Valuation of the flexibility in decision-making for revamping installations - A case from fertilizer plants

Petroleum Science

Volumn 7, Issue 3, 2010, Pages 428-434

  Wang, Zhen ^a   Li, Liangjun ^a  

^a CHINA UNIVERSITY OF PETROLEUM   (China)

Author keywords

Fertilizer installations; Fuel oil; Mean reversion; Natural gas; Real option

Indexed keywords

EID: 77955205294     PISSN: 16725107     EISSN: 19958226     Source Type: Journal    
DOI: 10.1007/s12182-010-0089-6     Document Type: Article

References (13)

1. Brennan M J and Schwartz E S. Evaluating natural resource investment. Journal of Business. 1985. 58(2): 135-157.
2. Dixit A and Pindyck R. Investment Under Uncertainty. Princeton, NJ: Princeton University Press. 1994.
3. Ekern S. An option pricing approach to evaluating petroleum projects. Energy Economics. 1988. 91-99 (April).
4. Gibson R and Schwartz E. Stochastic convenience yield and the pricing of oil contingent claims. Journal of Finance. 1990. 45(3): 959-976.
5. Kellogg D and Charnes J. M. Real-options valuation for a biotechnology company. Financial Analysts Journal. 2000. May/June. 76-84.
6. Lima G A C and Suslick S B. An integration of real options and utility theory for evaluation and strategic decision-making in oil development and production projects. SPE 94665 presented at the 2005 SPE Hydrocarbon Economics and Evaluation Symposium held in Dallas, TX, U. S. A. 3-5 April.
7. McDonald R and Siegel D. 1986. The value of waiting to invest. Quarterly Journal of Economics. 101(4): 707-727.
8. Pennings H P G and Lint L j O. The option value of advanced R& D. European Journal of Operational Research. 1997. 103(1): 83-94.
9. Ramón Y R. Real option valuation of free destination in long-term liquefied natural gas supplies. Energy Economics. 2008. 30(4): 1909-1932.
10. Schwartz E S and Moon M. Rational pricing of internet companies. Financial Analysis Journal. 2000. 56(3): 62-275.
11. Schwartz, E S. The stochastic behavior of commodity prices: implications for valuation and hedging. Journal of Finance. 1997. 52(3). 923-973 (July).
12. Tourinho O A F. The Valuation of Reserves of Natural Resources: An Option Pricing Approach. University of California, Berkeley. PhD Dissertation. 1979.
13. Trigeorgis L. Real Options: Managerial Flexibility and Strategy in Resource Allocation. Cambridge, Massachusetts: MIT Press. 1996.