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Revenue-Based Multipliers as an Indicator of the Investment Attractiveness of Domestic Vertically Integrated Oil and Gas Companies

. 27, . 2, 2022


: 24.02.2022

: 16.03.2022

: 30.03.2022

: 04.07.2022


JEL: G32, L25, L71, M41, O12



Oleg V. SHIMKO Center for Innovative Economics and Industrial Policy, Institute of Economics of Russian Academy of Sciences (IE RAS), Balashikha, Moscow Oblast, Russian Federation 


Subject. This article focuses on the ratios of market capitalization or enterprise value to net revenue from core activities of the twenty five leading publicly traded oil and gas companies within 2008 through 2018.
Objectives. The article aims to identify key trends in the considered ratios of the oil and gas industry corporations and in the ratio changes within the studied period, and identify the factors that have caused these changes.
Methods. For the study, I used comparative, and financial and economic analyses, and generalization of materials of the companies' consolidated financial statements.
Results. Revenue-based ratios are found to be applicable to assess the value of oil and gas companies. Companies with better profitability have higher multiplier values with a similar net revenue structure. It was determined that integrated corporations usually lag behind independent companies in terms of multiples. It was found that the output of oil products from purchased raw materials is estimated by market to be lower than products produced from own resources. The presence of resale in the revenue structure reduces the multiplier value. The debt burden growth contributes to the multiplier reduction. Therefore, in multiplier, it is advisable to use the enterprise value indicator that includes net debt instead of market capitalization with a significant difference in the debt component. The found country factor should be taken into account when using the multiplier.
Conclusions and Relevance. The use of revenue-based multipliers requires a thorough analysis of the financial and business operations of companies. However, it is quite acceptable if the overall profitability decreases and the debt burden increases in the stock market segment of the global oil and gas industry. The results of the study can be used to assess the value of oil and gas assets as part of a comparative approach and develop measures to increase the market capitalization of publicly traded oil and gas corporations.

: revenue, valuation, comparative approach, multiplier, oil and gas industry


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ISSN 2311-9438 (Online)
ISSN 2073-8005 (Print)

. 28, . 2, 2023