Engineering
3 years ago

New approach predicts viability of oil wells amidst declining prices.

Deleted Journal
Economic evaluation of oil well: A simple rule of thumb approach
J.I. Nwosu, U.C. Uwalaka

Paper Summary

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The article presents a simple method for evaluating the economic viability of oil well investments. By using a step-by-step approach, the researchers calculated the capital outlay, Net Present Value (NPV), and Internal Rate Of Return (IRR) of an oil well. They also estimated the break-even flow rate. The analysis of a hypothetical oil well in Nigeria showed a capital outlay of US13.34million,NPVofUS13.34 million, NPV of US13.34million,NPVofUS6.06 million, and IRR of 17%. This demonstrates the decreasing profitability of oil wells due to declining oil prices and high drainage costs.