Question
Two leases in Northern Texas are being combined to form the North End Unit. Lease 1 WI: 100% Lone Star Oil Co. RI: 1/8 Alice
Two leases in Northern Texas are being combined to form the North End Unit.
Lease 1
WI: 100% Lone Star Oil Co.
RI: 1/8 Alice White
1/9 Bob Green
Acreage contributed: 1,200 acres
Estimated net recoverable bbls: 480,000 bbls
Lease 2
WI: 75% Prairie Oil Inc
25% High Plains Ltd
RI: 1/4 Carl Brown
Acreage contributed: 1,000 acres
Estimated net recoverable bbls: 550,000 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%.
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