Project financing for the small independent company
In the post-1982 era, alternative project financing for acreage is not attractive to either the operator nor the lender. Should the value of acreage again appreciate at a rate greater than the cost of financing, alternative financing might be considered. However, the lessons of the post-1982 era say that this should be done very cautiously. Exploratory drilling can be financed using alternative project means under certain conditions where producing properties are available to provide the necessary collateral. Financing high quality development drilling programs or completion only programs is attractive by alternative financing. The operator can retain a greater share of his net reserves with this method. Furthermore, he can significantly reduce his investment per unit of production, increase net cash flow per dollar of equity investment, and conserve his own equity capital for use in other projects. When the discounted cash flow rate of return for internal funding is reduced to the range of 25% to 30% and less, a greater return to the operator can be obtained by financing through limited partnerships. The after-tax leverage of limited partnerships provides a means of financing prospects which otherwise are not attractive to operators using either their own funds or funds available through alternative financing. An operator should consider alternate financing from institutions having different sources of funds; i.e., pension funds, foreign investors, limited partnerships, etc. Terms available to the independent can be influenced by this, and a best fit to the operator's own situation should be sought.
- Research Organization:
- H.J. Ramsay and Assocs. Inc.
- OSTI ID:
- 5570358
- Report Number(s):
- CONF-830386-
- Journal Information:
- Soc. Pet. Eng. AIME, Pap.; (United States), Journal Name: Soc. Pet. Eng. AIME, Pap.; (United States) Vol. SPE 11289; ISSN SEAPA
- Country of Publication:
- United States
- Language:
- English
Similar Records
Solar thermal financing guidebook
Changing the Rules of the 'ROE': A Reform in Waiting
Related Subjects
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
03 NATURAL GAS
030600 -- Natural Gas-- Economic
Industrial
& Business Aspects
CAPITAL
DRILLING
ENERGY SOURCE DEVELOPMENT
EXPLORATORY WELLS
FINANCING
INDUSTRY
INVESTMENT
MANAGEMENT
NATURAL GAS INDUSTRY
PETROLEUM INDUSTRY
PROGRAM MANAGEMENT
WELL DRILLING
WELLS