| The basic definition of an Independent Oil | | | | The U.S. Energy Information Administration |
| and Gas Company is a non-integrated company | | | | (EIA) states in their Annual Energy Outlook |
| which receives nearly all of its revenues | | | | 2007, "Despite the rapid growth projected for |
| from production at the wellhead. They are | | | | biofuels and other non-hydroelectric |
| exclusively in the exploration and production | | | | renewable energy sources and the expectation |
| segment of the industry, with no downstream | | | | that orders will be placed for new nuclear |
| marketing or refining within their | | | | power plants for the first time in more than |
| operations. The tax definition published by | | | | 25 years, oil, coal, and natural gas still |
| the IRS states that a firm is an Independent | | | | are projected to provide roughly the same |
| if its refining capacity is less than 50,000 | | | | 86-percent share of the total U.S. primary |
| barrels per day on any given day or their | | | | energy supply in 2030 that they did in 2005." |
| retail sales are less than $5 million for the | | | | In this report the EIA also predicts |
| year. Independents range in size from large | | | | consistent growth in U.S. energy demand from |
| publically held companies to small | | | | 100.2 quadrillion Btu in 2005 to 131.2 |
| proprietorships. Many independents are | | | | quadrillion Btu in 2030. |
| privately held small companies with less than | | | | |
| 20 employees. The Independent Petroleum | | | | Maturing production areas in the lower 48 |
| Association of America (IPAA) recorded in a | | | | states and the need to respond to shareholder |
| 1998 survey that "a large percentage of | | | | expectations have resulted in major |
| independents are organized as C Corporations | | | | integrated petroleum companies shifting their |
| and S Corporations at 47.6% and 27.7%, | | | | exploration and production focus toward the |
| respectively. A total of 91.4% of responding | | | | offshore in the United States and in foreign |
| companies are classified as independent | | | | countries. Independent oil and gas producers |
| (versus integrated) for tax purposes. More | | | | increasingly account for a larger percentage |
| than one fifth of responding companies | | | | of domestic production in the near offshore |
| reported their stock is publicly traded. " | | | | and lower 48 states. Independent producers' |
| | | | share of lower 48 states petroleum production |
| Independent producers derive investment | | | | increased form 45 percent in the 1980's to |
| capital from a variety of sources. A 1998 | | | | more than 60 percent by 1995. Today the IPAA |
| IPAA survey reports that 36.2% of capital is | | | | reports that independent producers develop 90 |
| generated through internal sources followed | | | | percent of domestic oil and gas wells, |
| by banks 27.8 % and outside investors (oil & | | | | produce 68 percent of domestic oil and |
| gas partners) at 20.3 %. | | | | produce 82 percent of domestic gas. Clearly, |
| | | | they are vital to meeting our future energy |
| Supplying Future Energy Needs | | | | needs. |
| | | | |