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.