Present value of profit/investment ratio for an oil well

Input(s)

$R F$: Recovery Factor (bbl/acre $\mathrm{ft}$ )

$h$: Formation Thickness $(\mathrm{ft})$

A: Reservoir Area (acre)

$D$: Present Worth Factor (dimensionless)

$W_{p}$: Working Profit per barrel of Oil $(\$ / b b l)$

$C_{T}$: Total Cost of an Oil Well (\$)

Output(s)

$R$: Recovery $(\mathrm{bbl})$

$P V_{i}$: Present Value of Income (\$)

$B E$: Break-even Price (\$)

$P V_{P I R}$: Present Value of Profit/Investment Ratio (dimensionless)

Formula(s)

$$ \begin{gathered} \mathrm{R}=\mathrm{A} \cdot \mathrm{h} \cdot \mathrm{RF} \\ \mathrm{PV}_{\mathrm{i}}=(\mathrm{D}) \cdot(\mathrm{R}) \cdot(\mathrm{WP}) \\ \mathrm{BE}=\left(\mathrm{PV}_{\mathrm{i}}\right)-\left(\mathrm{C}_{\mathrm{T}}\right) \\ \mathrm{PV}_{\mathrm{PIR}}=\frac{\left(\mathrm{PV}_{\mathrm{i}}\right)-\left(\mathrm{C}_{\mathrm{T}}\right)}{\mathrm{C}_{\mathrm{T}}} \end{gathered} $$

Reference(s)

Serpen, U., Petroleum Economics, Course Notes, ITU Petroleum and Natural Gas Engineering, Istanbul, Turkey, (2008) Page: 34.