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Two leases in Southern California are being combined to form the South Field Unit. Lease 1: WI: 100% Sun Coast Co. RI: 1/7 Michael Black

Two leases in Southern California are being combined to form the South Field Unit.

  • Lease 1:
     WI: 100% Sun Coast Co.
     RI: 1/7 Michael Black
     1/8 Emma Green
     Acreage contributed: 650 acres
     Estimated net recoverable bbls: 260,000 bbls
  • Lease 2:
     WI: 65% Ocean Wave Ltd
     35% Shoreline Inc
     RI: 1/3 Samuel White
     Acreage contributed: 450 acres
     Estimated net recoverable bbls: 300,000 bbls
Requirement:
 a. Calculate the participation factors for each party based on the acreage contributed.
 b. Calculate the participation factors for each party based on the net recoverable barrels contributed.
 c. Calculate the participation factors for each party based on the acreage contributed weighted 40% and the net recoverable barrels weighted 60%.

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