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3) An oil well is currently producing under the following circumstances: Working Interest = 60%, Royalty = 22.5%, Severance Tax (both oil and gas) = 6%, Oil Price = $50/STB, Gas Price = $3.20/MCF, GOR = 1000 SCF/STB, Gross Operating Expenses = $12,500/Mo. a. Determine the current economic limit of the well in STB/M. b. If oil prices dropped to $40/STB, determine the new economic limit of the oil well in STB/M.

3) An oil well is currently producing under the following circumstances: Working Interest = 60%, Royalty = 22.5%, Severance Tax (both oil and gas) = 6%, Oil Price = $50/STB, Gas Price = $3.20/MCF, GOR = 1000 SCF/STB, Gross Operating Expenses = $12,500/Mo. a. Determine the current economic limit of the well in STB/M. b. If oil prices dropped to $40/STB, determine the new economic limit of the oil well in STB/M.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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am. 126.

3) An oil well is currently producing under the following circumstances: Working Interest = 60%, Royalty = 22.5%, Severance Tax (both oil and gas) = 6%, Oil Price = $50/STB, Gas Price = $3.20/MCF, GOR = 1000 SCF/STB, Gross Operating Expenses = $12,500/Mo. a. Determine the current economic limit of the well in STB/M. b. If oil prices dropped to $40/STB, determine the new economic limit of the oil well in STB/M.
Transcribed Image Text:3) An oil well is currently producing under the following circumstances: Working Interest = 60%, Royalty = 22.5%, Severance Tax (both oil and gas) = 6%, Oil Price = $50/STB, Gas Price = $3.20/MCF, GOR = 1000 SCF/STB, Gross Operating Expenses = $12,500/Mo. a. Determine the current economic limit of the well in STB/M. b. If oil prices dropped to $40/STB, determine the new economic limit of the oil well in STB/M.
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