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Oil Well Breakeven Analysis

This document contains a summary of 3 engineering project management questions. The questions calculate the breakeven point for oil wells with varying production rates over multiple years. Question 1 calculates a breakeven point of 3.42 years for a well producing 100 BOPD for 10 years. Question 2 calculates a breakeven point between years 4 and 5 for a well with increasing production rates the first 5 years. Question 3 calculates a breakeven point of 7.39 years for a project developing 5 wells with a production rate that increases and decreases over 10 years.

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Mohamed Sadek
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78 views10 pages

Oil Well Breakeven Analysis

This document contains a summary of 3 engineering project management questions. The questions calculate the breakeven point for oil wells with varying production rates over multiple years. Question 1 calculates a breakeven point of 3.42 years for a well producing 100 BOPD for 10 years. Question 2 calculates a breakeven point between years 4 and 5 for a well with increasing production rates the first 5 years. Question 3 calculates a breakeven point of 7.39 years for a project developing 5 wells with a production rate that increases and decreases over 10 years.

Uploaded by

Mohamed Sadek
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Engineering Project

Management (EAX_5_277)

Dr. saad mostafa


Eng. Amr taha
Eng. Ahmed borg
Eng. Mohamed balaha
Question 1
A well is planed to be drilled with a cost of $5 m. It is estimated that
the well will produce with a constant rate of 100 BOPD for 10 years.
Calculate the breakeven point of this well assuming an oil price of
$40/bbl.
Solution:
Income per year = 100 bbl x $40 x 365 days= $1,460,000
Breakeven point = Initial Investment/Income per year
Breakeven point = 5,000,000/1,460,000 = 3.42 years
Question 2
A well is drilled with a cost of $5 m, the well is estimated to produce
with the following rates in every year, 1. 50 BOPD, 2. 100 BOPD, 3. 150
BOPD, 4. 200 BOPD, 5. 250 BOPD, then the well will produce with a
constant rate of 250 BOPD. Calculate the breakeven point assuming the
oil price is $25/bbl.

Solution:
Question 2
year Production Rate Cash Out Cash In Total Cumlative

1 50 5,000,000 456,250 -4,543,750 -4,543,750

2 100 0 912,500 912,500 -3,631,250

3 150 0 1,368,750 1,368,750 -2,262,500

4 200 0 1,825,000 1,825,000 -437,500

5 250 0 2,281,250 2,281,250 1,843,750

6 250 0 2,281,250 2,281,250 4,125,000

7 250 0 2,281,250 2,281,250 6,406,250


Question 2
The breakeven point is between the 4th and the 5th year, to know
exactly we have 2 methods, 1. Graphically, 2. interpolation.
1. 8,000,000

6,000,000

4,000,000
cumulative ($)

2,000,000

0
1 2 3 4 5 6 7 8

-2,000,000

-4,000,000

-6,000,000
year
Question 2
2.

4 -437,500
X 0
5 1,843,750

5 − 4 1,843,750 − −437,500
=
5−𝑥 1,843,750 − 0
X=4.19
Question 3
An oil field is planed to be recovered using 5 wells, the 5 wells are all
drilled at the same time, at the start of the production the reservoir
produces with 500 BOPD for the first year, then the production rate
increases by 20% each year, the production reaches its maximum in the
4th year. The rate stays constant for 2 years then starts to decline with
a rate of 10% per year. Calculate the breakeven point for this project
assuming the drilling cost of one well is $5m and an oil price of $13.
Question 3
year Rate Out In Total Cumulative
0 25,000,000 0 -25,000,000 -25,000,000
1 500 2,372,500 2,372,500 -22,627,500
2 600 2,847,000 2,847,000 -19,780,500
3 720 3,416,400 3,416,400 -16,364,100
4 864 4,099,680 4,099,680 -12,264,420
5 864 4,099,680 4,099,680 -8,164,740
6 778 3,689,712 3,689,712 -4,475,028
7 700 3,320,741 3,320,741 -1,154,287
8 630 2,988,876 2,988,876 1,834,588
9 567 2,689,941 2,689,941 4,524,529
10 510 2,419,950 2,419,950 6,944,479
Question 3
10,000,000

5,000,000

0
0 2 4 6 8 10 12

-5,000,000
cumulative ($)

-10,000,000

-15,000,000

-20,000,000

-25,000,000

-30,000,000
years
Question 3

7 -1,154,287
X 0
8 1,834,588

8 − 7 1,834,588 − −1,154,287
=
8−𝑥 1,834,588 − 0
X=7.39

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