Droopy Oil Company just completed (December 28, 2007) the successful testing of a tertiary recovery pilot project and as a result has determined that 900,000 barrels of oil should be classified as proved developed reserves. However, 200,000 of the 900,000 barrels will be produced only after significant future development costs are incurred.
Calculate DD&A for Droopy’s wells and related E&F, assuming net capitalized drilling and equipment costs of \($1,850,000\) and production of 40,000 barrels.