Two leases in Northern California are being combined to form the North Field Unit. Lease 1 WI:
Question:
Two leases in Northern California are being combined to form the North Field Unit.
Lease 1
WI: 100% Coast Oil Co.
RI: 1/7 Adam Green
1/8 Linda Black
Acreage contributed: 950 acres
Estimated net recoverable bbls: 360,000 bbls
Lease 2
WI: 65% River Oil Ltd
35% Shore Sands Inc
RI: 1/3 Joe White
Acreage contributed: 750 acres
Estimated net recoverable bbls: 470,000 bbls
Requirement:
a. Determine the participation factors for each party assuming the participation factors are based on the acreage contributed.
b. Determine the participation factors for each party assuming the participation factors are based on the net recoverable barrels contributed.
c. Determine the participation factors for each party assuming the participation factors are based on the acreage contributed weighted 60% and the net recoverable barrels weighted 40%.