Any Production Accountants out there?

[Barnes]

CP, your my only hope.

Need a little help clarifying some things....

When a company reports BOE/Day, what is it based on?

How is it calculated? Is it daily avg/gas oil used? (6*daily avg gas) + daily avg oil?

What does a company do in the case of a farm in? If they are farmed in on someones land do they report they own 100% of the production or is it reduced based on working interest?

[Bring_Back_Shantz]

I'm not a production accountant, but I still use 6 as the multiplier to go from mcf to BOE. (I'm an engineer)

As for the farm in question, if you're looking for NET numbers then you only use the working interest that you've earned by farming in.

Why do you need to know this?

[socktape]

Originally Posted by Barnes

CP, your my only hope.

Need a little help clarifying some things....

When a company reports BOE/Day, what is it based on?

How is it calculated? Is it daily avg/gas oil used? (6*daily avg gas) + daily avg oil?

What does a company do in the case of a farm in? If they are farmed in on someones land do they report they own 100% of the production or is it reduced based on working interest?

BOE is calculated using gas(e3m3) and oil(m3) volumes that are converted to BOE. It is usually calculated and tracked as a rolling average of a couple months to a year as too small of a timeline can be affected by turnarounds, pipeline breaks, etc.(this is depending of course on the size of company, wouldn't matter to a company EnCana's size)

Farm in's are when a company asks permission to drill a well on someone else's landholdings. Usually a smaller company on a larger companies land. for ex. tristar farms in on CNRL. Tristar can then drill the well and produce the well till it recovers the cost of drilling plus a percentage(100-300% of drill and complete cost is a normal situation) CNRL would get a royalty while the recovery period is on which would count as an expense agains the "payout" of the well. Once tristars well recovers said cost+, CNRL can elect to participate in the well as a working interest owner, or just keep the royalty going.

If you need a better example pm me.

[socktape]

Originally Posted by fotze

Except a company like cnrl would not want to let another company farm in on there land, more profitable to do it yourself if it was your business.

I was using them as an example but I would bet good money that CNRL has and will let a small guy in to drill on land that they don't see as a core property. This happens all the time with large companies when they don't see the economics that they require to do projects that little guys will take on. The hurdle rates that the larger companies are far higher than a smaller company would be willing to risk.

There are numerous instances where companies like CNRL will sell off non-core properties to "little guys" only having the little guys turn these wells into big producers. Sometimes it they just need a fresh set of eyes.