Economic and Financial Determinants of Oil and Gas Exploration Activity

43 Pages Posted: 14 Apr 2007 Last revised: 30 Nov 2022

See all articles by Peter C. Reiss

Peter C. Reiss

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Date Written: August 1989


This paper studies the investment activities of 44 independent oil and gas firms from 1978 to 1986. It develops a dynamic model of oil and gas exploration and development. The model predicts less of a decline in exploration activity than actually occurred in 1985-86. I consider the extent to which financial factors may have affected firms' investment plans during the 1985-86 deflation. There is some evidence that credit contracts in this industry did place important limitations on firm's abilities to respond to the energy price deflation. These constraints were imposed because lenders could not separately distinguish between unfavorable industry developments and poor individual firm performance.

Suggested Citation

Reiss, Peter C., Economic and Financial Determinants of Oil and Gas Exploration Activity (August 1989). NBER Working Paper No. w3077, Available at SSRN:

Peter C. Reiss (Contact Author)

Stanford Graduate School of Business ( email )

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