Higher Operating Synergies

Three provinces—Bolivar, Hassi Messaoud, and Ghawar—have higher operating synergies than the other six provinces. Their operating expense formula is:

For example, if a financier has three operating wells in one of these provinces, the operating costs are $13,161 whereas a similar scenario in another province would be $17,320.

As well, a suspended well also costs less if there is another operating well in the same province. The “n” for a suspended well in these provinces will be 0.1 instead of 0.2.

Please note that if n <1.0, these provinces of higher synergies will actually have a higher operating expense than the other six provinces. Finding that edge to determine which wells to suspend should be an interesting financial challenge.