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Low Producing Lease Calculation Example

The daily production average for a low-producing oil lease over three months is calculated by dividing the total barrels produced by the number of well days, where a well day is one well producing for one day. An example is provided where the total barrels produced over December, January and February was 2,250 and the number of well days was 198, resulting in a daily production average of 11.36 barrels per day.

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22 views1 page

Low Producing Lease Calculation Example

The daily production average for a low-producing oil lease over three months is calculated by dividing the total barrels produced by the number of well days, where a well day is one well producing for one day. An example is provided where the total barrels produced over December, January and February was 2,250 and the number of well days was 198, resulting in a daily production average of 11.36 barrels per day.

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Gag Paf
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Calculating the Daily Production Average for a Low-Producing Lease

The daily production average in a three-month period for a lease equals to the total oil
production for all three months. This amount is divided by the number of “well days” within
those three months. A “well day” is one well producing for one day.

Example:
An oil lease has several producing wells for the months of December, January and February, as
shown below.

MONTH BARRELS SUB-TOTAL WELL NUMBER OF SUB-TOTAL OF


PRODUCED OF BARRELS NUMBER DAYS WELL IS “WELL DAYS”
FOR EACH PRODUCING FOR EACH
MONTH MONTH
December 180 Barrels 1 20 Days
December 100 Barrels 2 10 Days
December 220 Barrels 3 30 Days
Sub-Total 500 Barrels 60 Days
January 480 Barrels 1 28 Days
January 0 2 0 Days
January 520 Barrels 3 31 Days
Sub-Total 1,000 Barrels 59 Days
February 250 Barrels 1 28 Days
February 200 Barrels 2 20 Days
February 300 Barrels 3 31 Days
Sub-Total 750 Barrels 79 Days
GRAND 2,250 Barrels 198 Days
TOTALS

• Total amount of barrels produced for December, January and February was 2,250 and
the number of “well days” the oil wells produced was 198.

• The daily production average is calculated by dividing 2,250 barrels by 198 “well days,”
which equals to 11.36 barrels per day.

• This lease qualifies as a low-producing oil lease and is subject to a tax credit.

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