| Summary: | The studies devoted to the analysis of the diversification of production activities of the largest public oil companies and its impact on their cost do not consider production or financial factors, which are important indicators for assessing the development prospects of companies.In this article, an econometric analysis will be carried out to identify the external and internal factors affecting the capitalization of the largest vertically integrated oil companies, and for the first time, profitability ratios for each of them will be used to test the hypothesis about the positive impact of diversification of activities on the upstream and downstream segments.As a result of the study, it was found that an increase in profitability in the upstream segment leads to an increase in the value of oil companies shares, while profitability in the downstream segment turned out to be an insignificant factor that negatively affects the dependent variable.The obtained results indicate that investors are more oriented to the financial indicator related to the production sector, ignoring the refining segment, which may lead to underestimation of oil companies and subsequent adjustments of stock prices.The final conclusions can be used by investment companies and other stock market participants as part of investment decision making process regarding the acquisition/sale of shares of large vertically integrated oil companies.As part of the development of a study on the valuation of oil companies, it could be analyzed the influence of the factors considered in the work on firms that conduct production activities separately in upstream and downstream segments.
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