oil and gas ladd petroleum corporation a wholly owned subsidiary which represents utah's participation in oil and gas activities re corded a solid pretax profit improvement during 1976 however as a result of tax increases and changes in industry ac counting standards ladd's tax obligation more than doubled during 1976 so that net income was held to approximately the 1975 amount new legislative and regulatory actions have changed certain paradoxical condi tions in the domestic oil and gas industry historically earnings have benefited from depletion allowances at the same time they have been depressed by price reg ulations now that the tax reduction act of 1975 has reduced drastically benefits from depletion allowances it is in the na tional interest that producers obtain relief from regulations which hold their product prices at artificially low levels moving in that direction during 1976 the federal power commission established a 1.42 per mcf price for new gas gas com mitted to the interstate market since janu ary 1 , 1 975 this rate which represents an increase from 52 per mcf allowed prior to the approval better reflects current mar ket conditions and thus reduces the arti ficial constraint of price regulation future legislative and regulatory actions must be directed towards programs which encour age free market activity so that capital in vestment will flow towards the develop ment of energy resources in the united states from its headquarters in denver colo rado ladd conducts drilling and produc ing operations in many important domestic and canadian petroleum areas excluding alaska ladd delivered 2,290,000 barrels of crude oil and 26.0 billion cubic feet of gas in 1976 as compared with 2,435,000 barrels of crude oil and 26.9 billion cubic feet of gas in 1975 the 1976 average price realization for crude oil was higher than in 1 975 and the average price realiza tion for natural gas showed substantial improvement ladd experienced an unusually high 40 success ratio in participating in 46 exploratory test wells last year meanwhile 64 of 78 development wells also were suc cessful these activities have made im portant additions to ladd's reserves and enhanced future earnings prospects ladd petroleum's budget for the explo ration and development of new oil and gas reserves has increased significantly since the company was acquired by utah in no vember 1973 the added expenditures have given ladd a broader base of pros pects and operations including the 1976 entry into offshore activities a record oil and gas budget approved for 1977 further reflects utah's goal to increase its output of these two vital energy sources an otfshore oil well drilled to a depth of 1 7,000 fee in louisiana stale waters marks a new venture in the exploration field for ladd petroleum ladd holds a 25 percent interest in the project 20