Oil and Gas Drilling Limited Partnership

oil and gas drilling limited partnership

A partnership in which investors' funds are used to look for new oil and gas sources. Developmental programs search in areas of proven reserves, while more risky exploratory programs limit their activities to virgin areas. Also called developmental oil and gas partnership, exploratory oil and gas partnership.

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Oil and Gas Drilling Limited Partnership

A limited partnership between limited partners with limited liability and one or more general partners with unlimited liability, the purpose of which is to find and drill oil or gas from the ground. The general partner uses the investment money from the limited partners to drill in for oil or gas; the typical partnership unit for a limited partner costs $5,000, and the limited partner risks no more than this investment. There are two types of oil and gas drilling limited partnerships. A development oil and gas drilling limited partnership provides for drilling only in places with proven reserves, providing the limited partners with low risk and a steady return. An exploratory oil and gas drilling limited partnership provides for drilling in places without proven reserves, searching for previously undiscovered reserves. This latter carries higher risk, but also the possibility of an extraordinarily high return if a large reserve is discovered.