Analysis helps determine farm-in fractional interest

Journal Article · Mon Jan 09 00:00:00 EST 1989 · Oil Gas J.; (United States)

OSTI ID:6453846

Towler, B F ^[1]

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1. Univ. of Wyoming, Laramie, WY (US)

Equations are developed for obtaining the fractional interest that a farmi-in or farm-out company requires when farming in or out of a property. This fractional interest can then serve as the beginning value for negotiating a final percentage. Farm-in and farm-out deals are a common method of financing exploration in the oil and gas industry. They are even used sometimes to finance workovers to stimulate production from a well that is not achieving its true potential. The most common deal would involve a farm-in company paying the costs of one or more exploration and appraisal wells on a permit or prospect in exchange for a certain percentage interest in the prospect. But, what are the economics of such deals. Can they be worthwhile for both the farm-in and farm-out parties. An analysis of such deals can help point the way as to when one should farm-in or farm-out a prospect.

• OSTI ID: 6453846
• Journal Information: Oil Gas J.; (United States), Vol. 86:2
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING
POLICY AND ECONOMY
02 PETROLEUM
03 NATURAL GAS
NATURAL GAS INDUSTRY
FINANCING
PETROLEUM INDUSTRY
ECONOMIC ANALYSIS
EQUATIONS
FINANCIAL INCENTIVES
OIL WELLS
ECONOMICS
INDUSTRY
WELLS
294002* - Energy Planning & Policy- Petroleum
294003 - Energy Planning & Policy- Natural Gas
020700 - Petroleum- Economics
Industrial
& Business Aspects
030600 - Natural Gas- Economic
Industrial
& Business Aspects