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Energy Finance and Economics: Analysis and Valuation, Risk Management, and the Future of Energy

ISBN: 978-1-118-01712-8
624 pages
February 2013
Energy Finance and Economics: Analysis and Valuation, Risk Management, and the Future of Energy (1118017129) cover image


Thought leaders and experts offer the most current information and insights into energy finance

Energy Finance and Economics offers the most up-to-date information and compelling insights into the finance and economics of energy. With contributions from today's thought leaders who are experts in various areas of energy finance and economics, the book provides an overview of the energy industry and addresses issues concerning energy finance and economics.

The book focuses on a range of topics including corporate finance relevant to the oil and gas industry as well as addressing issues of unconventional, renewable, and alternative energy.

  • A timely compendium of information and insights centering on topics related to energy finance
  • Written by Betty and Russell Simkins, two experts on the topic of the economics of energy
  • Covers special issues related to energy finance such as hybrid cars, energy hedging, and other timely topics

In one handy resource, the editors have collected the best-thinking on energy finance.

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Table of Contents

Acknowledgments xi

1 An Introduction to Energy Finance and Economics 1
Betty J. Simkins and Russell E. Simkins

PART ONE An Overview of Energy Finance and Economics

2 Geopolitics andWorld EnergyMarkets 19
Robert W. Kolb

3 Energy Economics: Past, Present, and Prospects for the Future 49
James L. Williams and Betty J. Simkins

4 Sustainable Energy: Myths and Realities 79
Olamide O. Shadiya, Jane A. Talkington, John Mowen, Karen High, and Josh L. Wiener

5 A Brief Introduction to the Petroleum Industry: From Crude Oil and Natural Gas to Petrochemicals and Their Products 107
Russell E. Simkins and Kenneth A. Borokhovich

6 The Economics of Renewable Energy 129
Brad Carson

7 How Our Political Views Affect Our View of Energy Prices 145
Sheridan Titman

PART TWO Financial and Economic Analysis in the Energy Industry

8 Oil and Gas Accounting 151
L. Charles Evans III

9 Financial Statement Analysis for Oil and Gas Companies and Competitive Benchmarking 181
Siamak Javadi, Betty J. Simkins, and Mary E. Wicker

10 Petroleum Economics, Risk and Opportunity Analysis: Some Practical Perspectives 229
David A. Wood

11 Real Options and Applications in the Energy Industry 253
Betty J. Simkins and Kris Kemper

12 International Petroleum Fiscal System Design and Analysis 269
David Johnston

13 Financing Large Energy Projects 313
Stephen V. Arbogast and Praveen Kumar

14 Financing Bio-Fuels Projects: Case Study Lessons 343
Stephen V. Arbogast

PART THREE Energy Risk Management and Related Topics

15 Energy Derivatives and Markets 365
Craig Pirrong and Mohsen Mollagholamali

16 Introduction to Energy Risk Management 379
Ivilina Popova and Betty J. Simkins

17 Risks in Trading Energy Commodities 411
Divya Krishnan

18 Carbon Management and Environmental Issues 425
Evgenia Golubeva

19 Hedging and Value in the U.S. Airline Industry 443
David A. Carter, Daniel A. Rogers, and Betty J. Simkins

PART FOUR Case Studies

20 PKO Resources, Inc.: Valuing a Producing Oil and Gas Property 467
John D. Martin, J. Douglas Ramsey, and Sheridan Titman

21 Financial Analysis of the Purchase of a Hybrid Consumer Vehicle 477
Don M. Chance, Pratik Dhar, and Betty J. Simkins

22 ExxonMobil Corp.’s Acquisition of XTO Energy, Inc.: An Exercise in Valuation 491
Allissa A. Lee and Betty J. Simkins

23 Southwest Airlines: The Blended Winglet Project 513
Aaron Martin, Daniel A. Rogers, and Betty J. Simkins

24 Wind Energy Power Company, Inc. (A): Analyzing a Wind Energy Investment 525
John D. Martin, J. Douglas Ramsey, and Sheridan Titman

25 A Case Study on Risk Management: Lessons from the Collapse of Amaranth Advisors LLC 543
Ludwig Chincarini

Index 579

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Author Information

BETTY SIMKINS, PhD, is the Williams Companies Professor of Business and a Professor of Finance in the Department of Finance at Oklahoma State University's (OSU) Spears School of Business. She teaches energy finance, a course that she developed, at both the undergraduate and graduate levels, and also teaches executive education courses on energy finance for companies globally. Her primary area of research is risk management, including energy risk management, and she has published extensively in this area. Simkins has received a number of teaching awards at OSU, including the Regents Distinguished Teaching Award. She currently serves on the Board of Directors for the Financial Management Association, as coeditor of the Journal of Applied Finance, editor of FMA Online, and as past president of the Eastern Finance Association. Simkins worked in the corporate world for ConocoPhillips and Williams Companies.

RUSSELL SIMKINS is Manager of Proposal Services in the College of Engineering, Architecture, and Technology at Oklahoma State University (OSU) and a licensed Professional Engineer in the state of Oklahoma. He has over thirty years of engineering experience and worked for ConocoPhillips, Fractionation Research Inc., Lubrizol Corporation, Southwest Research Institute, and the U.S. Department of Energy. Simkins has also been active in the engineering profession as a member of various working groups in the Society of Automotive Engineers (SAE), Coordinating Research Council (CRC), and American Society of Testing Materials (ASTM) dealing with fuels and lubricants.

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