450 well A 657 Compressor fuel 200 Well B Meter 1000 () Well C 3,700 980 Well D Heater Treater 150 Shut Well E IN Allocate on lease fuel back to the well heads. . Allocate gas sales back to the well heads. +++ Page 1 > of 4 Based on the volumetric allocation of natural gas, assume the following: Tyler Oil Company owns 100% of the working interest in the above lease. Alex Walker owns a 1/8 royalty interest in the lease. The sales price is $8.00/mmbtu and the state severance tax is 8%. Based on gas analysis the heating content is 1.03 Btu. What is the value of gas sales? What is the amount of gross revenue Tyler Oil Company should record? What amount should Tyler Oil Company record for gross royalty and severance tax? Provide the revenue entry by Tyler Company if PURCHASER assumes the responsibility of distributing severance taxes and royalty. Provide the revenue entry by Tyler Company if Tyler assumes the responsibility and receives 100% of the proceeds What amount of gross revenue, royalty, severance taxes and net revenue should Tyler Oil Company record for each well (A-B-C-D-E)? MacBook Air C - ZOOM

450 well A 657 Compressor fuel 200 Well B Meter 1000 () Well C 3,700 980 Well D Heater Treater 150 Shut Well E IN Allocate on lease fuel back to the well heads. . Allocate gas sales back to the well heads. +++ Page 1 > of 4 Based on the volumetric allocation of natural gas, assume the following: Tyler Oil Company owns 100% of the working interest in the above lease. Alex Walker owns a 1/8 royalty interest in the lease. The sales price is $8.00/mmbtu and the state severance tax is 8%. Based on gas analysis the heating content is 1.03 Btu. What is the value of gas sales? What is the amount of gross revenue Tyler Oil Company should record? What amount should Tyler Oil Company record for gross royalty and severance tax? Provide the revenue entry by Tyler Company if PURCHASER assumes the responsibility of distributing severance taxes and royalty. Provide the revenue entry by Tyler Company if Tyler assumes the responsibility and receives 100% of the proceeds What amount of gross revenue, royalty, severance taxes and net revenue should Tyler Oil Company record for each well (A-B-C-D-E)? MacBook Air C - ZOOM

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 1P: Reynolds Construction (RC) needs a piece of equipment that costs 200. RC can either lease the...

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15. Tyler Oil Corporation estimates the following costs to acquire, drill, and complete a well on Lease A: Drilling and completion costs Acquisition costs Selling price of oil ($/bbl). Lifting costs ($/bbl). State severance tax rate $ 80,000 600,000 1,000 25 5% 20% Royalty interest REQUIRED: Would the investment be profitable if proved reserves are: a. 12,000 bbl? b. 18,000 bbl? c. 24,000 bbl?
7. Chavez Petroleum's lease in Wyoming produces both oil and gas. Additional information as of 1/1/19 follows: IDC..... Proved property costs, net L&WE. Beginning of year accumulated DD&A Estimated proved reserves, 12/31/19 $900,000 100,000 300,000 50,000 Oil ...... 200,000 bbl Gas Production during 2019 Oil 1,000,000 Mcf .... Gas. 10,000 bbl 300,000 Mcf REQUIRED: Compute amortization assuming the lease is fully developed: a. Assuming oil is the dominant mineral
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Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and 60 1 Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $bl. The rovalty interest is and the severance tax rate is 10%. b Prepare the revenue entries for Cameron Oil Company and Garcia Company. Well Days Produced 30 26 24 Liberty Well 1 Freedom Well A-1 Total Production Sold 2,900-measured at point of delivery 24-Hr Test (bbl) 20 35 Dyson Powell 50 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%. Prepare the revenue entries for Cameron Oil Company and Garcia Company.
In this assignment you will need to perform an analysis on a hypothetical discovery based on the following information: Field Size 1.4 Tcf Production/Reserve Ratio 7% of the original field size starting producing year 3 Gas Price $3.5/Mcf CapEx $1/Mcf capitalized in 5 years, straight-line depreciation Operating Cost $0.8/Mcf Royalty 10% Government Take 40% Cost recovery limit 60% of gross revenue Discount Rate 10% Income Tax Rate 33% Allow cost recovery carry forward 1. Evaluate the discovery – you need to calculate the total worth, worth to the company, government take, value in terms of entitlement interest and working interest. 2. Evaluate the producing gas reserve – total worth, worth to the company, government take, value in terms of entitlement interest and working interest.
4. A petroleum project involves production of crude oil from a 5,000,000 barrel reserve. Time zero mineral rights acquisition cost (lease bonus) of $2,000,000 isthe basis for cost depletion. Intangible drilling expenses of $1,500,000 will be incurred in time zero. Tangible producing equipment costing $3,000,000 at time zero will go into service in year one and be depreciated using double declining balance (on the 7-year depreciation basis considering first full year of use). Production is estimated to be 350,000 barrels per year. Well-head crude oil value before transportation cost is estimated to be $42.0o per barrel in year one, $43.00o per barrel in year two, and $44.0o per barrel in year three. Royalties are 10.0% of revenues (well-head value) each year. Operating costs are expected to be $3,000,000 in year one, $3,300,000 in year two, and $3,600,000 in year three. The allowable percentage depletion is 15.0%. The effective income tax rate is 40.0%. The investor has other taxable…
Al Kawthar Company has oil and gas properties located only in the United States. Data for Al Kawthar Company as of December 31, 2020, are as follows: Cost to be amortized 37,500,000 Production during 2020 Oil 19,000,000 bbl Gas 18,000,000 Mcf Proved reserves. 31/12/20 Oil 14,000,000 bbl 32,000,000 Mcf Gas Selling price at 31/12/20 Oil 120 bbl Gas 20 Mcf Average selling.price duting 2020 Oil 110 bbl Gas 12 Mcf Compute the DD&A based on equivalent energy units for 2020. Show ALL workings. %24 %24
in X ngagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false Calculator Print Item Lease or Sell Plymouth Company owns equipment with a cost of $600,000 and accumulated depreciation of $375,000 that can be sold for $300,000, less a 4% sales commission. Alternatively, Plymouth Company can lease the equipment for four years for a total of $320,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Plymouth Company on the equipment would total $40,000 over the four-year lease. a. Prepare a differential analysis on August 7 as to whether Plymouth Company should lease (Alternative 1) or sell (Alternative 2) the equipment. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) August 7 Lease Sell Differential Equipment Effects Equipment (Alternative 1) (Arnative 2) (Alternative 2) $ 320,000 Revenues $300,000 600,000 Costs Profit (Loss)…
16. MODULATE Co. has the following assets.Vacant building to be leased out under operating lease4,000,000Building being constructed for TO ADJUST, Inc.800,000Building under construction to be used as office1,600,000Building under construction to be rented out under operating lease400,000Building rented out to MODULATE’s employees who pay rent at market rates3,200,000Office building awaiting disposal200,000How much is the total investment property?Group of answer choices7,600,0004,200,0004,400,0004,600,000
Al Kawthar Company has oil and gas properties located only in the United States. Data for Al Kawthar Company as of December 31, 2020, are as follows: Cost to be amortized 37,500,000 Production during 2020 Oil 19,000,000 bbl 18,000,000 Mcf Gas Proved reserves. 31/12/20 Oil 14,000,000 bbl Gas 32,000,000 Mct Solling price at 31/12/20 Oil 120 bbl Gas 20 Mcf Average selling.price during 2020 Oil 110 bbl Gas 12 Mcf Compute the DD&A based on equivalent energy units for 2020. Show ALL workings.
1. A natural gas upstream company acquires a license for an onshore block and estimates that drilling a well will cost US$250 million. If natural gas is found the net present value is forecasted at US$1 billion. From its analysis of the block, the company has determined that there is a 70% chance of drilling a dry hole in this block. a) Draw a decision tree to represent the NPV outcomes of the company. b) Calculate the expected value and state whether the company should ahead to drill the well. go
You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX 0 O $201.765 O $193,822 O $185,617 O $222,872 O $213,918 1 $127.000 $60,000 2 Depreciation Increase in NWC Year-end net debt $80,000 Cost of net debt = 8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0. using the APV method. $72,000 $50,000 $100,000 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138.500 $10,000 $84,000 $30,000 $140,000