OCR Text |
Show Oil and Gas Recognizing the favorable outlook for suppliers of energy-related materials, Utah extended its resource extraction interests into oil and natural gas through three mergers consummated during the 1974 fiscal year. During November 1973 Ladd Petroleum Corporation, a Denver- based firm active in the acquisition and development of oil and gas properties, became a wholly owned subsidiary of Utah. Subsequently Clarcan Petroleum Corporation and LVO Corporation were acquired in March 1974 and in October 1974, respectively. Approximately 2,531,000 shares of Utah International common stock having a combined market value in excess of $110 million on the dates of the respective mergers were required to complete these acquisitions. Domestic oil and gas prices since the initial acquisition of Ladd in November 1973 have been responsive to increased demand in the world market. While domestic oil prices for most reserves established prior to May 1973 are still frozen at $5.25 per barrel, prices for new oil and for certain old oil are not regulated and tend to find a level comparable to world market prices. As a result, Ladd's oil prices, which were averaging approximately $4.00 per barrel at the time of the merger into Utah, are now averaging somewhat in excess of $8.00 per barrel. With producing oil and gas properties in 16 states and two Canadian provinces together with an accelerating explora tion and development program under way, Utah through its Ladd Petroleum subsidiary is now favorably situated to furnish a portion of the national requirements for these two vital energy sources. Utah produced 2,141,026 barrels of crude oil and 28.4 billion cubic feet of gas in 1974 compared with 2,116,853 barrels of crude oil and 29.6 billion cubic feet of gas in 1973. These deliveries have been adjusted to combine the production of the three acquisitions as though they had been a part of Utah during the respective years. Oil and gas reserves have been accumulated through exploration programs, acquisition of properties by purchase and by continuous exploration and development of the company's own prospective undeveloped properties. Utah, through Ladd, directly controls many of these projects while others are developed with industry partners. The political climate continues to be one of the major problems confronting the oil and gas industry. Proposed legislation to eliminate the depletion allowance, to roll back prices or assess a windfall profits tax is certain to be renewed with increased emphasis in the new Congress. Restrictive legislation in this area which does not provide offsetting incentives for those in search of new oil and gas reserves could jeopardize the already serious national energy situation. Probing deep below the earths surface, drilling rigs search for new natural gas reserves at Ladd Petroleum operations in the Gomez Field of West Texas to help meet the energy needs of the Midwest. |