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Assignment 2

This document contains an assignment with three questions regarding petroleum economics. Question 1 asks to calculate net revenue interests for different working interest owners on an oil and gas lease. Question 2 asks to determine various metrics like oil initially in place and reserves for a 320-acre lease given production data. Question 3 asks to calculate the productive life and economic limit of an oil well given declining production rates and costs.

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132 views1 page

Assignment 2

This document contains an assignment with three questions regarding petroleum economics. Question 1 asks to calculate net revenue interests for different working interest owners on an oil and gas lease. Question 2 asks to determine various metrics like oil initially in place and reserves for a 320-acre lease given production data. Question 3 asks to calculate the productive life and economic limit of an oil well given declining production rates and costs.

Uploaded by

Fabiola Carranza
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PE

 -­‐  3712  Petroleum  Economics  Fall  2018  


Assignment  2  
 
 
Q1.  The  XYZ  Oil  Company  acquires  an  oil  and  gas  lease  from  a  landowner  Mr.  A.  The  mineral  deed  
shows  Mr.  A  will  be  entitled  to  landowners’  royalty  interest  (LORI)  of  1/8th.  The  geologist  who  
found  the  area  retains  an  ORRI  of  1.5%.    
 

a)   Calculate  the  NRI  of  the  XYZ  Oil  Company  assuming  the  company  has  a  100%  working  
interest.  
b)   If  the  XYZ  Oil  Company  shares  the  working  interest  with  three  other  investors  as  follows,  
compute  the  NRI  of  each  investor  assuming  the  same  LORI  and  ORRI  are  applicable.  
 

Investors   WI  (%)  
XYZ   50%  
ABC   25%  
GAS   15%  
DOME   10%  
 
 
Q2.  A  320-­‐acre  lease  has  to  be  evaluated.  Data  on  the  lease  are  as  follows:  
 

Average  porosity  =     15%  


Net  pay  =     15  ft  
Water  saturation  =     30%  
Reservoir  oil  formation  volume  factor  =     1.2  
Initial  producing  rate  =     9,026  Stb/month  
Economic  limit  =     200  Stb/month  
Recovery  factor  =     20%  
 

Determine  by  calculations  the  following:  


a)   Stb  initially  in  place  
b)   Reserves  
c)   Exponential  decline  rate  required  to  recover  the  reserves  
d)   Life  of  the  field,  years  
e)   Average  producing  rate  after  five  years,  Stb/month  
 
 
Q3.  Assume  initial  production  rate  is  375  Stb/month  and  declining  exponentially  at  20%  per  
year.  The  price  of  oil  is  $60/Stb.  Severance  tax  is  7%,  working  interest  is  100%,  net  revenue  
interest  is  87.5%,  and  monthly  lease  operating  cost  is  $3,700.  The  total  cost  of  drilling  and  
completing  the  well  is  $350,000.  Calculate  the  productive  life  of  the  field  and  the  economic  
limit.  
 

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