Energy Finance and Economics

BETTY SIMKINS, PhD, is the Williams Companies Professor of Business and a Professor of Finance in the Department of Finance at Oklahoma State University’s (OSU) Spears School of Business. She teaches energy finance, a course that she developed, at both the undergraduate and graduate levels, and also teaches executive education courses on energy finance for companies globally. Her primary area of research is risk management, including energy risk management, and she has published extensively in this area. Simkins has received a number of teaching awards at OSU, including the Regents Distinguished Teaching Award. She currently serves on the Board of Directors for the Financial Management Association, as coeditor of the Journal of Applied Finance, editor of FMA Online, and as past president of the Eastern Finance Association. Simkins worked in the corporate world for ConocoPhillips and Williams Companies.RUSSELL SIMKINS is Manager of Proposal Services in the College of Engineering, Architecture, and Technology at Oklahoma State University (OSU) and a licensed Professional Engineer in the state of Oklahoma. He has over thirty years of engineering experience and worked for ConocoPhillips, Fractionation Research Inc., Lubrizol Corporation, Southwest Research Institute, and the U.S. Department of Energy. Simkins has also been active in the engineering profession as a member of various working groups in the Society of Automotive Engineers (SAE), Coordinating Research Council (CRC), and American Society of Testing Materials (ASTM) dealing with fuels and lubricants.

• Acknowledgments xi1 An Introduction to Energy Finance and Economics 1Betty J. Simkins and Russell E. SimkinsPart One An Overview of Energy Finance and Economics2 Geopolitics and World Energy Markets 19Robert W. Kolb3 Energy Economics: Past, Present, and Prospects for the Future 49James L. Williams and Betty J. Simkins4 Sustainable Energy: Myths and Realities 79Olamide O. Shadiya, Jane A. Talkington, John Mowen, Karen High, and Josh L. Wiener5 A Brief Introduction to the Petroleum Industry: From Crude Oil and Natural Gas to Petrochemicals and Their Products 107Russell E. Simkins and Kenneth A. Borokhovich6 The Economics of Renewable Energy 129Brad Carson7 How Our Political Views Affect Our View of Energy Prices 145Sheridan TitmanPart Two Financial and Economic Analysis in the Energy Industry8 Oil and Gas Accounting 151L. Charles Evans III9 Financial Statement Analysis for Oil and Gas Companies and Competitive Benchmarking 181Siamak Javadi, Betty J. Simkins, and Mary E. Wicker10 Petroleum Economics, Risk and Opportunity Analysis: Some Practical Perspectives 229David A. Wood11 Real Options and Applications in the Energy Industry 253Betty J. Simkins and Kris Kemper12 International Petroleum Fiscal System Design and Analysis 269David Johnston13 Financing Large Energy Projects 313Stephen V. Arbogast and Praveen Kumar14 Financing Bio-Fuels Projects: Case Study Lessons 343Stephen V. ArbogastPart Three Energy Risk Management and Related Topics15 Energy Derivatives and Markets 365Craig Pirrong and Mohsen Mollagholamali16 Introduction to Energy Risk Management 379Ivilina Popova and Betty J. Simkins17 Risks in Trading Energy Commodities 411Divya Krishnan18 Carbon Management and Environmental Issues 425Evgenia Golubeva19 Hedging and Value in the U.S. Airline Industry 443David A. Carter, Daniel A. Rogers, and Betty J. SimkinsPart Four Case Studies20 PKO Resources, Inc.: Valuing a Producing Oil and Gas Property 467John D. Martin, J. Douglas Ramsey, and Sheridan Titman21 Financial Analysis of the Purchase of a Hybrid Consumer Vehicle 477Don M. Chance, Pratik Dhar, and Betty J. Simkins22 ExxonMobil Corp.’s Acquisition of XTO Energy, Inc.: An Exercise in Valuation 491Allissa A. Lee and Betty J. Simkins23 Southwest Airlines: The Blended Winglet Project 513Aaron Martin, Daniel A. Rogers, and Betty J. Simkins24 Wind Energy Power Company, Inc. (A): Analyzing a Wind Energy Investment 525John D. Martin, J. Douglas Ramsey, and Sheridan Titman25 A Case Study on Risk Management: Lessons from the Collapse of Amaranth Advisors LLC 543Ludwig ChincariniIndex 579