The amount of publicly offered Oil and Gas drilling programs has been growing by leaps and bounds over the past three years and new registrations in 1970 indicate that it will be a bigger year than the $1.7 billion registered in 1969. There has been increased emphasis by the oil operators offering these programs to register their programs early and shift money raising to the first half of the year, thereby providing more time for efficient spending of these funds in the last half. However, with the high number of registrations (many for the first time) the registration time is becoming longer and investors don't appear to be cooperating, since money raising is going very slow this year.
Selling these programs has undoubtedly been on an increase in the number of relationships between drilling program companies and prestigious investment banking firms to help place the program. However, failing to raise the expected amount of money in the first half may create the undesirable situation of high registrations in the last half to offset the shortfall. This would then force accelerated year-end drilling to spend the higher amounts of money in the 1970 tax year, under a "drill we must" atmosphere. This can cause lower quality prospects to be drilled, which is often to the detriment of both the oil operator and the investor. Although the 1969 Tax Act favors the oil investment over other tax sheltered investment, there are certain threats from various areas which may thwart the drilling program activities sufficiently to cause reduced investment in these programs in the future. These potential deterrents, which are all interrelated, are such things as, oil operator abuses of the procedure, further governmental regulations, Investor disenchantment, and possible tax revisions in the future that might adversely affect the tax advantages of this type of investment. The pattern for this hard money raising period seems to be that those companies with a "good track record" and an experienced in-house sales force or significant ties with investment banking firms with oil expertise are raising 50-75% of the total amount they registered.
