Common Stock Returns around Farmout Announcements in the Oil and Gas Industry

Distadio, LF; Ferguson, A; Lam, P

Common Stock Returns around Farmout Announcements in the Oil and Gas Industry

Distadio, LF Ferguson, A

Lam, P

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Publisher:: SAGE Publications
Publication Type:: Journal Article
Citation:: Energy Journal, 2023, 44, (4), pp. 171-194
Issue Date:: 2023-01-01

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Field	Value	Language
dc.contributor.author	Distadio, LF
dc.contributor.author	Ferguson, A https://orcid.org/0000-0003-0535-0643
dc.contributor.author	Lam, P
dc.date.accessioned	2024-04-10T00:53:02Z
dc.date.available	2024-04-10T00:53:02Z
dc.date.issued	2023-01-01
dc.identifier.citation	Energy Journal, 2023, 44, (4), pp. 171-194
dc.identifier.issn	0195-6574
dc.identifier.issn	1944-9089
dc.identifier.uri	http://hdl.handle.net/10453/177636
dc.description.abstract	We examine market reactions to farmout agreements, a common form of strategic alliance undertaken by oil and gas explorers internationally. Using an Australian sample of 722 farmout agreements announced during the 1990–2016 period, we find that farmout announcements generate a positive cumulative average abnormal return of 3.60% for farmors and 1.90% for farminees over a 3-day event window. Cross-sectional analysis of farmors’ event returns provides results consistent with the resource pooling hypotheses. We also find that farmors’ announcement returns are sensitive to the underlying oil price volatility, consistent with the real options view of farmout arrangements.
dc.language	en
dc.publisher	SAGE Publications
dc.relation.ispartof	Energy Journal
dc.relation.isbasedon	10.5547/01956574.44.4.ldis
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1402 Applied Economics
dc.subject.classification	Energy
dc.subject.classification	4004 Chemical engineering
dc.subject.classification	4008 Electrical engineering
dc.subject.classification	4012 Fluid mechanics and thermal engineering
dc.title	Common Stock Returns around Farmout Announcements in the Oil and Gas Industry
dc.type	Journal Article
utslib.citation.volume	44
utslib.for	1402 Applied Economics
pubs.organisational-group	University of Technology Sydney
pubs.organisational-group	University of Technology Sydney/Faculty of Business
pubs.organisational-group	University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2024-04-10T00:53:00Z
pubs.issue	4
pubs.publication-status	Published
pubs.volume	44
utslib.citation.issue	4

Abstract:

We examine market reactions to farmout agreements, a common form of strategic alliance undertaken by oil and gas explorers internationally. Using an Australian sample of 722 farmout agreements announced during the 1990–2016 period, we find that farmout announcements generate a positive cumulative average abnormal return of 3.60% for farmors and 1.90% for farminees over a 3-day event window. Cross-sectional analysis of farmors’ event returns provides results consistent with the resource pooling hypotheses. We also find that farmors’ announcement returns are sensitive to the underlying oil price volatility, consistent with the real options view of farmout arrangements.

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http://hdl.handle.net/10453/177636