Question
Balance sheet data for Geyser Energy as of 12/31/33 is as follows for Lease AD: Leasehold costs $850,000 Less: Accumulated DD&A ($310,000) Net leasehold costs
Balance sheet data for Geyser Energy as of 12/31/33 is as follows for Lease AD:
Leasehold costs | $850,000 |
Less: Accumulated DD&A | ($310,000) |
Net leasehold costs | $540,000 |
Wells and related E&F—IDC | $4,000,000 |
Less: Accumulated DD&A—IDC | ($1,750,000) |
Net wells and related E&F—IDC | $2,250,000 |
Wells and related E&F—L&WE | $2,200,000 |
Less: Accumulated DD&A—L&WE | ($340,000) |
Net wells and related E&F—L&WE | $1,860,000 |
Geyser’s activities during 2034 related to Lease AD were as follows:
Exploratory dry hole drilled | $1,000,000 |
Development dry hole drilled | $1,100,000 |
Tanks, separators, etc., installed | $410,000 |
Production | 400,000 bbl |
Proved reserves, 12/31/34 | 4,000,000 bbl |
Proved developed reserves, 12/31/34 | 3,700,000 bbl |
Requirement:
Calculate the Return on Investment for 2034.
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