Every day E&P companies are confronted with opportunities and decisions, which will impact the value of the assets and enterprise that they manage. As the goal of publicly held companies is to maximize shareholder value, companies tend to respond by attempting to maximize Wall Street's preferred valuation metric of the day. Return on capital employed (ROCE), cash flow per share, reserve replacement and finding and development costs per BOE are used to judge the industry's performance over time; but the most significant determinant of both absolute and relative shareholder returns remains a company's ability to increase the value of its reserve base in an economic fashion. A multi-year study of 45 publicly held independent E&P companies establishes the strong correlation between reserve value and share price performance.

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