Question

One of your clients is looking into investing in direct participation programs. He is examining several different types of programs. One of the programs that he is evaluating promises a relatively high tax write-off in the immediate future with low costs for land and rights associated with the land and minerals. Of the following, which BEST describes programs with these features?(A) This would be a developmental drilling program.

(B) This would be an exploratory drilling program.
(C) This would be a balanced drilling program.
(D) This would be an oil and gas income program.

Answer 1

This would be an exploratory drilling program.

Step-by-step explanation:

Exploratory drilling program is one that is carried out to determine the initial boundaries of a reservoir. It is an important step before development drilling program.

Exploratory drilling program is characterised by relatively high tax write-off in the immediate future with low costs for land and rights associated with the land and minerals. This is because presence of minerals has not been established yet.

Writeoffs are higher in this stage than others where equipment is already set up.