You have just inherited 250 acres of land in south Texas. An oil company approached you and offered you a one 1/2 percent (0.005) royalty for the rights to your oil. Given the following information, answer the questions below. Size = 200 acres Thickness of oil zone = 20 feet Porosity of oil zone rock = 20 % Oil saturation in pores = 40 % Recoverable Oil = 30 % Life of the wells = 30 years You do not need to consider the cost of the wells. Helpful conversions 1 acre = 43,560 square feet 1 cubic foot = 0.178 barrels
1. How many barrels of oil are in the ground?
2. How many barrels of oil are recoverable?
3. What is the value of recoverable oil at $95 per barrel?
4. What is the value of recoverable oil at $30 per barrel?
5. How much total money do you expect if oil stays at $95 per barrel? 6. How much total money do you expect if oil stays at $30 per barrel?
6. What will be your average monthly royalty check at $95 per barrel?
7. What will be your average monthly royalty check at $30 per barrel?