PETROLEUM SECTOR RETURNS

How do Petroleum Sector Returns compare to Broader Equity Market Returns?

Table of Contents

Abbreviations3

Abstract6

Chapter 1: Introduction7

Background of the study7

Aims7

Problem Statement7

Rationale of the study9

Significance of the study12

Hypotheses15

Chapter 2: Literature Review17

Chapter 3: Methodology53

Chapter 4: Results56

Analysis56

Hypotheses Test56

Hypothesis 1:56

Findings of Hypothesis 156

Hypothesis 2:61

Findings of Hypothesis 261

CARs calculation for the whole period of studies that covers 10 years & for each single year64

Chapter 5: Discussion & Conclusion71

References73

Appendices84

Tables, Figures & Equations84

Top 50 oil companies according to their market capitalization91

Abbreviations5

Abstract8

Chapter 1: Introduction9

Background of the study9

Aims9

Problem Statement9

Rationale of the study11

Significance of the study14

Hypotheses17

Chapter 2: Literature Review19

Theoretical Framework19

Theory and prior evidence19

S&P 500 index21

Evaluation Criteria23

Holding-Period Returns29

Cyclical Overvaluation of New Companies31

Price Pressure from Indexing32

Poor Neglected Brent33

Domestic Oil Production37

The Role of Seismic Advances in the Gulf of Mexico37

Domestic Natural Gas38

U.S. Petroleum Companies' Investments Abroad39

North Sea40

Asia and the Pacific Rim41

Africa41

Latin America42

Canada42

Former Soviet Union and Eastern Europe43

More products tankers?45

Portfolio Theory47

Concentration Versus Diversification49

International Diversification50

Exchange Rates Risk And Equity Market Investing51

Repayment Risk51

Foreign-Currency Risk52

Country Risk53

Commercial Bank Downscaling54

Liquidity Risk54

Chapter 3: Methodology55

Approach and Strategy of the Research55

3.2. Data Collection56

Chapter 4: Results58

Analysis58

Hypotheses Test58

Hypothesis 1:58

Findings of Hypothesis 158

Hypothesis 2:63

Findings of Hypothesis 263

CARs calculation for the whole period of studies that covers 10 years & for each single year66

Excess turnover analysis70

Bid-ask spread analysis71

Chapter 5: Discussion & Conclusion73

References75

Appendices86

Tables, Figures & Equations86

Top 50 oil companies according to their market capitalization93

Abbreviations

USO: United States Oil Fund

NYSE: New York Stock Exchange

STJ: St. Jude Medical, Inc.

NASDAQ: National Association of Securities Dealers

SUNW: Sun Microsystems, Inc

NYSE:BK: New York Stock Exchange: The Bank of New York Mellon Corporation

USB: U.S. Bancorp

DJIA: Dow Jones Industrial Average (Dow Jones Indices)

IPO: Initial public offering

CRSP: Center for Research in Security Prices

GICS: Global Industry Classification Standard

MRP: Meridian Petroleum plc

SPX: Sequenced Packet Exchange

ST: Straits Times Index

TDP, Trade, Development and Poverty Reduction (TDP)

YTD, Year-to-date

A(MM], beta adjusted EQUATION

A[MAR], market adjusted EQUATION

DWS, Department of Workforce Services

CDA Capital Development Authority

t-test: The t-test examines the means of couple of groups that are statistically dissimilar from each other.

IWF, Growth Index Fund

ECA CN, Encana Corp.

ONGC IN, Group of Companies

DVN US, Davenport (DVN) United States

LKOH RU, LUKOIL OAO

CEPSM, Centre of Excellence for Public Sector Marketing

APA US, American Psychological Association

CNQ CN, Canadian Natural Resource Ltd

HSE CN, Health, Safety, and the Environment

XTO US, XTO ENERGY INC

CNA LN, Centrica PLC

SNGS RU, Surgutneftegaz OAO

MRO US, Marathon Oil Corporation

XOM US, Exxon Mobil Corporation

RDSA NA, Royal Dutch Shell plc

CVX US, Chevron Corporation

BPILN, BP International Inc.b

BHP AU, BHP Billiton

GSZ FP, GDF Suez SA

PETR3 BZ, Petroleo Brasileiro

ENI IM, Enersis S.A

GSPBEX RU, Gazprom, Common stock Price

COP US, The Coalition on the Public Understanding of Science

OXY Occidental Petroleum Corporation

BG/LN, Bloomberg

SLB US, SCHLUMBERGER LTD

TS US, The Building Testing and Research Institute

FSLR US, First Solar Inc.

883HK, Stock price

RIL IN, Reliance Industries Limited

ROSN Rosneft' OAO

PTT TB Thailand's biggest company by market value

RIG US Transocean LTD.

HAL US Halliburton Company

EOG US EOG Resources, Inc.

6505TT Formosa Petrochemical Corp Industry

IBR Institute for Biblical Research

SM, Sadism and Masochism

APC US American Power Conversion

EOG US EOG Resources, Inc

Abstract

The purpose of the paper is to is to examine how the petroleum sector returns (both stocks and commodities) compare to the broader S&P 500 returns. 2 hypothesis are tested regarding the ...