The simple definition of an Independent Oil and Gas Firm is a non-integrated corporation which receives practically all of its revenues from production at the wellhead. They are exclusively in the exploration and production segment of the market, with no downstream promoting or refining inside their operations. The tax definition published by the IRS states that a firm is an Independent if its refining capacity is significantly less than 50,000 barrels per day on any offered day or their retail sales are significantly less than $five million for the year. Independents variety in size from massive publicly held providers to little proprietorships.
A lot of independents are privately held little providers with significantly less than 20 personnel. The Independent Petroleum Association of America (IPAA) recorded in a 1998 survey that “a massive percentage of independents are organized as C Corporations and S Corporations at 47.six% and 27.7%, respectively. A total of 91.four% of responding providers are classified as independent (versus integrated) for tax purposes. A lot more than a single fifth of responding providers reported their stock is publicly traded.”
Independent producers derive investment capital from a selection of sources. A 1998 IPAA survey reports that 36.two% of capital is generated by means of internal sources followed by banks 27.eight % and outdoors investors (oil & gas partners) at 20.three %.
Supplying Future Power Requirements
The U.S. Power Details Administration (EIA) states in their Annual Power Outlook 2007, “Regardless of the fast development projected for biofuels and other non-hydroelectric renewable power sources and the expectation that orders will be placed for new nuclear energy plants for the very first time in extra than 25 years, oil, coal, and organic gas nonetheless are projected to offer roughly the identical 86-% share of the total U.S. main power provide in 2030 that they did in 2005.” In this report the EIA also predicts constant development in U.S. power demand from 100.two quadrillion Btu in 2005 to 131.two quadrillion Btu in 2030.
Maturing production locations in the decrease 48 states and the want to respond to shareholder expectations have resulted in significant integrated petroleum providers shifting their exploration and production concentrate toward the offshore in the United States and in foreign nations. Independent oil and gas producers increasingly account for a bigger percentage of domestic production in the close to offshore and decrease 48 states. Independent producers’ share of decrease 48 states petroleum production enhanced type 45 % in the 1980’s to extra than 60 % by 1995. Right now the IPAA reports that independent producers create 90 % of domestic oil and gas wells, create 68 % of domestic oil and create 82 % of domestic gas. Clearly, they are crucial to meeting our future power wants.
