Anderson Economic Group Work

The Value of a Controlling Interest in an Expropriated Oil & Gas Company: YPF SA

This technical paper presents an example of the use of different valuation methodologies when applied to the question of the value of the controlling interest that the Spanish firm Repsol held in the integrated oil & gas corporation YPF Sociedad Anonima until its expropriation by the Argentine national government in May 2012. This problem involves two of the signal problems in valuation: the presence of asymmetric risk and real options.

Both traditional and novel methods are used in this analysis, including: standard discounted cash flow and market-multiple models; along with the novel recursive (“value functional”) method. A benchmark of market prices around the time of the expropriation is used to evaluate the strength of the valuation methodologies. To make the comparison rigorous, wherever possible the same underlying assumptions and data are used in all methods, with no subjective adjustments.

This paper is also available on the Supported Intelligence website.

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