Investopedia

Continue to Site »

EV/2P Ratio

Filed Under » , , , , ,
Dictionary Says

Definition of 'EV/2P Ratio '

The EV/2P ratio is an investment term that refers to the valuation of oil and gas companies. The enterprise value (EV) divided by the proven and probable (2P) reserves shows what multiples the company is trading at. The enterprise value reflects the company's total value. Proven and probable (2P) refers to geologic reserves, such as oil, that are more likely than not able to be recovered. This is determined through geological and engineering modeling.
Investopedia Says

Investopedia explains 'EV/2P Ratio '

The EV/2P ratio calculates the enterprise value per proven and probable reserves. These values constantly fluctuate and are used by investors to speculate on the future value of a potential investment. When the multiple is high, the company of interest would be trading as a premium for a given amount of oil in the ground; a low valuation would suggest a potentially undervalued firm.

Articles Of Interest

  1.

    How To Use Price-To-Sales Ratios To Value Stocks

    Take a look at how this effective ratio can be influenced by certain critical factors.

  2. Using Enterprise Value To Compare Companies

    Learn how enterprise value can help investors compare companies with different capital structures.

  3. Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.

  4. Market Summary For May 17, 2013

    The U.S. stock markets moved sharply higher this week, on track for its fourth straight week of gains, driven by ongoing improvements in economic indicators.

  5. If You Don't Mind Volatility, Deere Could Still Do Alright

    Though Deere's shares sold off after earnings, the business model is sound and rolling along.

  6. Agilent Isn't Making It Easy On Investors

    Core operating performance at Agilent needs to improve

  7. Is The Gold Pain Over?

    After falling more than 13%, gold has staged a rebound but is that for fundamental reasons or the work of value investors? Will gold reward investors who didn't give up or is there more pain ...

  8. Consumer Spending As A Market Indicator

    What people buy and where they shop can provide valuable information about the economy.

  9. Depreciation: Straight-Line Vs. Double-Declining Methods

    Appreciate the different methods used to describe how book value is "used up".

  10. Market Summary for May 10 2013

    Major U.S. indices moved higher this week but, given the new highs, traders should watch for retracements next week.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  2. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  3. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  4. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  5. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.

  6. Angelina Jolie Stock Index

    An index made up of a selection of stocks from companies associated with actress Angela Jolie.
Trading Center