Assume your geologist brings you a project. In order to do this project you have to acquire the right to drill on 10,000 acres in Winkler, county f Texas. You can acquire 3000 acres by purchasing an existing shallow field producing at 2000 feet from 50 wells drilled on 60 acre spacing. 30 of these wells produce between 1/4 bbl and 1 bbl a day, 15 are used as injection wells and 5 are shut in. This lease calls for a 1/8 royalty and was written without a Pugh Clause. 5000 acres are unleased and you believe you can acquire this land for $1,500 an acre bonus with a 25% royalty. The other 2000 acres are held by production by three different producers on lease similar to the one you seek to acquire. The 3000 acre lease you believe you can purchase for $500,000.