<p>Limiting global warming to well below 2 °C implies that a substantial share of fossil-fuel reserves may ultimately remain unproduced. We examine whether equity valuations of oil and gas producers reflect this stranded-asset risk at the asset level. We show that developed reserves—assets that generate near-term production—remain positively valued, whereas growth in undeveloped reserves has become value-decreasing. Additions to undeveloped reserves, which require large capital commitments and long development horizons, are increasingly discounted by equity markets. Exploiting major transition-related shocks, including the COVID-19 demand collapse and the 2021 U.S. re-entry into the Paris Agreement, we find that firms with larger undeveloped-reserve shares and longer development horizons experience larger valuation declines when transition risk is repriced. Together, the evidence indicates that markets increasingly differentiate between near-term, cash-flow-producing assets and long-dated fossil-fuel investments whose extractability is uncertain.</p>