A lease owned by Company XYZ has to be evaluated. The lease is currently producing at a rate of 4000 Stb/month. It is estimated that production will be constant for one year, and then decline expe nentially at a rate of 30% per year. Current operating expenses are $15,000 per month and are expected to increase by 10% per year in a step rate manner. Oil price is $15/Stb, and severance tax is 12% of gross revenue. The company has a 50% working interest and a corresponding net revenue interest (NRI) of 40%. Determine:

a. EL.

b. Remaining 8/8ths reserves.

e. Remaining net reserves (your company's share). d. The economic productive life of the lease.

e. The cash flow to the EL.

Answer rating: 100% (QA)

To determine the necessary values lets go step by step a Calculate the Economic Limit EL The Economi... View the full answer