At All Clear Energy, we take great care to research and evaluate each oil and gas lease we acquire, including existing producing wells. With producing well, there are often additional factors to consider which can can determine the viability of a successful oil production life span. Owning production means oil and gas reserves which are proven to produce either through current oil production operations or by performing the necessary workover operations to restore oil production in proven oil and gas fields.
Purchasing Producing Oil & Gas Properties
When evaluating an oil and gas lease or oil production for purchase, one of the most important factors is purchasing at the right price. Although there are a number of factors which can be used to determine the right price when buying oil production, the current and anticipated market price of oil is always of concern. Next up is the quantity of oil currently being produced in comparison to any additional work that might be needed to enhance existing production. These added work-over expenses should be factored in along with the anticipated life span of the current and existing production.
In addition to current and existing oil and gas production, know as proven oil and gas reserves, an oil or gas well may also contain additional hydrocarbon reserves behind pipe (shallower zones above current production) or deeper reserves in untapped reservoirs. With modern technology and new developments in drilling such as horizontal drilling or hydraulic fracing to name a few, these reserves could hold massive quantities of oil which should be accounted for.
In addition to oil revenues earned from producing properties, additional tax benefits may be available for the development and production of oil. Often times, these tax benefits could help to offset the initial cost of purchasing producing and existing oil and gas properties as well as offset the costs for further exploration and development of additional hydrocarbon reservoirs.