Production Reduction Analysis
by the operator. At the end of each month, expenses must be compared to revenues in accordance with the guidelines set forth in this article to see if the lease/unit produced in paying quantities. How long a lease/unit should operate at a loss without causing a readjustment to the number of wells shut in or amount of production reduction is an individual risk decision to be made by each operator.
a. 7. If the decision by management, with the assistance of land/legal, is that the lease/unit is presently producing in paying quantities, the issue then becomes whether one or more wells can be completely shut in or if oil production from one or more wells, on a lease/unit basis, can curtailed for the foreseeable future. a. 8. This calculation will vary on a lease/ unit basis based on the price/production assumptions utilized by the operator and the actual production reduction achieved
© Terry E. Hogwood 2020
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