Reserve Asset Values and the \"Hotelling Valuation Principle\"""

M.A. Adelman and G.C. Watkins

March 1992

M.A. Adelman and G.C. Watkins, March 1992

The Hotelling Valuation Principle, that the in-situ value of a mineral unit equals the current net price, is a special case of a more general relation. Tested against a set of recent Canadian sales of oil and gas reserves, the HVP is strongly rejected. The method permits also a demonstration that price expectations were quite different in oil and in gas, confirming industry opinion.

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