Evaluating the effectiveness of strategic investment projects of oil and gas extraction companies

Dynamically changing macroeconomic situation, particularities of oil and gas projects, as well as long-term planning horizons impose certain restrictions on the use of traditional tools of economic evaluation of investment projects for energy companies' managers as part of investment planning management. However, traditional approaches to assessing the cost-effectiveness used by energy companies can be adapted for using in accordance with emerging demands, and they can also be used in situations with considerable uncertainty while taking into account industry-specific evaluation of strategic projects. In this case, the cost-effectiveness of strategic planning of a company increases. The research proposes a mechanism of increasing the growth of a company's financial potential. The mechanism is relevant to the complexity of the evaluated project, and is based on the assessment of feasibility of the implementation of investment projects with different levels of risk. Thus, for resolving theoretical and applied issues, we used scientific methods of research, including methods of logical, comparative, systematic, statistical and financial analysis, as well as methods of economic and mathematical modeling. We state the scientific novelty of the research as the development of the cost-effectiveness evaluation theory and its implementation in oil and gas mining sphere. The paper describes the approaches to the reasonable managerial decision-making about the participation in investment projects, which allow for measuring the degree of risk of a particular project, making comparison of the degree of risk of different projects, as well as conducting stress tests on the basis of financial and economic model. The proposed approaches to the evaluation of investment projects of hydrocarbon exploration and production by energy companies show their efficiency under uncertainty of high and medium degree. The considered mechanism could help the companies revise the existing approaches to the management of investment activity, to switch to the risk-based principles of investment evaluation and streamline work process of their investment units.