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Oil and Gas Flow Rates - How to Determine if a Well's Daily Production Range is Fair

Oil and Gas Flow Rates - How to Determine if a Well's Daily Production Range is Fair

In the following table you will find typical daily production ranges for oil and gas companies for both onshore and offshore production wells.

 

Oil (barrels per day) 

Gas (million m3 per day) 

Quality  Onshore  Offshore  Onshore  Offshore 
Fair 300 - 1000 2000 - 5000 0.1 - 0.2 0.3 - 0.7
Good 1000 - 3000 5000 - 8000 0.2 - 0.5 0.3 - 1.0

"An important aspect of oil production is the decline in oil production over time due to falling pressure and increasing water production. Remedial action may be taken to mitigate the decline rate. However, production will decline over the life of the field at a geometric rate. Common practice in investment analysis is to use a 15 to 20% per annum decline rate when specific details are not known and assume that some 20 to 30% of the field's reserves are produced in the first 12 to 18 months of production."

 

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Note: Again, I found The Mining Valuation Handbook by Victor Rudeno a valuable source of information when I was looking for the answer regarding the oil and gas flow rates. For those looking for more detailed information about investing in mining and energy stocks I do recommend to buy a copy of this book for future reference.

 

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Source: The Mining Valuation Handbook

About Jeroen Snoeks

Jeroen Snoeks - UndervaluedEquity.com

Jeroen Snoeks is the founder of UndervaluedEquity.com, a website for investors passionate about investing in undervalued stocks. Through UndervaluedEquity.com, he shares his experience and knowledge and will soon reveal his personal stock portfolio.


 
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