The "Technical Corrections" Act of 1988 made a number of significant changes that affect the oil and gas industry. These changes together with a synopsis of other developments in the tax area are discussed in this issue's Current Updates section.

Current Updates in Oil and Gas Taxation. Mark, Richard S., Spring 1989, pp. 1‑8.

The tax reform act of 1986 substantially revised a number of provisions for taxation of hard minerals. Investors in these operations need to consider the changes in tax law that will have an impact on their investment decisions. This article presents a decision model based on the revised tax provisions so that hard minerals investments may be guided by the most recent tax law.

Effects of the 1986 TRA. Kilpatrick, Bob G. and Watkins, Larry E., Spring 1989, pp. 9‑18.

Mergers have become a major factor in the restructuring of the petroleum industry in recent years. Although mergers are popular, research suggests that acquiring firms rarely experience share price gains from mergers. Moreover, firms that bid to acquire others often experience significant share price declines if a merger falls through. On the other hand, firms that are merger targets experience price run-ups on the announcement of an acquisition, and declines when mergers fail. The question is whether these phenomena also apply to the oil and gas industry. This paper examines the share price behavior of firms in the oil industry when mergers fail.

Terminated Mergers. Cheng, Louis T.; Anderson, Dwight C.; and Davison, III, Wallace N., Spring 1989, pp. 19‑29.

Changes in oil markets and the U.K. fiscal regime have had a significant impact on the economics of oil exploration and production activities in the U.K. This paper, which is extracted from a speech, addresses the highlights that these changed conditions have had on the economics of oil and gas exploration and production in Scotland.

Economic Prospects for the Oil Industry. Walker, Jim, Spring 1989, pp. 30‑43.

Determining taxable surplus under Texas franchise tax rules has been in a state of flux since the Texas Supreme Court ruled that companies could use either the "book "or "tax" basis for measuring taxable surplus. Legislation to require taxpayers with surplus in excess of $1 million to use GAAP accounting is now law. However, there are tax planning opportunities in this new provision. This article discusses the changes in the law and how they affect oil and gas producers.

Texas Franchise Tax Impact of Senate Bill 1170 on Oil and Gas Companies. Klaver, Keith C. and Calkins, Carol M., Spring 1989, pp. 44‑47.

Prior to the Felmont case, the Federal Energy Regulatory Commission (FERC) imposed a utility-based service obligation on natural gas producers. The changing economic conditions of the 1970's led to a failure of this policy because producers had little incentive to find natural gas if they would be obligated to produce it at less than economic prices. The Felmont decision permitted producers to obtain a limited term abandonment which effectively would relieve both producers and pipelines from some of the consequences of uneconomic contracts. The subsequent release from the burden of the utility-based service obligation is discussed in this paper as well as the effects such release should have on production incentives.

Dedication and Abandonment Concepts. Johnson, Thomas G., Spring 1989, pp. 48‑67.

The case of Shell Oil Co. v. Commissioner established in law some significant concepts for the allocation of costs to properties for income tax purposes. These concepts had previously been subject to significant diversity in practice. This paper reviews the issues addressed in Shell, the conclusions reached by the tax court, and the implications that these conclusions have for other allocation decisions in the industry.

An Examination of Two Allocation Issues in the Shell Decision. Crumbley, D. Larry and Lynch, Jr., Howell J., Spring 1989, pp. 68‑88.