What is ‘Earnings Before Interest, Depreciation, Amortization and Exploration – EBIDAX’
An earnings metric used in the evaluation of oil, gas and mineral firms. The metric is used in a similar manner to the way that EBITDA is used for other firms, and allows investors and other stakeholders to get a better idea of the true earnings-generating capacity of the firm without the obscuring the effects of accounting rules.
Explaining ‘Earnings Before Interest, Depreciation, Amortization and Exploration – EBIDAX’
EBIDAX is one of several earnings metrics that may be employed by analysts to evaluate the financial strength of an oil, gas or mineral firm. Exploration costs are excluded because there are different methods than can be used to account for exploration costs in oil and gas accounting. Excluding these costs allows for a more accurate comparison to the firm’s competitors, who may use different accounting methods.
Further Reading
- Oil and gas company valuations – www.bvreview.org [PDF]
- Company Valuation: Oil and Gas vs. Other Sectors – www.onepetro.org [PDF]
- Total Economic Rents of Australia as a Source for Basic Income – link.springer.com [PDF]
- Value drivers in oil companies: an application of variance based structure equation model – www.cmr-journal.org [PDF]
- Exploring Valuation Differences Between Upstream and Midstream Sectors of the US Oil and Gas Industry – repository.tcu.edu [PDF]
- Valuation of exploration & production companies – search.proquest.com [PDF]
