Abstract: Financing Reserves

Donald A. Parks

Collateral value of reserves has changed over the last 15 years as a result of political and economic events such as nationalization and price control. Thus, present evaluation of reserves involves more than reservoir conditions and should include economic, operational, and geopolitical analysis as well. On a worldwide industry basis we are concerned with the ability of the capital market to supply the financing necessary to accommodate the needs of the energy industries. Our study of capital resources for U.S. energy revealed that the capital market appears adequate to accommodate these requirements. Although reserve evaluations are still vital they must be juxtaposed with associated corporate and country risks. More imagination is required on the part of the banks and p operty owners, and, more often than not, host-government involvement, including such forms as government guarantees, also must be evaluated. Analysis of domestic reserves involves pricing assumptions often difficult to forecast because of uncertain government policy. Present economic and geopolitical considerations in conjunction with reserve evaluations have resulted in several interesting financing concepts.

AAPG Search and Discovery Article #90968©1977 AAPG-SEPM Annual Convention and Exhibition, Washington, DC