Question: can u please do the Limitations these identify potential problems with analysis, may recommend additional analysis. These should be relevant to the problem at hand

can u please do the Limitations these identify potential problems with analysis, may recommend additional analysis. These should be relevant to the problem at hand (175 words)

can u please do the Limitations these identify potential problems with analysis,may recommend additional analysis. These should be relevant to the problem at

Outline Primitive Energy owns several coal seam gas reserves in south-west Queensland. As a relatively minor player in the Queensland Liquefied Natural Gas (LNG) market, Primitive does not have the capacity to transfer and process the gas for sale to domestic or international buyers. Instead, Primitive simply extracts the gas and then sells it immediately (at the well-head, which is at the surface) to one of the major gas companies operating in the area. Recently, Primitive entered into a contract to sell gas from one of its reserves for the fixed price of $4.45 per gigajoule (GJ) for the life of the reserve. With this contract in place, Primitive's management are currently trying to determine whether they should extract the gas through conventional 'Vertical drilling or the recently developed 'Horizontal drilling. As indicated in Figure 1, the Vertical drilling approach drills to the coal seam while the Horizontal approach drills down to and then across the coal seam. Figure 1: Vertical and Horizontal Drilling Geology.com Additional points of note are summarised in Table 1. Table 1: Summary Points for Vertical and Horizontal Drilling Vertical: Horizontal: Smaller capital outlay, however, more wells are generally required due to smaller drainage area (the portion of the reserve that a well can access). Preliminary designs indicate project requires 100 Vertical wells. Higher capital outlay given length of drilling, technology and difficulty. Greater access to gas reserves and larger spacing between wells, which means fewer wells required. Preliminary designs indicate that project requires 50 Horizontal wells. Specific detail on each of the well types including: capital outlay, production, maintenance, depreciation, state royalties, well drilling and capping schedule and other related information required for analysis is presented in the 'Well Drilling Information' spreadsheet

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!