1

CHAPTER ONE
INTRODUCTION

1.0 Background of the Study
Statisticians have played an increasing and important role in nearly all
phases of human endeavor. The influence of statisticians has now
spread to manufacturing, agriculture, business, communication,
economics, education, psychology, political science, sociology and
numerous other fields of life. Statistics is a body of scientific methods
and theory of collecting, organizing, summarizing, presenting and
analyzing data and as well drawing valid conclusions and making
reasonable decision. (Williams 1941)
Since statistics is a body of scientific methods as regards decision
making, its application is found in all discipline of human knowledge,
especially the sciences, where the available information can be put in
some kind of numerical forms. In fact, this project tends to study the
effect of crude oil revenue and the strength it has on the economy.
Production of crude oil can be said to be the burning of organic raw
materials, refined materials by chemical means into new products.
In many economies or business situations, two or more variables are
closely related and their relationship may help to predict the future
state of the economy or the degree of the association may help to
analyze the performance of the economy or business. For example,
there must be a close relationship between the wages paid to workers
and their productivity. The degree of the association between these

2

variables will enable the employer to decide on whether to increase
wages from workers. It is this relationship between variables that
seems to depend on regression analysis.
Crude oil is a naturally occurring flammable liquid consisting of a
complex mixture of hydrocarbons of various molecular weights and
other liquid organic compounds, that are found in geologic
formations beneath the Earth's surface. A fossil fuel, it is formed when
large quantities of dead organisms, usually zooplankton and algae, are
buried underneath sedimentary rock and undergo intense heat and
pressure. (George 1956)
Petroleum is recovered mostly through oil drilling. This comes after the
studies of structural geology (at the reservoir scale), sedimentary basin
analysis, and reservoir characterization (mainly in terms of porosity and
permeable structures). It is refined and separated, most easily
by boiling point, into a large number of consumer products, from
petrol (or gasoline) and kerosene to asphalt and chemical reagents used
to make plastics and pharmaceuticals. Petroleum is used in
manufacturing a wide variety of materials, and it is estimated that the
world consumes about 88 million barrels each day.
The use of fossil fuels such as petroleum can have a negative impact on
Earth's biosphere, releasing pollutants and greenhouse gases into the
air and damaging ecosystems through events such as oil spills. Concern
over the depletion of the earth's finite reserves of oil, and the effect this
would have on a society dependent on it, is a field known as peak oil.


3

Product sales analysis is the prediction of future sales of a product, either
judgmental or based on previous sales patterns. A further definition shows it
is a careful examination of a company's sales records, that is done to measure
the company's performance and to try and improve it or the break-down of
sales figures by region, product, customer, market, etc for a given period as a
control measure sales aptitude tests
A sales analysis report includes sales-related metrics, also called
key performance indicators, for a specified time-period. Sales analysis
reports provide a record of past performance and can be used as a tool
to predict future business performance.
Sales analysis reports are used to measure and monitor sales
department performance. Sales managers use these reports to develop
sales strategies, better understand past results and to help forecast
future results. Sales representatives use these reports to closely track
their performance against sales goals and to plan and prioritize sales
activities. Finance and human resources staff members use these
reports to calculate sales compensation and bonus payouts for sales
department employees.

1.1 Aims and Objectives of Study
1. To fit a regression model to the crude oil variables.
2. To study and describe the nature of correlation of the crude oil
variables.


4

1.2 Significance of Study
The study will be of importance to NNPC as it will help them to predict
what the projected revenue will be in the near future.
1.3 Scope and Limitations
1.3.1 Scope
The formation of the Nigeria National Petroleum Corporation in 1977
was an off-shoot of different development in the countrys oil industry.
Commercial oil findings were made in 1956 by shell in Olobiri present
day of Bayelsa State. This was after about half a country of exploration
activities in the southwestern Nigeria where the explorers made
bitumen.
The success of shell in Niger Delta attracted other companies including
Mobil, Texaco, Gulf (now Chevron), Agip, Esso and Safrap (now Elf) into
the country to take up concessions that had been relinquished by shell.
In 1963, the first offshore, finds were made by Gulf (Okan-1), Mobil
(Ata-1) and Texaco (Kulama-1). Since then the Nigeria oil industry has
gone through rapid expansion, notwithstanding the discourteous effects
of the civil war between 1967 and 1970, and of course, the recent
community problems have invariably grounded several operators. It
was believed that if government had more say in the running of the
country, the situation about the production of crude oil would take a
new look regardless of the effect. Unfortunately the Ministry of
Petroleum resources played mainly regulatory roles in the industry

5

then. Today, government participation stands at 55 percent in shell and
60 percent in Chevron, Mobil, Agip, Elf and Texaco.
In 1971, shortly before the country joined the Organization of
Petroleum Exporting Countries (OPEC) as its tenth member. The
Nigerian National Oil Corporation (NNOC) was established as an organ
for exercising control over the industry which was dominated by
multinationals. The corporation also provided a platform for
government to take up participating interest in the operations of the
companies starting with 331.3% in Agip has on the 1965 agreement,
which allowed the government to acquire interest in the company in the
event of a successful exploration effort. Other acquisitions were to
follow and by 1974, the acquisition had covered all the operating
companies with the percentage of government interest increased to
60%, thus given birth to the joint ventures relationship between
government and the major oil producing companies, a relationship
which subsists till today.
NNPC was formed through the merge of the NNOC and the Ministry of
Petroleum Resources in April 1977. The Corporation was given powers
and operational interest in refining, petrochemicals and products
transportation as well as marketing. This was in addition to its
exploration and production activities that were carried out mainly
offshore Niger Delta by its forerunner of the NNOC. Between 1978 and
1989, NNPC constructed refineries in Warri, Kaduna and Port Harcourt
and took over the 35,000 barred shell refinery established in Port
Harcourt in 1965. In addition, the corporation constructed several

6

kilometers of pipelines, pumps stations and depots for distribution of
petroleum of petroleum products throughout the country and
pioneered the exploration activities in the Chard Basin around
Maiduguri in 1982. Products retail, which hitherto was firmly in the
hands of major multinational oil companies, was deregulated to
accommodate indigenous marketers.
In 1990, with a view of improving the countrys oil and gas revenue
base, oil exploration, which has progressively moved offshore Niger
Delta, was further extended into frontier areas including the deep
offshore and the inland basins of Anambra, Benin(Dahomey) and Benue
where acreages were allocated to several multinationals after signing a
producing sharing contract with NNPC.
Nnpc.com
1.3.2 Limitations
Nigeria as a country is lagging behind in area of research. Most times the
reason is not that Nigerian student are not hard working rather the fact
is that effort made in getting relevant information in most cases proves
abortive. This is one of the challenges and limitations we had in carrying
out this research. As statisticians, without a well presented data, the
overall result will be highly misleading. Also sourcing for this
information was really tasking and cumbersome.



7

1.4 Literature Review
A lot of literates have contributed to the theme of the research. Some of
which includes:
Considine and Larson (1995): in a research on Uncertainty and the
convenience yield in crude oil price backwardations examined why
firms hold stocks of crude oil, particularly during price backwardations
when spot prices exceed prices for forward delivery. Using a stochastic
control model, the paper showed that the equilibrium value of
inventories contains: the conventional Hotelling principle; the
convenience yield from the classical theory of storage; and an option
value related to price uncertainty. Her empirical results suggest that a
convenience yield and risk premium are important elements of crude
oil price backwardations.

Herbert (1996) in his write-up on Data analysis of sales of natural gas to
households in the United States was of the view that Regression diagnostics
and a time series analysis of residuals are used to help define regression
equations and to identify, the weaknesses of these equations for explaining
monthly deliveries of natural gas to residential customers in the United
States for the time period April 1979 through March 1983. According to
him, more than 99% of the monthly variation in deliveries is explained by a
linear regression equation which includes heating degree days, cooling
degree days, and the price of natural gas as independent variables. Final
estimated relationships yield useful monthly and annual estimates of natural
gas deliveries to residential customers in the United States for the time
period April 1983 through March 1984. Most importantly, the estimated

8

results when used in conjunction with the diagnostics and the time series
analysis of the residuals indicate the possible strengths, weaknesses, and
applicability of the estimated relationships.
Borenstein (1997) in a paper on comparing crude oil and gasoline
prices he tested and confirmed that retail gasoline prices respond more
quickly to increases than to decreases in crude oil prices. Among the
possible sources of this asymmetry are production/inventory
adjustment lags and market power of some sellers. By analyzing price
transmission at different points in the distribution chain, we attempt to
shed light on these theories. Spot prices for generic gasoline show
asymmetry in responding to crude oil price changes, which may reflect
inventory adjustment effects. Asymmetry also appears in the response
of retail prices to wholesale price changes, possibly indicating short-run
market power among retailers.

Wang and Mulllins (1999) in an article on Fluorescence lifetime
studies of crude oil measured fluorescence lifetimes of a series of crude
oil at various concentrations for UV-visible excitation and emission
wavelengths. The lifetime results are compared with fluorescence
spectra and quantum yields for these solutions. The concentration
effects of energy transfer and quenching are large and result in a
significant decrease in fluorescence lifetimes for high concentrations
and for heavy crude oils. Thus, radiationless processes dominate in
energy transfer. At high concentrations, energy transfer produces large
red shifts in fluorescence emission spectra, while quenching produces a

9

large reduction in quantum yields. Stern-Volmer analyses of lifetime
and quenching data show a linear dependence of energy transfer and
quenching rates on concentration. The rate constants are consistent
with collisions which are very efficient at energy transfer and
quenching, and the rates of these two processes are comparable.

Fleming and Ostdiek (1999) in an article on the impact of energy
derivates on the crude oil market examined the effects of energy
derivatives trading on the crude oil market. There is a common public
and regulatory perception that derivative securities increase volatility
and can have a destabilizing effect on the underlying market. Consistent
with this view, we find an abnormal increase in volatility for three
consecutive weeks following the introduction of NYMEX crude
oil futures. While there is also evidence of a longer-term volatility
increase, this is likely due to exogenous factors, such as the continuing
deregulation of the energy markets. Subsequent introductions of crude
oil options and derivatives on other energy commodities have no effect
on crude oil volatility. We also examine the effects of derivatives trading
on the depth and liquidity of the crude oil market. This analysis reveals
a strong inverse relation between the open interest in crude oil futures
and spot market volatility. Specifically, when open interest is greater,
the volatility shock associated with a given unexpected increase in
volume is much smaller.

Timothy and Larson (2001) in an article on Risk premiums on inventory
tested for the presence of risk premiums on crude oil and natural gas.

10

The econometric analysis followed from a stochastic model in which the
equilibrium value of inventories depends on a convenience yield and an
option value related to price uncertainty. The empirical findings provide
rather strong support for the presence of risk premiums and also
evidence for the existence of convenience yields. The risk premiums
rose sharply with greater price volatility and help to explain why prices
for immediate sales often exceed prices for future delivery.

Krichene (2002) in a paper on World crude oil and natural gas
examined world markets for crude oil and natural gas over the period
19181999; it analyzes the time-series properties of output and prices
and estimates demand and supply elasticities during 19181973 and
19731999. Oil and gas prices were stable during the first period; they
became volatile afterwards, reflecting deep changes in the market
structure following the oil shock in 1973. Demand price elasticities were
too low; however, demand income elasticities were high. Supply price
elasticities were also too low. The elasticity estimates help to explain
the market power of the oil producers and price volatility in response to
shocks, and corroborate elasticity estimates in energy studies.

Fong and See (2002) in a paper on Markov switching model on future
crude oil prices examined the temporal behaviour of volatility of daily
returns on crude oil futures using a generalized regime switching model
that allows for abrupt changes in mean and variance, GARCH dynamics,
basis-driven time-varying transition probabilities and conditional
leptokurtosis. This flexible model enables us to capture many complex

11

features of conditional volatility within a relatively parsimonious set-up.
We show that regime shifts are clearly present in the data and dominate
GARCH effects. Within the high volatility state, a negative basis is more
likely to increase regime persistence than a positive basis, a finding
which is consistent with previous empirical research on the theory of
storage, e.g. Ng and Pirrong (1994). The volatility regimes identified by
our model correlate well with major events affecting supply and
demand for oil. Out-of-sample tests indicate that the regime switching
model performs noticeably better than non-switching models
regardless of evaluation criteria. We conclude that regime switching
models provide a useful framework for the financial historian interested
in studying factors behind the evolution of volatility and to oil futures
traders interested short-term volatility forecasts.

Santis (2003) in a book on crude oil price fluctuation explained
why crude oil prices fluctuate, the main cause being the quota regime,
which characterizes the OPEC agreements. Given that the Saudi
oil supply is inelastic in the short term, a shock in the oil market is
accommodated by an immediate price change. By contrast, a dominant
firm behaviour in the long term causes an output change, which is
accompanied by a smaller price change. This explains why oil prices
overshoot. The results of a general equilibrium model applied to Saudi
Arabia support this analysis. They also indicate that Saudi Arabia does
not have any incentive for altering the crude oil market equilibrium
with either positive or negative supply shocks, as its welfare declines;
and that it has an incentive (disincentive) for intervening if a negative

12

(positive) demand shock hits the crude oil market. A second set of
simulations is designed to understand what kind of OECD policy might
help to bring down prices. A tax cut would worsen the situation,
whereas policies that can increase the price elasticity of demand seem
to be very effective.

Horn (2003) in a write-up OPECs optimal crude oil price was of
the view that OPEC decided to stabilize oil prices within a range of 22
28 US-Dollar/barrel of crude oil. Such an oil-price-level is far beyond the
short and long run marginal costs of oil production, beyond even that in
regions with particularly high costs. Nevertheless, OPEC may achieve its
goal if world demand for oil increases substantially in the future and
oil resources outside the OPEC are not big enough to accordingly
increase production. In this case OPEC, which controls about 78% of
world oil reserves, has to supply a large share of that demand increase.
If we assume OPEC will behave as a partial monopolist on the oil
market, which takes into consideration the reaction of the other
producers to its own sales strategy, it can reach its price target. Lower
prices before 2020 are probable only if the OPEC cartel breaks up.
Higher prices are possible if production outside OPEC is inelastic as
assumed by some geologists, but they would probably stimulate the
production of unconventional oil based on oil sand or coal. Crude
oil prices above 30 US-Dollar/barrel are therefore probably not
sustainable for a long period.


13

Kaufmann and Laskowski (2005): In a write-up on the causes of
the relationship between the price of crude oil and refined petroleum
products revisited the issue of asymmetries in the relation between the
price of crude oil and refined petroleum products in the United States.
An econometric analysis of monthly data indicates that the asymmetric
relation between the price of crude oil and motor gasoline is generated
by refinery utilization rates and inventory behavior. The asymmetric
relation between the price of crude oil and home heating oil probably is
generated by contractual arrangements between retailers and
consumers. Together, these results imply that price asymmetries may
be generated by efficient markets. Under these conditions, there is little
justification for policy interventions to reduce or eliminate price
asymmetries in motor gasoline and home heating oil markets

Krichene (2005) A simultaneous equation model for world crude oil
markets A model for world crude oil and natural gas markets is
estimated. It confirms low price and high income elasticities of demand
for both crude oil and natural gas, which explains the market power of
oil producers and price volatility following shocks. The paper
establishes a relationship between oil prices, changes in the nominal
effective exchange rate (NEER) of the U.S. dollar, and the U.S. interest
rates, thereby identifying demand shocks arising from monetary policy.
Both interest rates and the NEER are shown to influence crude prices
inversely. The results imply that crude oil prices should be included in
the policy rule equation of an inflation targeting model.


14

Baumeister and Peersman (2007) in a book on Sources of the volatility
puzzle in the crude oil market noted that a remarkable feature of the
crude oil market is a dramatic rise in oil price volatility over time which
has been accompanied by a substantial fall in oil production volatility.
We investigate the sources of this opposite evolution of both oil market
variables. Our main finding is that the observed volatility puzzle can be
rationalized by the fact that the price elasticities of both oil supply and
oil demand have decreased considerably over time. This implies that
small disturbances on either side of the oil market generate large price
reactions but only modest quantity adjustments. We also document that
structural shocks which shift the oil demand and supply curves have
become smaller in the more recent past thereby even mitigating
oil price fluctuations.

Duan et al (2008) in a journal on The dynamics of online word-of-mouth
and product sales: An empirical investigation of the movie industry
noted that there are growing interests in understanding how word-of-
mouth (WOM) on the Internet is generated and how it influences
consumers purchase decisions at retail outlets. A unique aspect of the
WOM effect is the presence of a positive feedback mechanism between
WOM and retail sales. They characterize the process through a dynamic
simultaneous equation system, in which we separate the effect of online
WOM as both a pre-cursor to and an outcome of retail sales. They apply
our approach to the movie industry, showing that both a movie's box
office revenue and WOM valence significantly influence WOM volume.
WOM volume in turn leads to higher box office performance. This

15

positive feedback mechanism highlights the importance of WOM in
generating and sustaining retail revenue.
Cooper and Kleinschmidt (2009) in their article on Success Factors in
Product Innovation focused on the factors responsible for the success of
product innovation. Management of the 1980s and 1990s faces a
dilemma in product innovation. On the one hand, there is increasing
pressure to develop and launch more new products. On the other hand,
product innovation remains a very high-risk endeavor, fraught with
difficulties and littered with failures. According to the author, if
businesses are to survive and prosper, managers must become more
judicious at selecting new product winners, and at effectively managing
the new product process from product idea through to launch. In recent
years, there have been a number of investigations into the success
factors in product innovation and have yielded many insights into why
new products succeed or fail. Traditionally, new product success has
been measured in one way, namely in financial terms. But as one
research team points out that financial return is one of the most easily
quantifiable industrial parameters, it is far from the only important one.
Simester (2011) in his paper on the Effect of Search Costs on the
Concentration of Product Sales investigated the Internets Long Tail
phenomenon. By analyzing data collected from a multi-channel retailer,
it provides empirical evidence that the Internet channel exhibits a
significantly less concentrated sales distribution when compared with
traditional channels. Previous explanations for this result have focused
on differences in product availability between channels. However, he

16

demonstrated that the result survives even when the Internet and
traditional channels share exactly the same product availability and
prices. Instead, he found consumers usage of Internet search and
discovery tools, such as recommendation engines, are associated with
an increase the share of niche products. They concluded that the
Internets Long Tail is not solely due to the increase in product selection
but may also partly reflect lower search costs on the Internet. If the
relationships we uncover persist, the underlying trends in technology
portend an ongoing shift in the distribution of product sales.













17

CHAPTER TWO
DATA COLLECTION
2.1 Method of Data Collection
report from In this project, the method of data collection used is
documentation and Nigeria National Petroleum Corporation (NNPC),
Headquarter Lagos (Annex), Ikoyi and the annual report of statistics
department Central Bank of Nigeria (CBN).

2.2 Limitation of Data Collection
The limitation of data collection is that the data are only in Crude oil
production on NNPC and the data collected are on the actual revenue
from crude oil production, number of manual labour used in the
production of crude oil, cost of equipment used for the production of
crude oil and the number of hours worked in the production of crude oil
from 2000 2011 and all the variables are in aggregate..

2.3 Data Collected
The data collected includes:
Revenue: This is the amount the organization makes as profit at
the end of production from both the locally-used and the exported
crude oil.

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Labour: This is the number of persons used in the production of
crude oil.
Cost of Equipment: This is the amount spent of the purchase of
equipment used in the production of crude oil.
Manhour: This the total number of hours worked in the
production factory.
YEAR
Revenue
(N MILLION)
Labour

Cost of Equipment
(N MILLION)
2000 47.054 578.00 5.80
2001 116.427 585.00 5.80
2002 112.090 580.00 5.00
2003 110.500 589.00 13.60
2004 173.200 597.00 15.90
2005 101.177 613.00 14.50
2006 156.989 645.00 18.90
2007 150.020 693.00 20.20
2008 218.000 658.00 25.00
2009 224.581 663.00 37.90
2010 350.659 370.00 49.60



19

2.4 Problems Encountered
The process of getting relevant information in most cases is always
cumbersome. This is one of the challenges we had in carrying out the
research. As a statistician, without a well-presented data, the overall result
will be highly misleading how much more when there is no data. Also,
sourcing for necessary information was really tasking. Too many factors
militated against the quick completion of this research but to mention a few.














20

CHAPTER THREE
ANALYSIS OF DATA
3.0 Data Analysis
The data for this research to be analyzed are presented in section 2.3
(Data Presentation) and SPSS software will also be used to do analysis.
In the data analysis the variables for the analysis in millions of naira are
actual revenue from crude oil production and Projected revenue from
crude oil production denoted as Y and X1 respectively.

With the aid of SPSS the following are the means, standard deviation
and variables of the crude oil variables

= i = 1,2,3, , n

S
2
=
(

Descriptive Statistics


Mean Std. Deviation N
Revenue 160.0634 81.87160 11
Labour 597.3636 84.99326 11
Cost_of_Equipment 19.2909 13.90536 11




21


3.1 Regression Model and Parameters Estimation
The regression model is multiple linear as given below
Y
i
=
0
+
1
x
1i
+ e
i

Interpretation of Parameters
Y
i
= Predicted value of the dependent variable (
y) in the ith trial
x
1i
= A value of the independent variable (x
1
) in the ith trial

The last condition on the error ( ) term indicates that the error terms
are uncorrelated.

Regression Coefficients



Coefficients
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig. 95.0% Confidence Interval for

Std. Error Lower
Bound
Upper Bound
1
(Constant) 141.832 81.635

1.737 .121 -46.418 330.082
Labour -.136 .124 -.142 -1.097 .305 -.423 .150
Cost_of_Equipment 5.167 .760 .878 6.800 .000 3.415 6.919
a. Dependent Variable: Revenue




22


Yi = 141.832 - 0.136X1i + 5.167X2i

Goodness of Fit
Goodness of fit test of the regression model
Yi = 141.832 - 0.136X1i + 5.167X2i

H0: 0 = 1 = 2 = 3 =0 (The regression coefficient are thesame)
H1: i i
1
for at least one i i
1


The Analysis of Variance (ANOVA) table is a result from SPSS and
will be used to test the hypothesis.
= .05
ANOVA Table

ANOVA
a

Model Sum of Squares df Mean Square F Sig.
1
Regression 62339.688 3 20779.896 31.016 .000
b

Residual 4689.802 7 669.972

Total 67029.490 10

a. Dependent Variable: Revenue
b. Predictors: (Constant), Manhour, Cost_of_Equipment, Labour

Decision Rule
Reject H0 if F-Ratio > F,(3,7)df and accept if otherwise at 5% level of

23

Significance.
F,(3,7)df = 4.35
Decision
Since F-Ratio > F,(3,7)df i.e
31.018 > 4.35
We reject H0 and conclude that the regression coefficients are not
the same.
b. Coefficient of Multiple Determination
Coefficient of multiple determination (RY(X1X2X3)
2
) of the model is
0.887

Model Summary
b

Model R R
Square
Adjusted
R
Square
Std. Error of
the Estimate
Change Statistics
R Square
Change
F
Change
df1 df2 Sig. F Change
1 .942
a
.887 .859 30.77218 .887 31.393 2 8 .000
a. Predictors: (Constant), Cost_of_Equipment, Labour
b. Dependent Variable: Revenue


An R
2
-value of .887 1 shows the efficiency of the model.








24

C. Residual Statistics


The mean of the residual is 0
Residuals Statistics
a


Minimum Maximum Mean Std. Deviation N
Predicted Value 88.5895 347.6696 160.0634 77.10653 11
Std. Predicted Value -.927 2.433 .000 1.000 11
Standard Error of Predicted
Value
9.634 30.135 15.018 5.999 11
Adjusted Predicted Value 81.1825 277.7157 154.9018 64.50852 11
Residual -45.94175 36.70490 .00000 27.52347 11
Std. Residual -1.493 1.193 .000 .894 11
Stud. Residual -1.700 1.332 .019 1.018 11
Deleted Residual -59.53435 72.94328 5.16160 41.77710 11
Stud. Deleted Residual -1.989 1.412 -.004 1.077 11
Mahal. Distance .071 8.681 1.818 2.503 11
Cook's Distance .000 1.796 .254 .522 11
Centered Leverage Value .007 .868 .182 .250 11
a. Dependent Variable: Revenue














25

3.2 Table of Correlation

A correlation matrix is simply a rectangular array of numbers which
gives the correlation coefficients between a single variable and every
other variables in the investigation. The correlation coefficient between
a variable and itself is always 1, hence the principal diagonal of the
correlation matrix contains 1s. The correlation coefficients above and
below the principal diagonal are the same.

The sign (positive or negative) of the correlation = the sign of the slope
of straight line. It is calculated with the model below
=

Correlations

Revenue Labour Cost_of_Equipment
Pearson Correlation
Revenue 1.000 -.483 .933
Labour -.483 1.000 -.390
Cost_of_Equipment .933 -.390 1.000
Sig. (1-tailed)
Revenue . .066 .000
Labour .066 . .118
Cost_of_Equipment .000 .118 .
N
Revenue 11 11 11
Labour 11 11 11
Cost_of_Equipment 11 11 11

The correlation between revenue and cost of equipment is the greatest.
( y,x2 = .933)

26

CHAPTER FOUR
SUMMARY, CONCLUSION AND RECOMMENDATION
4.1 Summary
The exploration and production of crude oil has been the bedrock of
Nations economy (OPEC Nations) There has been a lot of views to the
crude oil activities in Nigeria. According to Nashawi (2003) in his write-
up on forecasting world crude oil production using multicyclic hubbert
models concluded that the rapid growth in fuel demand has forced the
policy makers worldwide to include uninterrupted crude oil supply as a
vital priority in their economic and strategic planning. The view shown
by Ayadi (2005) in an article on OPEC review on the oil price fluctuation
and the Nigerian economy summarized that an increase in oil prices
does not necessarily lead to an increase in industrial production in
Nigeria.
With all these postulations, a raw data was collected showing the
revenue from crude oil production, the amount of labour used in the
course of the production and the cost of the equipment used over the
period 2000-2011. The analysis was run using SPSSV21.
4.2 Conclusion
Results led to the development of the model Yi = 141.832 - 0.136X1i +
5.167X2i showing that the amount of labour used in the production of
crude oil in the considered years negatively affected the revenue
generated as it could be seen in the correlation coefficient of -0.483.
Both the cost of equipment happens to be the bedrock for the revenue

27

as it had a positive impact on the revenue generated. This could be seen
in their positive correlation with the revenue.

An R
2
= .887 in the regression models and a residual mean of 0 confirms
the genuinety of the models.

4.3 Recommendation
In the light of the above data interpretations and conclusions, the
following recommendations should be considered:
The Nation should see crude oil production as her major source of
income and as such deploy more man-power to facilitate the production
of much more quantity of this product.
The oil sector should maintain the cost and quality of the machines used
in their productions.
Finally, the oil sector point should be highly observant and know when
to take advantage of other Nations oil prices that are members of OPEC.



28

REFERENCES
Ayadi Zeller (2005): An Introduction to Bayeisan, Inference in Econometrics
John Willey, sons Inc, London. (44-82)
Williams S. Anderson (1941): Statistics for business and Economics South
Western College publishing Cincinnati Ohio. 7
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