Boring Finance. Petroleum Exploration and Firm Debt : Evidence from Norway

I create a novel dataset combining detailed exploration data with register financial data on all public and private firms operating on the Norwegian Continental Shelf to analyze the effects of debt on well drilling decisions. I make use of an over-dispersed Poisson regression model where key elements of the industry microstructure are specified. I find that access to long-term debt has a positive relationship with exploratory drilling, while short-term debt is associated with lower rates of drilling. A negative interaction effect between long-term debt and operating profits is found, consistent with a financial constraints mechanism