Modified Oil-well Depletion Curves

OIL-WELL depletion curves, to be of value, should show when a well or lease may no longer be operated at a profit. The difference, at any time, between the total expenditures and the total income of a lease or well may be called the lease status. Plotting this lease status against time will give a curve subject to more accurate and different interpretations than the barrels-time curves. According to the hypothetical barrels-time curves shown in Fig. 1, well A, at the end of 16 mo., is producing twice as much oil as well B and will continue to produce for another year whereas well B will cease producing in about 6 months. DATA FOR LEASE STATUS-TIME OR DOLLARS-TIME CURVE TIME LEASE MONTHS STATUS Lease purchased for $3000 0 -$ 3,000 No expenses chargeable to lease for 3 mo 2 - 3,000 Well A is started; cost of drilling for month is $16,000 3 - 19,000 Well is completed at additional cost of $10,000 4 - 29,000 Well A is brought in and flows 10,000 bbl. first month (see Fig. 1). Necessary to invest in tanks, boilers, pipe lines, etc.: difference between expenditures and receipts gives profit for month of $5,000 5 - 24,000 Investment is small, cost of operating well A is small, so profits are $15,000 6 - 9,000 Well ceases to flow so there is additional investment for pumping equipment and additional operating expense; net earnings from 6,000 bbl. of oil produced is $4,000.... 7 - 5,000 Lease operation now becomes normal and curve becomes smooth 8 - 500 9 2,000 10 4,500 11 6,000 12 7,700 13 8,700 14 9,000 15 9,500 16 10,000