Geologic Success and Economic Failure (Are We Hunting Rocks or Dollars?): ABSTRACT

Abstract

A geologic success that is an economic failure may range from a structurally high dry hole to a large and prolific gas discovery located in a sparsely settled area where there is neither a gas market nor prospects for getting one in the near future. If a project is not an economic success, it is, to some degree, an economic failure because there is no neutral ground. Economic success generally is measured by rate of return on invested capital and by total profit related to investment. In addition to direct costs, the cost of money or capital and the cost of taxes are two very important factors affecting economic success, and must be considered in appraising a venture. The question, How much or gas must be found for economic success? End_Page 467------------------------------ must be answered for any prospective area, and answers will range from a few thousand barrels to a billion barrels. Wells in oil country may be economically successful where each produces less than 10 BOPD. In contrast, wells located in some inaccessible places must produce more than 1,000 BOPD to avoid economic failure. End_of_Article - Last_Page 468------------