Financial analysis of international oil companies and the effect of foreign direct investment in the northern region of Iraq

This paper investigates the impact of Foreign Direct Investment (FDI) on the economic development in the Northern Region of Iraq, with a focus on the financial performance of international oil companies (IOCs) operating within the region. The study analyzes nine key financial ratios for IOCs over the period from 2011 to 2019: Return on Assets (ROA), Return on Equity (ROE), Return on Invested Capital (ROIC), Interest Coverage Ratio, Debt/Equity Ratio, Gross Profit Margin (GPM), Current Ratio, Quick Ratio, and Working Capital. The results reveal that ExxonMobil consistently outperformed its peers in ROA, ROE, ROIC, Interest Coverage Ratio, and Debt/Equity Ratio, while Genel Energy showed superior performance in the Current and Quick ratios. Additionally, Rosneft and Gazprom exhibited leading performance in Gross Profit Margin and Working Capital, respectively. A random effects panel estimation analysis was employed to explore the relationship between financial ratios and company revenues, uncovering a significant influence of crude oil prices on the financial outcomes of IOCs. The findings underscore the importance of optimizing financial management, diversifying revenue streams, establishing a strong policy framework to attract FDI, and investing in research and development. Strengthening partnerships with international oil companies emerges as a critical strategy for fostering sustainable economic growth and securing the long-term prosperity of the Northern Region of Iraq’s oil sector.