THE FUNDING OF OIL AND GAS EXPLORATION COMPANIES

Abstract

The initial funding of an independent exploration company with relatively unexplored acreage, or less, is virtually impossible under current conditions. The Government's policies on crude prices and taxation deductions are significant factors in this situation.

Established companies have a variety of funding methods available and the most appropriate method will depend on the companies' circumstances. All of the available methods should be thoroughly examined and evaluated before the final decision is made.

The ability of companies to raise money from the public will continue to be unpredictable while present conditions prevail. Those companies which mean to stay in business should avail themselves of the opportunity to raise money when it is available.

In any changes to the Income Tax Laws to re-introduce incentives for the public to contribute to exploration companies, consideration should be given to the fact that the professional market dealers who used to subscribe to marginal situations will not be interested if the taxation deduction is limited to some arbitrary amount.