Yep. Once you have a model of future production, you can test sensitivity. I ran the model from when the Hoppe was drilled. It takes $350 per bbl oil to pay out a 3.5 MM$ well like the Hoppe. It pays out in 12 years. So if you get a modest $300 price increase for oil, you may get your money back on a future well like the Hoppe. If an investor buys into the well for $8 million gross, a modest $600 a bbl increase will get his money back in 21 years with zero percent IRR.
OK, let's look at reserves. If a well like the Hoppe, given $100 oil, declines not a bit from the Hoppe current rate of 10 BOPD, You will get your $8 million back in 33 years. But....within 100 years of well life profits will be $47 million dollars. That's an IRR of 3%. Better than a bank savings account, I suppose...if you ignore the risk.
