Reserve Asset Values and the “Hotelling Valuation Principle”””””””
M.A. Adelman and G.C. Watkins
M.A. Adelman and G.C. Watkins, March 1992The 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.