Quad O's Evolution: Subsequent Regulatory Effects from Existing Regulations on Shareholder Wealth

Quad O is the Environmental Protection Agency (EPA)'s methane reduction regulation that requires greater producer efficiency when methane is extracted by requiring efficient upstream, midstream, and downstream equipment. There are various times when Quad O was implemented and updated, and August 11th, 2012 was the first implementation period. Quad O's second implementation was on January 1st, 2015, and this study evaluates oil and gas returns around Quad O's early 2015 regulatory change. Oil and gas returns were mostly unaffected by the second Quad O implementation, indicating it is difficult to identify when firm returns responded to regulatory change. Equity to commodity markets interacted for each firm's return. Exploration & production equity to Brent crude ratios are among the lowest commodity market risk in the industry. In contrast, equity and commodity markets place the next highest equity to commodity ratios to mid and downstream transportation & pipeline and refining & marketing firms, indicating comparative commodity to equity risk was higher closer to oil and gas extraction.