Troubled d Waters maters S SF For F Ol Oil Business Since about last June the once favored oil ail issues have taken a rather severe buffeting buffeting buffeting buffet buffet- ing in the stock market WITH FEW exceptions lows laws have been reached since that time with some same quality issues showing extreme declines Although the shakeout of the oils ails may not nat yet be completed completed completed com com- some same of af the reasons for far the drop drap in prices should be examined since only anly last spring pring ring oil ail stocks were a fair- fair haired group graup in the eyes of investors Alaskan Black Gold Rush PART OF the decline may be due to the fact that some oil ail stocks stacks were overs oversold aId to begin with and may now be merely seeking a more normal level Early in 1969 news from fram the oil frontiers whether fact or fancy caused some same impressive impressive impressive sive gyrations in the shares of potential participants The Alaskan North Narth Slope Indonesia and Libya provided tales of af valuable lease concessions and huge petroleum reserves THIS TIllS SERVED to inject ailstock oil ail stock prices with considerable vitality The most mast talked about event was the September Alaskan Alaskan Alaskan Alas Alas- kan lease sales cloaked in warlike security However when the million sale was completed there was realization on an the part of af investors that a great deal had been spent for far crude that was still under the frozen tundra in not clearly defined quantities and the difficulties difficulties difficulties dif dif- and costs of getting this crude to market would be substantial THIS POINT marked the beginning beginning beginning be be- ginning of af additional disenchantment disenchantment disenchantment disen disen- with the oils ails Expropriation Threats At nearly the same time political and military events loomed in areas of overseas oil ail company campany activity In many instances expropriation was a threat and in Bolivia Balivia the threat was realized as Gulf Gull Oil lost its oil ail properties there ALTHOUGH compensation is likely or ar even the return of the property is possible Gulf and others now more closely weigh the risks of af foreign in in- vestment Libya Nigeria and the whole whale Middle East also suddenly suddenly suddenly sud sud- denly became delicate areas On The Home Front From Fram about midyear on there was a slowly rising tide of af tax reform sentiment at the heart of af which was call for far fora fara a cut cut in the oil depletion allowance PROPONENTS of this proposal proposal pro pro- proposal depicted oil ail millionaires as paying nominal income taxes Those who wanted the allowance al allowance allowance al- al lowance unchanged predicted that a reduction would put an end to oil ail exploration The law did pass and reduced the depletion allowance from fram 27 percent to 22 percent EFFECTS on individual companies are hard to define define define de de- de- de fine but the industry feels that the tax changes will cost cast oil ail and gas producers some m million in 1970 Another depressant on an oil ail stocks stacks is a proposed revision of af import quota quata regulations originally originally or or- designed to protect domestic oil ail firms against a flood of low cost foreign crude END RESULT could be adjustments adjustments adjustments ad ad- in world petroleum distribution patterns and possibly pos pas sibly lower prices for crude oil ail In the third quarter of 1969 the effect of the year early-year refinery workers' workers strike began began began be be- gan to show in company earnings earnings earnings earn earn- ings and for some same estimates were scaled down WITH SOME exceptions the oil group graup on an average is expected expect expect- ed to show shaw little or ar no gain in earnings for far 1969 over aver 1968 For Far 1970 the picture could improve improve im im- im- im prove prave dependent in part of the outcome of af tariff and quota quata talks Hold Oils On the whole whale the staff of af Babson's Reports feels the oils merit retention Long term crude from fram Alaska Indonesia and Libya will prove prave to be valuable additions to world petroleum supplies and should add important revenues to oil ail company campany financial state state- ments