Black Gold Gold The Triangle Prospect

The Triangle Prospect Lease Sale 18 blocks available for bidding. Thickness of producing layer = 50 feet $175 million bidding budget per team. Blocks will go to the highest bidder at the close of the last presentation. Submit a sealed bid at the start of class. Present your chosen blocks, bid and why. Be sure to explain why or why not the fault may or may not be a problem. Try to estimate when in the geologic sequence the dome and the fault were formed. These will be team presentations, maximum time limit to announced. Post your assignment prior to presentation. You may use any form of presentation you like including the overhead projector. Provide a contour map of the area as part of your bid. You may contour the elevation values provided on the map below; or you may also use the elevation values provided in the associated spread sheet, assignment4elevations.xls. You may contour by hand or use any contouring software including Excel. Try doing 3-D contouring. You may use the assignment4bidsheet.xls spreadsheet for your computations or you may design your own. Deduct expenses when computing cash flow. Formulate a cash flow scenario; we know that well production increases for a period of time, peaks, and then decreases (similar to a bell curve). An equal cash flow scenario will lead to an unrealistic bid. Compute the present value of the cash flow scenario you have chosen based on your required return on investment—we have chosen 15%. Excel offers a built-in present value function for arbitrary cash flow, NPV; use it. Show all your work. Formulate your bids. Show all your work. Convince management to put shareholder money on the line. Happy Exploring!

Formulas Of Interest E= Volume of a spherical dome is given by: V where r = radius of the base of the dome and h = height from the base to the top of the dome. Volume of a half sphere is given by: V = r= radius of sphere Volume of a cube: V = L= length of side of cube. E= Present value: P = Future payment (paid or earned n years into the future n = Number of years into the future i = Interest rate or return on investment Hint: You may use the built-in present value function NPV in Excel to compute the present value of an arbitrary cash flow. Mission =

Parameters Of Interest Formation porosity = 3% Producible volume = 30% (percentage of total oil volume in place that can actually be produced with enhanced techniques. Gallons of oil per cubic foot = 7.5 gl/cu. ft. Gallons of oil per barrel = 42 gl/barrel (You will need the two above parameters to convert volume to barrels) Exploration and development costs = $150,000,000 Production cost per barrel = $10 Profit margin = 15% Life of well = 20 years Estimated average oil price = $90/barrel

Elevation Values Of Target Reflector (ft) Producing well, oil and gas, 12 miles east, thickness of producing layer = 50 feet 9 F U T R E S A L 1 2 3 4 5 6 Miles 6 Fault 7 8 9 10 11 12 3 18 13 14 15 16 17 Miles 3 6 9 12 15 18 FUTURE SALE 10 = Block Number