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Tuesday, January 09, 2007 7:31:32 AM
You said, "You are right about the wells depleating, and I'm not an oil man. But as an engineer I do know about fluids. These well produced much more in the past and are on a decline. But the decline slows as the rate of removal slows. So the decline gets more and more gradual. A well that produces 10/bbls a day might be producting 9 years from now."
Agreed. But think about what is going on during that time. Even if the price of oil is stable the well and equipment is older so more maintenance issues. The cost of electricity, office help, contractors, chemicals, field labor have probably routinely escalated over time. Taxes on production equipment are not based on how productive a well is, so they continue or go up as well. All of this is happening as production trends down over time. If more than 2% of Dragons wells are making over 3 bopd or if more than 98% of them are making more than 1/2 bopd I'd be very surprised.
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