Oil and Gas Investor, Steps in the Life of a Prospect

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oil & gas 101

Drilling Glossary Exploration Glossary Drilling Economics Factors Affecting Prices In Pursuit of Petroleum Steps In The Life of a Prospect Private vs. Public

Oil investments, Steps in Prospect's Life

1. Acquire seismic, surface and subsurface data (well logs, cores and tests) in area of interest.

2. Generate prospect idea.

3. Acquire leases through purchase or farm-in arrangement.

4. Estimate drilling and completion costs to test prospect.

5. Predict expected volume of reserves, likely production rates and operating costs.

6. Run a model of economics to determine the rate of return, cash flow and expected value generated by the sale of the oil and gas if the prospect is successful.

7. Assess stratigraphic and structural risks and determine if the expected returns are sufficient to justify the capital expenditures.

8. Apply for federal and/or state drilling permits.

9. Contract drilling rig, mud-logger, cementing and well logging services.

10. Prepare location and move in rig.