, CHAPTER9 Prodaction Activirles and Project Analysls315 12. George Oil Corporation drilled a successful gas well. Although capable of production, the well was shut in awaiting the completion of a pipeline. Shut-in royalty payments of $2,000 per month were paid during the months of April through July. Assume the following independent cases: REQUIRED: a. The shut-in royalty payments were not recoverable from future production. Give the entry to record payment of the shut-in royalty for April. b. The shut-in royalty payments were recoverable from future production. Give the entry to record payment of the shut-in royalty for April. 13. Lincoln Petroleum has the following data in connection with Lease A: Drilling cost Estimated completion cost. Estimated selling price (S/bbl) Estimated lifting cost (Vbbl)... $40,000 400,000 250,000 100 23 5% 3/16th . State severance tax rate Royalty interest. REQUIRED: Lincoln Petroleum is sole owner of the working interest. If reserves are determined to be 11,000 barrels, is the well profitable? Would the well be profitable if reserves are 16,500 barrels? How many barrels of total production would it take to recover drilling and completion costs? 14. Clark Oil Company has the following expenditures in August 2019 Lease A: Well #2-Cleaning and reacidizing formation. . . . Lease B: Well #3-Testing, perforating, and completion si 3.000 at 10,000 feet. Current production is at 12,000 feet 60,000 ..10,000 IDC. Equipment from inventory REQUIRED: Record the above transactions. Tyler Oil Corporation estimates the following costs to acquire, drill, and complete a well on Lease A: 15. $ 80,000 Acquiition costs. Drilling and completion costs ...................600,000 25 5% Lifting costs (S/bbl) State severance tax rate .. . . Royalty interest 20% REQUIRED: Would the investment be profitable if proved reserves are: a. 12,000 bbl? b. 18,000 bbl? c. 24,000 bbl