NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Economic and Financial Determinants of Oil and Gas Exploration Activity

Peter C. Reiss

NBER Working Paper No. 3077
Issued in August 1989
NBER Program(s):   ME   EEE

This paper studies the investment activities of 44 independent oil and gas firms from 1978 to 1986. It develops a dynamic model of oil and gas exploration and development. The model predicts less of a decline in exploration activity than actually occurred in 1985-86. I consider the extent to which financial factors may have affected firms' investment plans during the 1985-86 deflation. There is some evidence that credit contracts in this industry did place important limitations on firm's abilities to respond to the energy price deflation. These constraints were imposed because lenders could not separately distinguish between unfavorable industry developments and poor individual firm performance.

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Document Object Identifier (DOI): 10.3386/w3077

Published: Peter C. Reiss, 1990. "Economic and Financial Determinants of Oil and Gas Exploration Activity," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 181-206 National Bureau of Economic Research, Inc.

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