The Hotelling Valuation Principal (HVP) implies that the value per unit of an in-ground exhaustible natural resource is equal to the current price less the cost of production. The assumptions required for this principle include a certain and homogenous reserve stock, unconstrained extraction, and constant costs. Extensive research has empirically investigated the HVP. This paper expands the HVP framework and relaxes the theory’s assumptions to account for reserve differentials. The results show that the original net price model is more closely aligned with developed reserve value, than total reserve value. In addition, this paper develops two- and three-factor net price models to incorporate user cost, extraction capacity and the risk of developing and producing oil and gas reserves.
","abstract_html":"<p>The Hotelling Valuation Principal (HVP) implies that the value per unit of an in-ground exhaustible natural resource is equal to the current price less the cost of production. The assumptions required for this principle include a certain and homogenous reserve stock, unconstrained extraction, and constant costs. Extensive research has empirically investigated the HVP. This paper expands the HVP framework and relaxes the theory’s assumptions to account for reserve differentials. The results show that the original net price model is more closely aligned with developed reserve value, than total reserve value. In addition, this paper develops two- and three-factor net price models to incorporate user cost, extraction capacity and the risk of developing and producing oil and gas reserves.</p>","abstract_has_math":false,"creators":["Hicks, Brian K."],"institution":null,"degree_name":"Ph.D.","degree_level":"Dissertation","degree_discipline":null,"degree_department":null,"school":null,"contributors":["Tracy Xu","Jack Strauss","Ronald Rizzuto"],"advisors":[],"committee_chairs":[],"committee_members":[],"year":2021,"date_issued":"2021-01-01T08:00:00Z","date_published":"2021-01-01T08:00:00Z","updated_at":"2026-07-24T02:03:26Z","subjects":["Asset pricing","Hotelling","Natural resources","Oil and gas","Business","Corporate Finance","Economics","Finance","Finance and Financial Management"],"languages":["en"],"rights":["Copyright is held by the author. User is responsible for all copyright compliance.
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