A proposed drilling prospect has been evaluated. A well will be drilled on 160-acre prospect area. The company does not yet lease additional acreage of 60 acres, adjacent to the prospect. Evaluation is based on the condition that the company will be able to lease the remaining 60 acres. Basic data and economic analysis (net present value at 10% that would be realized from the prospect for each option, net of taxes, royalties, lease operating expense and costs of the well) of each option for the prospect are given in Table below. The company has identified the following three options for participation in the deal, given that the company has acquired the remaining 60 acres1. Participate in the drilling with 37.5% (60 acres/160 acres times 100 = 37.5%) non- operating WI. Farmout acreage while retaining 1/8th of 7/8th royalty interest on 60 net acres. Carry with a back-in privilege (37.5% WI) after 150% of the investment by the participating parties is recovered Based on the above options and the data in Table above, calculate the following. Should the adjacent lease be acquired? If yes, how much (maximum) should be paid for it? If the adjacent lease is acquired, which of the three options will be more valuable