Page 77 - A Practical Companion to Reservoir Stimulation

DESIGN AND MODELING OF PROPPED FRACTURES

EXAMPLE E-11
For the 100% discount rate (applicable in locations with
Net Present Revenue
hyperinflation), then
Forecast of performance of a hydraulically fractured well (40,000) (20) + (30,000) (20)
suggests the following incremental cumulative production NPV = 1+1 22
over what the unstirnulated well would deliver:
Year 1 : 40,000 STB + (18,000) (20) + (6000) (20)
Year 2: 30,000 STB 2’ 24
Year 3: 18,000 STB
(2000) (20)
Year 4: 6,000 STB 1
Year 5: 2,000 STB. 25
Calculate the net present value (NPV) of the incremental = 4 x 10’ + 1.5 x 10’ + 0.45 x 10’
production. Assume $20/STB as the price of oil. Use 20% and
100% discount rates. +0.075 x 10’ + 0.013 x 10’
Solution (Ref. Section 8-2.8) = $6.038 x 10’. (E-51)
The NPV of the incremental (net) revenue is given by Ignoring the last two years would mean only 1.5% difference
Eq. 8-57. in the NPV.
Thus, for this problem, the revenue NPV for the 20%
discount rate is Finally, the 5-yr NPV ratio between the value at a 20%
discount rate and that at a 100% discount rate is 2.3.
(40,000) (20) (30,000) (20)
NPV = +
1 + 0.2 ( 1 + 0.2)*

+ (18,000) (20) + (6000) (20)
(I + 0.2)~ (I + 0.2)~

+ (2000) (20)
(1 + 0.2)’

= 6.67 x 10’ + 4.17 x 10’ + 2.08 x 10’

+0.58 x 10’ + 0.16 x lo5
= $1.366 x lo6. (E-50)
Ignoring the last two years would mean only 5% difference in
the NPV.

E- 17