Problem
An independent E&P firm signs a contract on Jan 2, 2017 for a petroleum lease/block in the deep offshore water in the Gulf of Guinea. On signing the contract, the contractor pays $100 million in bonus. During the first two years, the contractor conducts exploration activities at a cost of $80 million each year. A commercial oil field was discovered with the first well completed on Dec 31, 2019. But it took two years to develop the field at a cost of $100 million in year one and $150 million in year two. The size of discovery is 100 MMbblS
A: PRODUCTION FORECAST EXERCISE:
Assuming the instantaneous production at the beginning of the third year after signing the lease is 1000 BOPD and production from the field peaks at a rate of 100,000 Bbl/day at the beginning of 2023 declining exponentially after two years on the plateau at an effective decline rate of 12.5% per year. Layout the appropriate production profile for this field and the corresponding production forecast for the evaluation of this field. The field is expected to be sold to a smaller independent firm in 20 years after production began. What is the estimated reserves remaining as at the time the field is sold? Present your forecast graphically showing plots of annual production and cumulative production on a single graph.
The response should include a reference list. One-inch margins, Using Times New Roman 12 pnt font, double-space and APA style of writing and citations.