Tyler Oil Corporation estimates the following costs to acquire, drill, and complete a well on Lease A:
Question:
Tyler Oil Corporation estimates the following costs to acquire, drill, and complete a well on Lease A:
REQUIRED: Would the investment be profitable if proved reserves are:
a. 12,000 bbl?
b. 18,000 bbl?
c. 24,000 bbl?
Transcribed Image Text:
Acquisition costs... Drilling and completion costs Selling price of oil ($/bbl). Lifting costs ($/bbl).. State severance tax rate Royalty interest ... $ 80,000 600,000 1,000 25 5% 20%
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