companies | ||
---|---|---|---|---|

Akaike Test | 1. Two-way error component | −1.078 | 1. Two-way error component | 0.819 |

2. FE/Random cross sectional | −0.893 | 2. FE/Random cross sectional | 1.025 | |

3. OLS regression | 1.678 | 3. FE time | 1.743 | |

4. FE time | 1.787 | 4. OLS regression | 1.747 | |

Schwartz Test | 1. Two-way error component | −0.352 | 1. OLS regression | 1.840 |

2. FE/Random cross sectional | −0.258 | 2. Two-way error component | 1.864 | |

3. OLS regression | 1.859 | 3. FE time | 1.882 | |

4. FE time | 2.059 | 4. FE/Random cross sectional | 2.024 | |

Hannan-Quinn Test | 1. Two-way error component | −0.834 | 1. Two-way error component | 1.243 |

2. FE/Random cross-sectional | −0.679 | 2. FE/Random cross-sectional | 1.431 | |

3. OLS regression | 1.739 | 3. OLS regression | 1.784 | |

4. FE time | 1.879 | 4. FE time | 1.799 | |

Durbin-Watson Test | 1. Two-way error component | 1.998 | 1. Two-way error component | 2.035 |

2. FE cross-sectional | 2.353 | 2. FE cross-sectional | 2.120 | |

3. Random cross-sectional | 1.478 | 3. Random cross-sectional | 1.455 | |

4. OLS regression | 0.304 | 4. OLS regression | 0.565 | |

5. FE time | 0.264 | 5. FE time | 0.486 | |

Hausman Test | Chi-square statistic | 4.314 | Chi-square statistic | 1.706 |

Probability | 0.229 | Probability | 0.635 |

Models | OLS Regression | Company Fixed Effects | Time Fixed Effects | Two-Way Error Component | Random Effects |
---|---|---|---|---|---|

Specifications | Equation (1) | Equation (3) | Equation (5) | Equation (7) | Equation (8) |

Intercept | 1.397 ** | 1.090 *** | 1.373 ** | 0.961 ** | 1.075 *** |

(3.228) | (5.750) | (2.925) | (3.711) | (4.427) | |

EQUITY | 0.013 | 0.339 | 0.041 | 0.628 | 0.368 |

(0.027) | (0.950) | (0.077) | (1.310) | (1.334) | |

EPS | 0.842 * | 0.091 | 0.830 * | 0.085 | 0.122 |

(2.349) | (0.683) | (2.194) | (0.672) | (0.944) | |

CE | −0.651 * | −0.079 | −0.661 * | −0.098 | −0.124 |

(−2.474) | (−0.474) | (−2.372) | (−0.588) | (−0.826) | |

R Square | 35.44% | 97.30% | 36.21% | 98.01% | 13.07% |

F statistic | 5.307 ** | 52.864 *** | 3.066 * | 56.079 *** | 1.453 |

PRICE: logarithm of the market value of equity per share at the end of the year; EQUITY: logarithm of the book value of equity per share at the end of the year; EPS: logarithm of the earnings per share for the year; CE: logarithm of the capital expenditure per share for the year. |

Models | OLS Regression | Company Fixed Effects | Time Fixed Effects | Two-Way Error Component | Random Effects |
---|---|---|---|---|---|

Specifications | Equation (1) | Equation (3) | Equation (5) | Equation (7) | Equation (8) |

Intercept | 0.716 *** | 0.803 *** | 0.722 *** | 0.867 *** | 0.741 *** |

(12.228) | (11.054) | (12.439) | (12.899) | (8.550) | |

EQUITY | 0.246 *** | 0.147 | 0.241 *** | 0.084 | 0.225 *** |

(5.809) | (1.580) | (5.731) | (0.991) | (4.842) | |

EPS | 0.042 | 0.099 | 0.034 | 0.102 | 0.037 |

(0.470) | (0.835) | (0.379) | (0.952) | (0.475) | |

CE | 0.950 *** | 0.863 ** | 0.896 *** | 0.638 * | 0.826 *** |

(4.912) | (2.807) | (4.624) | (2.270) | (3.973) | |

R Square | 44.11% | 85.81% | 46.16% | 88.84% | 33.22% |

F statistic | 30.525 *** | 11.09 *** | 19.550 *** | 13.574 *** | 19.237 *** |

PRICE: logarithm of the market value of equity per share at the end of the year; EQUITY: book value of equity per share at the end of the year; EPS: earnings per share for the year; CE: capital expenditure per share for the year. |

© 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

## Share and Cite

**MDPI and ACS Style**

Jianu, I.; Jianu, I.
The Share Price and Investment: Current Footprints for Future Oil and Gas Industry Performance. *Energies* **2018**, *11*, 448.
https://doi.org/10.3390/en11020448

**AMA Style**

Jianu I, Jianu I.
The Share Price and Investment: Current Footprints for Future Oil and Gas Industry Performance. *Energies*. 2018; 11(2):448.
https://doi.org/10.3390/en11020448

**Chicago/Turabian Style**

Jianu, Ionel, and Iulia Jianu.
2018. "The Share Price and Investment: Current Footprints for Future Oil and Gas Industry Performance" *Energies* 11, no. 2: 448.
https://doi.org/10.3390/en11020448