# Estimated Total Production

Another well parameter that will be calculated at the auction is its estimated cumulative production at its estimated time of abandonment.

This is a two-step calculation. The first step is determining the estimated final flowrate when the well is abandoned. This uses the basic decline formula based on the estimated well life (described from two webpages ago).

The next calculation is this well known petroleum engineering equation:

Where:
Np = cumulative oil production
qf = estimated final flow rate, as calculated based on estimated well life
qi = initial flowrate, as stated in the auction
D = decline rate, as stated in the auction

The main reason for this Np calculation is to determine a well amortization expense rate (WAR). The well's market value is divided by Np to get an amortization expense in \$ per m3.

The table below summarizes the estimated life, the flowrate at this time, and the cumulative oil production for eight extreme scenarios in OilFinancier:

 Scenario qi (m3/OF Day) Depletion Rate (%/OF Day) Royalty Rate (% of total production) Estimated Life (OF Days) Estimated Final Flowrate (m3/OF Day) Estimated Np (m3 1 50 0.5 6 207 18 6,400 2 50 3.0 6 35 18 1,100 3 50 0.5 40 118 28 4,400 4 50 3.0 40 20 28 700 5 500 0.5 6 668 18 96,400 6 500 3.0 6 111 18 16,100 7 500 0.5 40 578 28 94,400 8 500 3.0 40 96 28 15,700

Remember that these calculated well lives are just estimates. We need to estimate something reasonable to make reasonable accounting statements as “the assets are consumed.”

The table above does not consider operating synergies or stripper royalty rates. With these parameters, well life will be extended and total production will be higher.