Paper: An Overview Of Producing Property Acquisition

A basic decision faced by all oil field investors, since reserves are continually being depleted through production, is to either add reserves through drilling, enhancement and/or acquisition, or go out of business. The data available on finding costs indicate that it has usually been cheaper to buy rather than drill for reserves in recent years. This comparison may be distorted since the true finding cost is not known until the discovery is fully developed, which usually takes years. However, it is obvious from the data that the current decision is normally to buy, not drill. Hence, the drastic drop in rig count continues, while the number of acquisition transactions continues to be strong.