Well Economics Calculator
Calculate IRR, NPV, and payback period for an oil or gas well.
Inputs
$
bbl/day
%
$/bbl
$/mo
%
%
%
Results
Net Present Value
$16,328,829.00
≈ 39 average U.S. homes
Payback Period
8 months
20-Year ROI453%
Total Gross Revenue$44,979,857.00
Total Production599,731 bbl
Roi453.05
How to Use This Calculator
- Enter capital expenditure (CAPEX $), initial production rate (bbl/day), oil price ($/bbl), and royalty rate (%).
- Enter operating cost per barrel ($/bbl), decline rate (%), and discount rate (%) for NPV.
- Read net present value (NPV $), IRR (%), and payout period (months).
- Review undiscounted cumulative cash flow to identify the break-even oil price.
- Use sensitivity analysis on oil price and decline rate to assess economic risk.
How the result changes with Initial Rate
| Initial Rate | Net Present Value | Payback Period |
|---|---|---|
| 1,009 | $38,851,213.00 | 4 months |
| 3,507 | $149,348,832.00 | 1 months |
| 6,504 | $281,915,889.00 | 1 months |
| 9,001 | $392,366,321.00 | 1 months |
What each input means
- Well Cost
- Total cost to drill, complete, and equip the well.
- Initial Rate
- Initial oil production rate.
- Annual Decline Rate
- Annual exponential decline rate.
- Oil Price
- Expected oil price per barrel.
- Monthly Operating Cost
- Monthly lease operating expenses.
- Royalty Rate
- Mineral royalty percentage.
- Tax Rate
- Combined severance and income tax rate.
- Discount Rate
- Discount rate for NPV calculation.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersWell Cost = 5000000, Initial Rate = 500, Annual Decline Rate = 30, Oil Price = 75 = 8 input(s) provided
- Calculate Net Present ValueNet Present Value16328829 = $16,328,829
- Calculate Payback PeriodPayback Period8 = 8
- Calculate 20-Year ROI20-Year ROI453 = 453
- Calculate Total Gross RevenueTotal Gross Revenue44979857 = $44,979,857
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