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Information spillovers in onshore oil and gas exploration

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  • Levitt, Clinton J.

Abstract

I investigate information externalities in onshore oil and gas exploration using data from Alberta, Canada. I use information in the drilling histories of firms exploring Alberta for oil and gas to estimate various models of exploration rates. The objective is to study how the outcomes of previous exploration decisions, under both private-information and public-information assumptions, as well as timing, influence firms’ exploration rates across Alberta. The results show that firms’ exploration rates were influenced by both its own drilling history as well as by the outcomes of other firms. The drilling histories of other firms had important effects on a firm's decision to explore a region if the firm had yet to start exploring that region. However, once a firm had started to explore a region, the outcomes of rivals were less important than the firm's own outcomes. Additional results provide an interesting characterization of the different factors that affect firms’ exploration decisions.

Suggested Citation

  • Levitt, Clinton J., 2016. "Information spillovers in onshore oil and gas exploration," Resource and Energy Economics, Elsevier, vol. 45(C), pages 80-98.
    • Handle: RePEc:eee:resene:v:45:y:2016:i:c:p:80-98
    DOI: 10.1016/j.reseneeco.2016.05.003
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    References listed on IDEAS

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    Cited by:

    1. Bøe, Kristine S. & Jordal, Therese & Mikula, Štepán & Molnár, Peter, 2019. "Do political risks harm development of oil fields?," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 338-358.

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