Investment Evaluation of a Chinese Oil Project Using Economic Value Added Analysis

• In Event: International Accounting 1

Abstract

Economic Value Added (EVA) perspective helps avoid short-term focused investment behavior. It is especially useful in evaluating oilfield investment, which is characterized as high investment, high-profit and high risk, given that the investment assessment is uniquely critical for the sustainable development of petroleum companies. In this paper, we illustrate the application of EVA in the evaluation of the project investment. Specifically, we describe the process of applying EVA in the project pre-project assessment and post-project evaluation. We also compare EVA with traditional investment appraisal theories by conducting analyses and offering examples of oil field projects. We find that EVA is more useful than other evaluation methods in investment evaluation of Chinese oil projects.

Authors

• Xuefeng Tian, China University of Petroleum

• Tiantian Zhang, China University of Petroleum

• Ann Rensel, Niagara University

• Ling Zhang, China University of Petroleum