The purpose of this study is to determine whether oil and gas producing companies smooth their ending reserve quantities. Smoothing is defined as a reduction in variance in the trend of ending reserve quantities over time compared to the trend of ending reserve quantities less the hypothesized smoothing variable over time. This study focuses on two variables that are most susceptible to manipulation—revisions of previous estimates and additions. This study also examines whether revisions are positively or negatively biased and the variability of the revisions. The sample consists of 70 companies chosen from oil & Gas Reserve Disclosures: 1980-1984 Survey of 400 Public Companies by Arthur Andersen and Company. For each company, ending reserve quantities for the years 1978-1984 were regressed over time, and the standard deviation of the estimate (SDE) was calculated. Then the ending reserve quantities less the hypothesized smoothing variable were regressed over time, and the SDE was calculated. A linear model and a semi-logarithmic model were used. A smoothing ratio (SR) was determined by dividing the SDE of reserves less the hypothesized smoothing variable by the SDE of ending reserve quantities. An SR greater than one indicates smoothing, and an SR less than one indicates that smoothing did not occur. The mean percentage revision and a t-test were used to test for positive or negative bias in the revisions. The mean absolute percentage revision was used to assess the relative variability of revisions. The number of companies classified as smoothers of oil reserves was statistically significant for the semi-logarithmic model but not for the linear model. Under both models the number of companies classified as smoothers of gas reserves was statistically significant. Few companies had mean percentage revisions that were significantly different from zero. The majority of companies had mean absolute revisions of under ten percent.
| Identifer | oai:union.ndltd.org:unt.edu/info:ark/67531/metadc331283 |
| Date | 08 1900 |
| Creators | Campbell, Alan D. |
| Contributors | Brock, Horace R., Davidson, Martin J., Spalding, John Barney, Koch, Bruce S., Abernathy, Lewis M. |
| Publisher | University of North Texas |
| Source Sets | University of North Texas |
| Language | English |
| Detected Language | English |
| Type | Thesis or Dissertation |
| Format | xi, 203 leaves, Text |
| Rights | Public, Campbell, Alan D., Copyright, Copyright is held by the author, unless otherwise noted. All rights reserved. |
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