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4. Lynx Oil Company is the only working interest owner in Lease A and has the following data: Proved property cost Drilling cost $100,000 $2,000,000
4. Lynx Oil Company is the only working interest owner in Lease A and has the following data: Proved property cost Drilling cost $100,000 $2,000,000 Estimated completion costs $3,000,000 Estimated selling price ($/bbl) $80 Estimated lifting cost ($/bbl) $25 State severance tax rate Royalty interest 5% 1/8 a) If reserves are determined to be 100,000 barrels, is the well profitable? b) Would the well be profitable if reserves are 150,000 arrels? c) How many barrels of total production would it take to recover drilling and completion costs? Edit View Insert Format Tools Table
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