· Why oil price up will not directly trigger the oil companies share price go up?
· Because oil company net present value is calculated based on the 5 years average future oil price (2012-2017) multiple by total oil reserve of the company minus production cost of each oil field and then add the refinery margin multiple # of bbl for refinery.
· As you can see, current oil price, if not irrelevant, it has little affect on oil company valuation unless such price will have a duration impact in long term.
3.02.2011
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