Well Cash Flow

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来自 Duke University 的课程

Oil & Gas Industry Operations and Markets

1302 个评分

Duke University

Oil & Gas Industry Operations and Markets

1302 个评分

The oil and gas industry has an enormous impact on all aspects of daily life. Individuals, corporations, and national governments make financial and policy decisions based on the cost, use, and availability of these two natural resources. This two-week course looks at the two most fundamental aspects of the oil and gas industry, its operations and markets, each of which is addressed as a separate module in the course. In the operations module, the course provides an overview of the production of oil and gas, from initial exploration to final transport. The second module focuses on the forces that drive the industry's operations, the oil and gas markets, including the cost of wells, seasonal impacts on prices, and the role of oil reserves. After every lesson, learners will take short quizzes to test their newly acquired knowledge, participant in crowd-sourced discussions about global markets, and complete a final project.

从本节课中

Oil and Gas Industry Markets

In this second module, the course shifts to the markets that drive Oil and Gas Industry operations. You will learn about the various costs of the core oil and gas industry activities, the factors that determine the prices that oil, gas and petroleum products sell for, and the effect that the amount of oil and gas remaining in the ground has on the future viability of individual companies to the Industry as a whole.

Cost Components0:37

Well Drilling and Production Costs5:14

Well Cost and Revenue Sharing4:33

Well Cash Flow2:54

Transport, Processing and Sales Costs6:32

与讲师见面

Lincoln Pratson
Gendell Professor of Energy & Environment
Nicholas School of the Environment

The oil and gas industry is a very expensive industry to enter because so

much money needs to be invested in an oil and

gas project before the project yields even its first dollar of profit.

This is an example of what the cash flow might look like over a 20 plus year

period for an onshore well producing both oil and natural gas.

In this plot, the well is drilled in year zero.

Investments made to secure the well site occur before then

while production costs and revenues for the well occur afterwards.

The cash flow in each year of the plot is the sum of negative cost and

positive revenues in that year.

The negative cash flow in year minus one is the cost to least the total anchorage

of mineral rites needed to drill the well and acquire the permits to drill.

The negative cash flow in year zero is the cost to drill and complete the well.

Production begins immediately afterwards and

by the end of year one, the cash flow turns positive.

Revenues received from selling the oil and

gas produced from the well exceed the well's production costs.

Note that these revenues then decline over the ensuing years.

This is because the revenues are based on the well's production, which falls off as

oil and gas in the vicinity of the well is drained from the reservoir.

This version of the plot includes the cumulative cash flow from the well

alongside its annual cash flow.

The cumulative of cash flow from the well is the running sum of costs and

revenues from one year to the next.

Note that by the end of year zero, the cumulative cost to lease acreage and

drill the well approaches $9 million dollars.

This is the amount of money that needs to be invested before the well generated

any revenue.

The well in this example, however, is really good.

By the end of year one, so much oil and gas has been sold, that all of the upfront

costs, have been paid off, and there's still $3 million of gross revenue.

Thus, in this particular case, pay out for the well occurs before the end of year

one, which is when the well becomes profitable.

Wells with lower initial production in year one, a faster decline rate, and

or which produce oil and

gas that fetch a lower sales price than in this example will take a longer time,

possibly many years to reach payout and thus finally become profitable.

In this particular example,

revenues continue to exceed well costs through year 18.

By year 19, however, oil and gas production have fallen so low,

that sales revenues, are no longer enough to pay for the well's cost and

the well is plugged, and abandoned.

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