Problem 1: What are the advantages of an integrated business model for holding oil and gas investments? Compare and contrast integrated and nonintegrated models.
Problem 2: Who are the stakeholders in the oil and gas industry and what roles do they play?
Problem 3: Landowner Larry enters into a standard oil and gas lease in Texas and a standard oil and gas lease in Louisiana on two different ranch properties. Larry receives a bonus from the Lessee, Wildcat Bill, on both transactions. Is the bonus payment reported as ordinary income subject to depletion or is the payment capital gain income without depletion to the extent of realization over basis in the minerals? Is the federal tax treatment different in Texas versus Louisiana given that Texas is an ownership-in-place state, while Louisiana is a rule-of-capture state for state oil and gas law purposes?