Investment opportunity in China's overseas oil project: An empirical analysis based on real option approach

Tang, Bao-Jun; Zhou, Huiling; Chen, Hao; Wang, Kai; Cao, Hong

doi:10.1016/j.enpol.2017.02.023

Cited by 41 publications

(25 citation statements)

References 24 publications

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“…Traditional investment philosophy holds that high uncertainty is likely to cause investment losses to a large extent which somewhat ignores the investor's ability to recognize and utilize opportunities for value added of the project [36]. In the viewpoint of real option, the greater the project uncertainty, the greater the potential opportunity value of the project [37,38]. If the managerial flexibility can be fully used, higher value can be created.…”

Section: Investment Valuation Methods Of Ppp Projectmentioning

confidence: 99%

“…Nevertheless, as one of the most widely used pricing methods, the NPV approach has some irreplaceable advantages in reflecting the static value of the project. ROA is Sustainability 2019, 11, 1857 6 of 18 considered to be a further inheritance and development rather than total negation of traditional tools [37]. Trigeorgis (2005) proposed the concept of Expanded NPV (ENPV), which organically combines the NPV approach and ROA [45].…”

Section: Investment Value Composition Of a Prh Ppp Projectmentioning

confidence: 99%

“…In the light of this formula, the uncertainties and flexibility contained in the investment are considered. The concept of ENPV has been widely used in real option analysis recently [37,58,62,63]. Accordingly, we adopt this formula in this paper to value the PRH PPP project.…”

Section: Investment Value Composition Of a Prh Ppp Projectmentioning

confidence: 99%

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Investment Valuation Model of Public Rental Housing PPP Project for Private Sector: A Real Option Perspective

et al. 2019

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Public rental housing (PRH) in China is mainly invested by the government at present. The huge capital demand brings it great pressure and a series of problems appear meanwhile. Public–private partnership (PPP) has been regarded as a way to solve the funding dilemma of PRH. However, the PRH project is not attractive for the private sector since the expected profit seems unsatisfactory based on traditional valuation methods. To improve this situation, this paper proposed an investment valuation model from a real option perspective. For the private sector, three types of options, including deferral option, abandonment option, and expansion option, were identified during the concession period of a PRH PPP project. On this basis, a two-stage binomial tree model was constructed for estimating the investment value. Then, the proposed model was tested in a hypothetical example of a typical PRH PPP project in Chongqing, China. The result shows that great potential value can be excavated through flexible strategies and adaption to uncertainties. This paper provides a deep analysis on the gaps of the real option application in public housing investment assessment, which is meaningful for improving the supply efficiency and financial sustainability of PRH.

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Section: Investment Valuation Methods Of Ppp Projectmentioning

confidence: 99%

Section: Investment Value Composition Of a Prh Ppp Projectmentioning

confidence: 99%

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Investment Valuation Model of Public Rental Housing PPP Project for Private Sector: A Real Option Perspective

et al. 2019

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“…In the paper [13] the authors Tang et al emphasize that oil companies, as a justification for investing in mining projects, require the mandatory use of estimation methods related to geological and economic uncertainties. According to the authors, it is much more important to answer the question of optimal investment, i.e., selecting the best available potential assets for investment.…”

Section: Introductionmentioning

confidence: 99%

“…The main emphasis in the article is on-the-shelf deposits. At the same time, as in the works of the previous authors [9,[11][12][13]20], traditional poorly-researched objects of hydrocarbon raw materials are not considered with sufficient attention.…”

Section: Introductionmentioning

confidence: 99%

An Algorithm of Management Decision-Making Regarding the Feasibility of Investing in Geological Studies of Forecasted Hydrocarbon Resources

Cherepovitsyn

Metkin

Gladilin³

2018

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Currently, under the conditions of increasing depletion of hydrocarbon reserves in Russia, it is necessary to consider the resource potential of poorly-researched oil and gas objects as a factor for ensuring the sustainable development of the oil and gas complex, in the context of the concept formation of rational subsoil utilization and a circular economy. The methodology of this study is based on a clear sequence of geological and economic studies of poorly-researched oil and gas objects, including four stages, such as analysis of the raw material base, assessment of the raw material potential, determination of technological development parameters, and economic evaluation. The methods of the probabilistic estimation of oil resources of the forecasted objects with regard to geological risk are outlined. Software packages "EVA-Risk Analysis" and "EVA-Economic Evaluation of Oil and Gas Field Development Projects" were used for estimation. The result of the study is the determination of the geological and economic efficiency of the development of nine hydrocarbon objects with the determination of the order of their further geological exploration, and introduction into industrial development on the example of the poorly-researched region of the Timan-Pechora oil and gas province located in the Arctic zone.

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Abandonment Decision-Making of Overseas Oilfield Project Coping with Low Oil Price

2018

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Investment opportunity in China's overseas oil project: An empirical analysis based on real option approach

Cited by 41 publications

References 24 publications

Investment Valuation Model of Public Rental Housing PPP Project for Private Sector: A Real Option Perspective

Investment Valuation Model of Public Rental Housing PPP Project for Private Sector: A Real Option Perspective

An Algorithm of Management Decision-Making Regarding the Feasibility of Investing in Geological Studies of Forecasted Hydrocarbon Resources

Abandonment Decision-Making of Overseas Oilfield Project Coping with Low Oil Price

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