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The AAPG/Datapages Combined Publications Database

GCAGS Transactions

Abstract


Gulf Coast Association of Geological Societies Transactions
Vol. 8 (1958), Pages 14-19

Economic Factors in the Geological Appraisal of Wildcat Prospects

George C. Hardin, Jr. (*)

ABSTRACT

Appraisal of exploratory or wildcat prospects is primarily the duty of petroleum geologists. Geological factors such as amount and quality of structural control and the type and quality of reservoir rocks expected must be evaluated. However, in arriving at a decision as to whether or not a prospect is to be drilled, this evaluation of geological factors must be controlled by economic factors such as amount of possible productive acreage available, cost and type of leases, cost of the exploratory well, and other purely economic considerations. Many geologists successfully base such appraisals on their experience without having a definite formula as a guide. A rather loose formula or "rule of thumb" based on exploratory drilling statistics in the area of operations con be used as a guide in making decisions as to the drilling of exploratory prospects. It is suggested that in the Gulf Coast, the minimum net return to be expected from the oil and gas to be ultimately produced from a new field found by an exploratory well, if the field should be comparable to other fields in the same trend with similar structural conditions, should exceed 50 times the total amount of money (total cost) risked on the prospect. This relationship is referred to as the profit-to-risk ratio.

The basis for this formula and the amount of tolerance in its use that is permissable because of geological factors is discussed, and several examples are analyzed.


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