Due to the nature of oil as a depleting asset, new discoveries of proved reserves are a critical component in the ongoing operations of exploration and production companies. Economic factors such as commodity price and the cost of capital should play a role in the discovery process; however, this role may vary by type of discovery source. This article examines US annual data over the years 1977–2014 to estimate the influence of oil price and interest rate on the ratio of new reserves by source to total proved reserves, controlling for changes in production. Findings from vector autoregression (VAR) models provide evidence that reserve changes respond to economic factors and these responses differ by source of discovery.
|Number of pages||8|
|Journal||Energy Sources, Part B: Economics, Planning and Policy|
|State||Published - May 4 2017|
- interest rate
- oil price