Sustainability Reporting and Cash Flow Return on Investment of Oil and Gas Companies
CHAPTER ONE
Objective of the study
The objectives of the study are;
- To ascertain the relationship between sustainability reporting and cash flow on oil and gas companies
- To ascertain the effect of cash flow return investment on Nigeria economy
- To ascertain whether oil and gas prices affect cash flow return on investment
CHAPTER TWO
REVIEW OF RELATED LITERATURE
DEVELOPMENT OF LONG-TERM SUSTAINABILITY FOR OIL AND GAS COMPANIES
The current economic literature gives a variety of definitions for long-term sustainability of a company. Within the framework of this study, defining its principal development vector, the long-term financial sustainability of an oil and gas company should be deemed to be the ability of the business to ensure the continuity of performance, the stability of revenue generation with the continued capability of cost optimisation and high level of innovation activity considering sustainable competitive edges, unique market position and destabilising environmental exposure. The basic factors affecting the development of long-term financial sustainability of an oil and gas company were listed above. Nevertheless, the modern risk-oriented approach to assessment of corporate sustainability defines a number of additional factors, such as: level of assumed risk within the implementation of a specific investment project undertaken by an oil and gas company, related probability of the project default, as well as the company’s ability to cover the default losses, i.e. the amount of economic capital
The role of economic risk management in industrial development
The internal and external environment of an industrial company is equally a source of opportunities for the realization of competitive advantages and a source of hazards for industrial development. Economic impacts from the implementation risks can be the following:
- Direct losses associated with material damage inflicted on a company (losses of resources, fixed assets, intangible assets).
- Deficiency in planned profit, cash flow due to the reduction of income, excess spending growth, loss of benefit, use of investment alternatives.
Due to the complexity of the technological environment, economic and financial relations, the growing of uncertainty risk factors as the main problem of risk management in industrial development acquire special significance for long-term business planning and strategy implementation. The variety of risks that track the development of industrial companies includes several economic risks. The quality of risk management is defined by:
- The continuity of supply, which is the main condition for regular industrial production.
- The stability of production sales and operating cash flow of the business.
- The efficiency of investment activity, adherence to which is achieved by proper selection of investment projects and business portfolio of a company.
- Business supporting the necessary financial resources for current operations, capital programs, technological level maintenance and modernization of production capacities. In this regard, sustainable industrial development is impossible without an effective mechanism for the identification, evaluation and management of economic risks.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought the Sustainability reporting and cash flow return on investment of oil and gas companies
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information Sustainability reporting and cash flow return on investment of oil and gas companies. 200 staff of NNPC, Lagos state were selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain Sustainability reporting and cash flow return on investment of oil and gas companies. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of Sustainability reporting and cash flow return on investment of oil and gas companies
Summary
This study was Sustainability reporting and cash flow return on investment of oil and gas companies. Three objectives were raised which included: To ascertain the relationship between sustainability reporting and cash flow on oil and gas companies, to ascertain the effect of cash flow return investment on Nigeria economy and to ascertain whether oil and gas prices affect cash flow return on investment. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staffs of NNPC, Lagos. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made directors, administrative staffs, senior staffs and junior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
In this study an introduction to a value based financial performance measure CFROI was provided. This measure compares the inflation adjusted cash flows generated by a company with the inflation-adjusted cash investment required to achieve it. By including the estimated lifetime of the depreciable assets and the expected residual value of the company’s non-depreciable assets an internal rate of return is calculated and compared to the company’s inflation-adjusted cost of capital. If a company is able to generate CFROI values in excess of its real cost of capital, it is argued that shareholder value should be created. Amongst the benefits ascribed to CFROI the focus on cash flow and the inclusion of the inflation adjustments are considered to be particularly valuable. The complexity of its calculation, and the fact that it exhibits some of the same problems associated with IRR measures, however, are mentioned as limiting factors
Recommendation
First, do not limit your tactical response to the global recession to cost cutting and restructuring of internal programs, but consider external growth opportunities. For example, inventory which companies could provide the most attractive assets and synergy with your existing portfolio. Second, make sure you benefit from superior credit rating by leveraging up credit over equity and acquire financially distressed companies that can rapidly turn into strong cash-flow mechanisms once refinanced under better terms.
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