The System of Factors Affecting the Capitalization of Public Oil Companies in the Upstream Sector

Abstract

The topic of assessing and searching for factors affecting the capitalization of public oil companies is of great interest to researchers. As part of the existing work in this area, the paper considers .the impact of various external and internal factors on the value of oil companies’ stocks, including the impact of changes in oil prices, stock index movements, inflation fluctuations, financial and production indicators. The study includes the construction of models with the calculation of standard errors by the PCSE method based on quarterly data of 11 major public oil companies operating in production segment for the period from Q1 2006 to Q3 2018. For the first time, while constructing a model to identify the factors that affect market capitalization of oil companies, the authors draw on the total oil production by OPEC countries, the total share of capital owned by the largest institutional investors, the indices of geopolitical instability and global uncertainty Among the key findings - quarterly production, rather than the cost of oil, is the most significant factor positively affecting the market capitalization of oil firms.