Video Library

for Exploration &

Production Specialists

Petroleum Production Performance

PE 107
Production Rate Decline Curves
David A.T. Donohue, Ph.D., J.D.
President, IHRDC
opyright © 1983 International Hu.rniln ,Rl',ourcl" [)pvpl0,Prnl'nt Corpo~ation All rights reserved No part
Contents

Acknowledgments v
Preface to Petroleum Performance Series vii
Foreword IX

Instructions to the User xi

Video Unit 1
1.0 Introduction 1
1.1 The Mathematical Representation of Decline Curves 16
1.1.1 Constant Percentage Decline 16
1.1.2 Hyperbolic and Harmonic Decline 18
Video Unit 2
1.2 The Graphical Representation of Decline Curves 22
1.3 Decline Curve Selection Based on Field Performance 32
1.3.1 Decline Curves for Tight Reservoirs 36
1.4 Applications of Constant Percentage Decline Curves 39
1.4.1 Decline Rates 42
Video Unit 3 and 4
1.5 Collection, Analysis and Smoothing of Production Data 49
1.5.1 Data Smoothing 54
1.5.1.1 The Method of Slopes and Intercepts 58
1.5.1.2 The Method of Selected Points 59
1.5.1.3 The Method of Averages 62
1.5.1.4 The Method of Least Squares 64
1.6 Incorporating Changes in Operating Practice 69
-deo Unit 5
1 Summary of the Procedures to be Followed
in Preparing Decline Curves 74
I Estimating Gaswell Reserves 78
The Use of Computers to Plot Decline Curves 84
10 Some People Who Rely on Decline Curves 85
.deo Unit 6
·ferences 89
ercises 91
ipendix A: SPE: Standards Pertaining to the Estimating and
Auditing of Oil and Gas Reserve Information 105
-pendix B: Tables of Constant Percentage Decline Curve
(Reference 4). Copy of Computer Generated Graphic
Prepared at Dwight's Energy Data and Shown in
Unit 3. 115
'pendix C: Equations to be Used in Applying the Method
of Least Squares to Exponential, Harmonic and
Hyperbolic Decline 125
Acknowledgments
This manual and the accompanying video program constitute
one module of the IHRDC Video Library for ~xploration and
Production Specialists. This module was produced during the
first production cycle of the Video Library, which was
sponsored in part by the following companies:
AGIP S.p.A.
ARAMCO
Chevron Corporation
Cities Service Oil and Gas Corporation
Dome Petroleum Ltd.
Gulf Oil Corporation
Mobil Oil Corporation
Phillips Petroleum Company
Schlumberger Ltd.
Texaco Inc.
Their sponsorship does not constitute approval or
recommendation of the methods or procedures contained
herein. Anyone using this program does so with the
understanding that these companies and IHRDC are to be held
harmless from any use or misuse that may result therefrom.
Acknowledgment should also be made of the following
companies and individuals, for their assistance in the
production of the video portion of this module:

Ron Samuels of Dwight's Engergydata, Dallas, TX

Forest Garb of H.J. Gruy and Associates,
Dallas, TX
IRDC Video Modules in
'etroleum Engineering

Production Drilling Well Sampling Natural Gas

Engineering Engineering and Testing Engineering
etroleum Production PE 201 PE 401 PE 601
Performance Planning the Drilling General Introduction and Properties, Measurement,
of a Well Measurement Techniques and Sampling of
Natural Gas Well Fluids
PE 202 PE 402
PE 101 Drilling Rig Design and Gaswell Testing: PE 602
Introduction and Surface Equipment Theory, Practice, and Gas Gathering and
General Principles Regulation Transmission
PE 203
PE 102 Drill String. Drilling PE 403 PE 603
Inflow Performance Bits. and Casing Oilwell Testing Separation and Field
Processing of Natural Gas
PE 103 PE 204 PE 404
Vertical Lift Performance Drilling Muds and the Drlllstem Testing PE 604
Mud Circulation System Compression of
PE 104 PE 405
:Iowing Well Performance Natural Gas
PE 205 Core Analysis
Fluid Hydraulics and Blowout PE 605
PE 105 Prevention
Gas Lift PE 406 Underground Storage
Reservoir Fluids: of Natural Gas
PE 206 Sampling and Analysis
PE 106A Drilling Program Optimization,
Pumping Systems- Surveying, and
Ro? Pumping Directional Drilling Investment
PE 1068 PE 207 Reservoir Analysis and
Pumping Systems-
Rodless Pumping
Drilling Problems Engineering Reserves Valuation
PE 208
PE 107 Preparing the AFE PE 501
Reservoir Environments and PE 701
Production Rate Petroleum Investment
Decline Curves Their Characterization
Analysis
Well Completion PE 502
Reservoir Fluid Flow and PE 702
»duction Equipment and Stimulation Natural Drive Mechanisms Risk Analysis as Applied
to Petroleum Investment
PE 121 PE 503
Wellhead. Flow Control PE 301 Enhanced Oil Recovery I:
quipment, and Flowlines Well Completion Design Waterflooding, Gas Injection,
PE 122 and Practices and Pressure Maintenance Offshore Drilling
paration and Treatment of PE 302 PE 504 and Production
Produced Fluids Enhanced Oil Recovery II: Systems
Cements and
Cementing Practices Thermal Processes
PE 123
Measurement Sampling PE 505 PE 801
and Storage PE 303 Enhanced Oil Recovery III: Offshore Drilling Systems
Perforation Chemical Processes
PE 124 PE 802
Instrumentation and PE 304 PE 506 Offshore Structure Oesiqn
Control ACldizing and Other Enhanced Oil Recovery IV: and Installation
Chemical Treatment Miscible Processes
PE 125 PE 803
Pipeline Desiqn PE 305 PE 507 Subsea Production Systems
and Construction Reservoir Simulation
Fracturing
xiuction Operations PE 306
PE 508
Reserves Estimation
PE 151 Sand Control
I Surveillance and Wire line
Aalntenance Operations
PE 152
Corrosion. Paraffin,
and Water Treatment
PE 153
Oilfield Safety
Preface to Petroleum Performance Series
The Video Library for lxploration and Production Specialists:
is a comprehensive, video-based instructional system
designed to provide practical technical training for
exploration and production specialists in the areas of
Petroleum Geology, Exploration Geophysics, and Petroleum
Engineering.
The organization of the Petroleum Engineering specialty is
shown in the topic outline on the preceding page.
The Petroleum Production Performance series introduces the
petroleum engineer to the production system, and to the
graphical techniques uSed to predict system performance and
optimize production.
This module introduces the topic of production decline
curves and their use as predictive tools in the analysis of
petroleum production performance. The module is divided
into six units: Units 1, 2, 4, and 5 provide the basic
instructional content; units 3 and 6 extend the
instructional content in the form of interviews. Unit 3 is
an interview with Ron Samuels, President of Dwight's
Energydata, Inc. Unit 6 is an interview with Forrest Garb,
President of H.J. Gury and Associates, Inc. Unit 3
discusses how production data on many hundreds of thousands
of wells within the United States is collected monthly and
made available for use either as a record of production or
in preparing decline curves. In Unit 6 an experienced
reservoir engineer who has worked with decline curves for
many years makes a number of practical suggestions about
their preparation, use, and limitations. Neither of these
units have exercises associated with them nor are they
absolutely necessary for learning the basic content of this
module. We recommend that you view them because of the
fundamental, practical knowledge you will gain. Units 1, 2,
4, and 5, together with their respective exercises, however,
must be undertaken to complete the module.
Foreword
This Module is divided into six units. Units 1,2,4 and 5
-pro~ide the basic instructional content. Units 3 and 6 extend
the instructional content in the form of interviews. Unit 3 is
an interview with Ron Samuels, President of Dwight's Energydata
Inc. Unit 6 is an interview with Forrest Garb, President of
H.J. Gury and Associates, Inc. In the former, you will have an
opportunity to learn how production data on many hundreds of
thousands of wells within the United States is collected monthly
and made available for use either as a record of production or
in preparing decline curves. In the latter, you will hear an
experienced reservoir engineer, who has worked with decline
curves for many years, make a number of practical suggestions
about their preparation, use, and limitations. Neither of
these units have exercises-associated with them nor are they
absolutely necessary to learning the basic content of this
Module ---- but they are recommended for viewing because of the
fundamental, practical knowledge that you will gain. Units 1,
2, 4, and 5 together with their respective exercises, however,
must be undertaken to complete the module.
Instructions to the User
This video-assisted training series has been designed to be
used on either an individual or a group basis. -
• To receive maximum benefit, you should begin by viewing
the first portion of a videotape, preferably beginning
with Module 1 and proceeding sequentially through the
series. However, there is no reason, other than inter-
pretation and consistency, why a sample module from the
middle of the course may not be selected and viewed.
• Each Module is divided into instructional units,
consisting of about 10-15 minutes of viewing. At the
end of each unit you are asked to do some further
reading and/or work exercises from this manual. This
reinforcement technique ensures that you "internalize"
what you hear and see in the video portion.
• The video program is "content dense;" that is, it
contains a great deal of information during a relatively
short viewing time. For this reason, you are encouraged
to view the tapes several times, especially if concepts
or methods are not clear the first time.
• Program content for both the manual and video are to be
found in the Table of Contents.
• To assist us in assessing the effectiveness of this
video-assisted training program, we ask you to rate each
module on the attached evaluation form and to submit it
to your training administrator or to us:

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 NOTE TO THOSE WHO PREFER TO USE 51
METRIC UNIT
In the text and exercises that follow you may
make the following unit substitutions without
changing the meaning of the material presented.
Even though this will change the absolute magni-
tude of quantities, the underlying concepts and
mathematical relationships will not. Substitu-
tions involved:
US/English Unit 51 Unit
Pressure psi k Pa
Volume bbl
Volume ft 3
 Unit 1.0

The objective of this module is to

Introduction show how individual well and field perfor-
mance trends may be analyzed so as to
provide information about future producing
rates of oil, gas, and water; about cumu-
lative production; and, most importantly,
about the remaining oil and gas reserves.
The Society of Petroleum Engineers
(SPE) has recommended four standard
methods for estimating reserves. They
appear in a publication entitled
"Standards Pertaining to the Estimating
and Auditing of Oil and Gas Reserves
Information," which was approved by the
SPE Board of Directors on October 30,
1979. A copy of this pUblication appears
in Appendix A.
Under Article 5, Section 3, we read:
"The acceptable methods for
estimating crude reserves include: 1)
the volumetric method; 2) evaluation
of performance history, which evalu-
ation may include an analysis and
 projection of producing ranges, reser-
voir pressures, oil-water ratios, gas-
oil ratios, and gas-liquid ratios; 3)
development of a mathematical model
through consideration of material
balance and computer simulation tech-
niques; 4) analogy to other reservoirs
if geographic location, formation
characteristics, or similar factors
render such analogy appropriate."
It is the second of these methods--the one
based on evaluation of performance history
--which we shall be discussing in the
following pages.
With reference to this specific
procedure, we read further:
"For reservoirs with respect to
which performance has disclosed reli-
able production trends, crude reserves
may be estimated by analysis of per-
formance histories and projections of
such trends. These estimates may be
primarily predicated on an analysis
of rates of decline in production,
and on appropriate considerations of
other performance parameters such as
reservoir pressures, oil-water ratios,
gas-oil ratios, and gas-liquid
ratios."
For the purposes of this method, then, it
is assumed that the factors which
influenced the performance trend of the
well or field in the past will continue to
govern its future performance in a similar
manner. In other words, without informa-
~

tion to the contrary, we assume that what

has occurred will continue to occur. It
is this assumption which allows us to
extrapolate future trends from past
performance.
Decline curves are the cornerstone of
this method, and are so named because of
the tendency of the production of the well
to decline over time as the reservoir is
depleted and the average reservoir
pressure declines. The rate of decline
depends on many factors, including the
reservoir drive mechanism, the pressure,
and the rock and fluid properties.

There are a number of ways in which

production decline data can be shown
graphically. In Fig. 1.0, we see the
production rate, q, plotted against time.
The rate is constant during the early life
of the well, when either proration or
maximum efficient rate limits are placed
,.1.0 Production rate-time.relationship

o
o
Time-~
)

~ 1.1 Production rate-cumulative

production relationship.

o
o

~.1.2 Percentage oil production-

cumulative oil production 100 ~)
relationship.

Oil%

o
o
on it. Thereafter, as the reservoir
pressure is reduced, the rate begins to
decline.
In Fig. 1.1, we see the production
rate, q, plotted against the cumulative oil
production, N. As expected the profiles
p
of the curves in Fig. 1.0 and 1.1 are so~e-

what similar, with the production rate

declining as more fluids are produced from
the reservoir.
We will often plot the percentage of
oil or water-cut versus cumulative produc-
tion in situations where the ultimate
production rate is controlled by the amount
of water production we can handle on the
lease. In Fig. 1.2, we have plotted the
percentage oil production versus cumulative
production. When the value of the oil
produced becomes equal to the cost of
disposing of the produced water, we have
reached the point of abandonment.
 In bottom-water drive fields, we might
plot the location of the oil-water contact
in the formation against cumulative oil
production. As the contact reaches the top
of the sand, we know that we have recovered
the crude reserves for this well. A typi-
cal plot is shown in Fig. 1.3.
In a similar manner, we might plot the
cumulative gas produced, Gp' versus the
cumulative oil produced, N (see Fig.
p
1 .4) . This plot is particularly useful in
cases where we know the expected total gas
to be produced. This information provides
an indication as to when the well will
reach its abandonment point.
One of the more important plots which
is incorporated into our estimation of
reserves is that of the average reservoir
pressure, PR, versus time (see Fig. 1.5).
Either pressure build-up tests or observa-
tion well data are used for this plot.
Fig. 1.3 l.ocation-ef oil-water contact versus
cumulative oil production.

o/w
Contact

Fig. 1.4 Cumulative gas versus cumulative

oil production.

Gp

o
o

Fig. 1.5 Reservoir pressure versus time.

o
o
Time--+)
 Finally, we should remember that for

fixed volume gas reservoirs, the average

reservoir pressure, PR, over the
compressibility factor, z, will plot as a
declining straight line function of the
cumulative gas produced on linear coordi-
nate pape~. This relationship is shown in
Fig. 1.6 and follows from the application
of the gas law to a fixed volume container.
Not all of the preceding curves

declined; however, they are generally

referred to as decline curves because the
most important ones involve production rate
which does decline. Accordingly, we shall
devote a major portion of this module to
their characterization.
Production rate is by far the most
popular dependent variable used in project-
ing future performance of wells and
reservoirs. It has the advantage of being
readily available and easily recorded.
When no major changes in operating
procedures are made and no stimulation
Fig. 1.6 - PR/L-versus cumulative gas
production for a fixed volume
reservoir.

o
o Gp
treatments are applied, the production
rate curves normalTy show a fairly
smoothly declining trend over extended
periods. This trend lends itself to
extrapolation.
This smoothness of decline is one
important requirement for extrapolation.
A second requirement is that there be a
known end point; that is, a production
rate at which a well or field begins to
lose money if production continues. This
point is referred to as the economic limit
production rate. If we incorporate this
value into our rate versus time and rate
versus cumulative production curves, we
can extrapolate each trend line to this
cut-off point. Thereby, we can determine,
for the first curve, the number of years
the well or field will produce profitably
prior to abandonment (Fig 1.7), and for
the second curve, the cumulative production
at the time of abandonment.
Fig. 1.7 Extrapolation of production rate
versus time and cumulative
production to an economic limit.

q q

o o
o o
Tlrne-e-e) Np
Economic limit production rate
 The end point .may also be a. minimum
oil-cut. In this case, we use the oil-cut
versus cumulative production curve in order
to calculate the total production at the
time of abandonment (Fig. 1.8).
Likewise, if the known end point is
the movement of the oil-water contact to
the top of the oil sand, then we would use
a plot of the oil-water contact elevation
versus cumulative oil production to find
the total production prior to abandonment
(Fig. 1.9).
If the total expected gas production
has been calculated with a degree of
accuracy and serves as our cut-off point,
we would plot the cumulative gas production
versus the cumulative oil production in
order to find the total oil to be produced
(Fig. 1.10).
Finally, for a gas well or field, the
minimum producing rate is determined by
the back-pressure imposed on the well with
or without surface compression. When the
ig.l.8 Oil-cut versus cumulative
production. 100%

Oil%

o
o Np

rig. 1.9 Location of oil-water contact versus

cumulative oil production.

O/W
Contact

Fig. 1.10 Cumulative gas versus cumulative

oil production.

Gp

o
o
value of this limiting back-press~re is
converted to a value of average reservoir
pressure, PR, divided by z and plotted
against cumulative production, an estimate
of the ultimate producible gas reserves
may be obtained (Fig. 1.11).
But a word of caution. There are two
important limitations on our projections.
First, the total reserves that are esti-
mated to be produced must be reasonable;
and second, the total time during which
those reserves are to be produced must
also be reasonable. If the projected
total reserves greatly exceed the volumet-
ric estimates, then we have made an error
in our calculations. We may be producing
from a much larger drainage area than the
drainage area of normal spacing. If this
is the case, it will not be long before an
offset well is drilled, thereby diminishing
the reserve estimates and shortening the
life of the well.
Fig. 1.11 Estimating gas reserves for a fixed
volume reservoir.

o
o Gp Gp
 1.1 The three types of decline curves most
The commonly used are: the constant percentage
Mathematical
or exponential decline, the hyperbolic
Representation
of Decline Curves decline, and the harmonic decline. Each
may be expressed mathematically.

1.1.1 The nominal production decline rate

Constant equation shows the change in production
Percentage
Decline rate per unit of time is a function of the
production rate.

o =_ dg/dt ( 1 .1)
q

With constant percentage decline, the change

in production rate per unit of time is a
constant function of the production rate, q.
This means that the decline rate, 0, is
constant. A negative sign is added to the
right side of the equation so that 0 will
have a positive value. If the variables of
this relationship are separated, and inte-
gration takes place between the appropriate
limits of flow rate and time, we obtain the
rate-time relationship for the constant
percentage decline curve.
 ( 1 .2 )

This is the rate-time relationship for the

constant percentage or exponential decline
curve.
To obtain the rate-cumulative produc-
tion relationship, we must integrate the
flow rate, qt' over the time period, t.

Np
=l 0
qt dt

=/ 0
qi e
-Dt
dt (1 .3)

q . - qt
1
= 0

q.1 is the initial production rate and

qt is the production rate at some later
time, perhaps at the time of abandonment
if we are estimating future production.
Note that 0 is a fraction and not a
percentage. This is the rate-cumulative
production equation for constant percent-
age or exponential decline curves.
 As mentioned above, the decline rate
is constant for constant percentage
decline. For convenience, we state that:

o =K ( 1 .4)

For the two decline curves to be studied

next, the decline rate is not constant.

1.1.2 For hyperbolic decline, the decline

Hyperbolic rate is proportional to a fractional power
and Harmonic
of q. This may be expressed as:
Decline

( 1 .5)

n lies between zero and one, (O<n<l).

(The videotape is incorrect here. It
should show O>n>l.)
For harmonic decline, the decline
rate is proportional to q. This may be
expressed as:

o = Kq ( 1 .6)
We see, then, that the harmonic decline
and constant percentage decline are
special cases of the hyperbolic decline;
that is, n is equal to 1 for the harmonic
decline, and to 0 for constant percentage
decline. On a more practical basis, we
note that for both hyperbolic and harmonic
decline curves, the decline rate will be
highest initially and will decrease as the
production rate decreases.

Each of the last two relationships

may be integrated. We start with the

hyperbolic decline relationship:

dg/dt (1.7)
o = Kq n =- q

Integrating this relationship between the

appropriate limits of time and flow rate,
we obtain the rate-time relationship.

qt = q.(l
1
+ n o.t)-l/n
1
( 1 .8)
 1

We note that, in order to calculate a flow

rate at any time, qt' we must know the
value of n and have calculated a value for
D.. We shall show how this is done
1

shortly. With one more integration we may

calculate the rate-cumulative production

relationship.

(1 .9)

n
q.
1
= (1 - n)

With this relationship and known values

for qi' qt' nand Di, it is an easy

task to calculate the cumulative
production, N.
p
In order to develop
equivalent relationships for harmonic
decline, we begin again with a decline
rate relationship, in this case:

dg/dt (1.10)
o = Kq = q
To integrate, we separate variables and
integrate between the appropriate limits
of time and flow rate. This gives us the
rate-time relationship.

(1.11)

-
In this case, we see that the constant n
no longer appears. We also see that we
must know both the initial flow rate,
q., and the decline rate at the initial
1

flow rate, D., in order to calculate the

1

flow rate, qt'

Once again, if we integrate the flow
rate, qt' with respect to time, we obtain
the rate-cumulative production relation-
ship.

(1.12)
 It becomes clear that our calculation
procedures are sequential; that is, we
must first determine the initial decline
rate D., the initial production rate
1

q., and, in the case of hyperbolic

1

decline, a value for n. With these

values, we use the rate-time relationship
to calculate qt and, then, knowing qt'
we use the rate-cumulative production
relationship to calculate a value for
N. With these relationships, then, we
p
can calculate the flow rate and cumulative
production at any given time.

Work exercises 7.1, 7.2, 7.3.

Unit 2

1.2 Using the mathematical relationships

The Graphical which apply to the three types of decline
Representation
curves, we may plot each on various types
of Decline
Curves of graph paper and see what conclusions
may be made. The two types of relation-
ships to be plotted are the rate-time and
rate-cumulative production expressions. On
a preliminary basis, we see in Fig. 1.12
how, for a constant initial production
rate, the plots differ on linear coordi-
nate paper for different values of n. In
Fig. 1.13, we see how they differ when
plotted on natural log/linear scales.
Remember that when n=l, we have harmonic
decline; when n=O, we have exponential
decline; and between the two we have
hyperbolic decline.
Now we should see how they plot on
three types of coordinate paper: linear,
semi-log and log-log. We shall plot three
mathematical relationships on each type of
graph paper: one for constant percentage
decline (labelled as I); one for hyperbolic
decline (labelled as II); and one for har-
monic decline (labelled as III). In order
to obtain these curves, the following
specific values for Nand 0 have been
assumed:
F'ag,
, 112
. lvpic.al
, clots
t-' on linear coordinate
paper of rate-time and rate-
cumulative production (after Nind.
1981).
n =
l/Z

hyperbolic

Fig.l.13 Typical plots on natural log/linear

coordinate paper of rate-time and
rate-cumulative production.

~...;V-=-3_ hyperbolic
 n

Curve I: o 0.03

Curve II: 0.5 0.10

Curve III: 1.0 0.3

On linear coordinate paper (Fig.

1.~4), we see that the production rate
decreases with both time and cumulative
production. We also note that the decline
rate is greater for curve III than for
curve II, and that curve II, in turn,
declines more rapidly than curve I. We
also note that, as a result of the more
rapid decline rate, curve III gives the
least value for cumulative production.
Curve II provides a higher cumulative
production rate, and curve I has the
highest cumulative production rate. The
differences in cumulative production
values are rather substantial.
The most important observation to be
made is that curve I, the constant percent-
age decline curve, is a straight line
 I<.Ill'llJ1l1' plpl' pJl IlIlt',lI
(OOrdlO.ltt' paper

a
a
Time )

Fig.l.14b Rate-cumulative production

plots on linear coordinate paper.

0"
o
when rate versus cumulative production is
plotted.- It is for this reason that this
specific decline curve is so popular.
Note that the decline rate 0 is equal to:

q. - qt
1
0 = (1.13 )
Np

This, in turn, is equal to:

o= =- 1 x slope = tan (8)

Where 8 is the counterclockwise angle

between the horizontal and the straight
line (or the tangent to the decline
curve). This observation provides a
graphical technique for calculating D.
If we now redraw the same curves on
semi-log paper with the rate axis converted
to a log scale (Fig. 1.15), we see that the
curves tend to be located in the same place
relative to each other. This is as it
should be. But now we make a second impor-
tant observation: we note that rate-time
curve I, the constant percentage decline
 Ig. 1 .;,.
1 <:l l\dtl'-(1I11(' plots on sl'IllI-log
" paper

q
log

o
Time )

Fig.1.15b Rate-cumulative production

plots on semi-log paper,

q
log

o
curve, is a straight line on semi-log paper.
This reinforces our understanding as to why
the constant percentage decline curve is so
popular. The rate-time curve is a straight
line on the semi-log paper and the rate-
cumulative production curve is a straight
line on linear paper. The fact that they
are both straight lines allows for easy
extrapolation.
Notice that rate-cumulative production
curve III, the harmonic decline curve, is a
straight line on semilog paper. With this
knowledge and a known value for the initial
production rate, we can calculate the
initial decline rate, D..
1

We also note that on the rate-time

plot, a value for the decline rate 0 in
curve I can be obtained graphically by
calculating the slope of the straight line
and by multiplying it by -1. This graphical
estimation for 0 can be compared to the value
obtained using the slope of the rate-
cumulative production curve which is a
straight line on linear paper (Fig. 1.14(b».
 aq

Fig.1.16a Rate-time plots on log-log paper.

q
log

Time ~
log

Fig.1.16b Rate-cumulative production

plots on log-log paper.

q
log

Np
log

Fig.1.16c Shifting to obtain a straight line.

q q
log log

Time ) Np
log log
 Now we should see how the three
~

curves plot on log-log paper. We see the

results in Fig. 1.16. Note that the curves
have shifted to the upper right portion of
the diagrams and that none of the curves
is a straight line. The hyperbolic decline
curves (curve II), however, for both the
rate-time and the rate-cumulative produc-
tion relationships, can be straightened.
Using appropriate shifting procedures
(see, for example, Campbell (1959», these
curves become straight lines on log-log
paper (Fig. 1.16(c». The straight line
allows for easier analysis. In addition
to the extra work involved in applying
this shifting procedure, the log-log plot
has the further disadvantage of crowding
the horizontal scale at the point where the
answer is sought (Fig. 1.16(b». For this
reason, special graph paper for hyperbolic
decline has been developed, making it
possible to obtain straight lines when
plotting rate versus time and rate versus
cumulative production.
 1.3 The next question we must ask is which
Decline Curve
of the three types of decline curves most
Selection Based
on Field nearly represents the decline performance
Performance of our wells or fields. There are a number
of published studies which will assist us.
Cutler (1924)* undertook an intensive
investigation of the decline curves of a_
large number of oil fields. He found that
constant percentage decline curves were in
good agreement with production data during
the early years of production, but often
gave results that were too conservative
during the later stages of production.
He expressed a preference, then, for
hyperbolic decline curves.
Nomoto (1929) compared the use of both
the constant percentage and hyperbolic
decline curves for a number of Japanese
oil fields and arrived at an opposite
conclusion; that is, that the constant
percentage decline curve was preferable.

* All references appear at the end of the text material.

 Shea, Higgins, and Lechtenberg (1964)
reported on their review of 347 California
reservoirs. In cases where they could
take a five-year production history,
extrapolate the decline curve for an
additional five years, and then compare
the prediction with what actually.took
place, they found that the constant
percentage decline curve was most accurate.
Ramsay (1968), in his Masters Degree
thesis at the University of Tulsa,
reported his findings on the analysis of
field data. He reviewed production data
for about 1,150 leases and 250 pools in
seven different states in the United
States. Using the same criteria as Shea,
et. al. (that is, using decline curves to
predict production five years into the
future, and then comparing those predic-
tions with what actually took place), he
found that the constant percentage decline
curve gave the best results.
 From these studies, you will realize
-
that there is room for disagreement among
the investigators, especially since the
data that they analyzed were different.
As a practical matter and as a matter of
convenience, semi-log paper is most often
used for production rate versus time-_
extrapolations, while linear coordinate
paper is generally favored for production
rate versus cumulative production
extrapolations. The use of straight line
extrapolations for both relationships
means that a constant percentage decline
is being assumed. This generally results
in conservative estimations, especially
during the later life of a well or field.
We see in Fig. 1.17, for example, that a
semi-log plot of rate versus time will
give an abandonment prediction at time,
t (Fig. 1.17(a)), whereas the
l
hyperbolic decline curve would give an
abandonment time at t (Fig. 1.17(b)).
2
Later abandonment time, of course, means
that the well will ultimately produce a
.g. 1.17 -Comparison of abandonment time.

q
log

a) Time )

q
log

b)

q
log

o t1 t2
c) Time )
 -

greater volume of reserves. Exp e r i c ncc d

engineers often allow for the fact that
the constant percentage decline line will
be conservative, and they compensate for
this by graphically flattening the decline
slope in the later stages of production,
although this is not recommended for
estimates requiring a rigorous defense
(Fig. l. l7 (c) ) .
We now realize that the constant
percentage decline curve has the broadest
application in practice. This means that
during the decline period of the well we
can plot the production rate versus time
as a straight line on semi-log paper and
production rate versus cumulative produc-
tion as a straight line on linear coordi-
nate paper. We also know that we may wish
to stretch the curves outward a little in
their later years of production.

1.3.1 One major limitation to the general

Decline use of constant percentage decline curves
Curves
for Tight seems to be for tight, less permeable
Reservoirs
reservoirs. For these reservoirs, a semi-
log plot of production rate versus time
initially follows a hyperbolic decline, and
then flattens to a constant percentage
decline when the transient reaches the
radius of drainage. In the early life of
the well or field, pressure transients
dominate production response. This gives
a hyperbolic decline performance relation-
ship. This type of curve, however,

ultimately becomes asymptotic to the hori-

zontal axis and would give an unusually
high cumulative production. For this
reason, the decline prediction follows a
hyperbolic curve initially, but then is
transferred to a constant percentage
decline curve at the point where the slope
of the hyperbolic curve becomes equal to
the decline of known wells and reservoirs
in the region (Fig. 1.18).
Except for tight reservoirs, then,
the constant percentage decline curves are
to be preferred.
Fi~, 1.18 [)(>clllH' curves for tight reservoirs

',000
q
88LS!D

100

10
2 3 4 56 7 8 9 10
Years
 1.4 Because the constant percentage
Applications decline curves receive such widespread
of Constant
use, it is useful for us to study them in
Percentage
Decline a little more detail. The production rate
Curves versus time and the production rate versus
cumulative production relationships are
given by these two expressions:

qt = q.e -Dt (see 1 .2)

1

q.1 - qt (see 1 .3)

N =
P 0

o is referred to as the continuous decline

rate and has the dimensions of lit. The
units for 0 and those for t must be the
same. Likewise, the production rates
should be given in the same time
dimensions. Thus, if the production rate,
q, is in barrels per month, t should be in
months and 0 in units of I/months.
 Sample Problem; We may use these
equations to solve the following sample
problem: we are given that the initial
production rate at the onset of decline is
6,000 bbl/month. A plot of the early
production history indicates that the
decline constant, 0, is equal to 0.025 and
has units of l/month. The economic limit
production rate for the well has been
calculated to be 75 bbl/month. We are
asked to estimate the production rate
after 3 years of decline, the total
reserves, and the time to abandonment. We
may calculate the production rate after 3
years of decline by solving our rate-time
equation with t equal to 36 months.

q36 = 6000e- 0. 025(36)

= 2439 bbl/month

In solving the second part of the

problem (that is, the total reserves), we
use the rate-cumulative production
equation and the given data to yield:
 6000 - 75
N
P
= 0.025
= 237,000 bbl

In order to calculate the time in

months to abandonment, we use our
production rate versus time equation, the
economic limit production rate and the
decline rate D.

75 = 6,OOOe-O.025t
t = 175 months
= 14.6 years

We should check these values against

our volumetric and local performance
estimates and should quite likely find
them to be reasonable. It should be
pointed out that the data just calculated
using mathematical expressions could
have been estimated just as easily by
using constant percentage graphical
projections. The procedures are
equivalent.
 1.4.1 We are often asked to quote the
Decline decline rate of a ~ell on an annual rather
Rates
than a daily or monthly basis. This can
be done if we make several observations
about our production rate-time equation.

(see 1.2)

We will begin by assuming that time, t, is

in years and that the constant, 0, is in
units of l/years. This means that the
product, ot, is dimensionless. Units for
production rate for this equation may be
given in barrels per day or barrels per
month. The only limitation is that the
consistency of units must be maintained
between 0 and t in the exponent.
With our basic equation, it can be
shown that the ratio of production rates
on the first day of the year in successive
years is a constant equal to e -0
 = = e -0

This ratio is often written as:

-0
e =1 - d (1.14)

The constant, d, is often referred to as

the annual production decline rate, and
should be distinguished from 0, which is
the continuous decline rate.
Sample Problem: Let us use these
definitions to solve the following
problem. We are given that the production
rate on the first day of year 1 is 1,000
bbl/day, and on the first day of year 2 is
750 bbl/day. The ratio of these two
production rates is equal to I-d.
 q2 750
-- =
1000 = 1 -d
ql

d = 0.25

The value of d is then found to be equal

to .25, meaning that there is an annual
production decline rate of 25%. It can
be shown that the monthly decline rate,
d m, is related to the annual decline
rate, d, by the expression:

(1 - d )12
m
= (1 - d) (1.15)

An annual decline rate of 25% equals a

monthly decline rate of 2.35%.

(1 - d m)12 = (.75)
dm = 0.0235
As you can see, the calculations are quite

direct.
An annual decline rate, d, equal to
25%, is equivalent to a continuous decline
rate, 0, of:

(1 - d) = e -0
(1 - .25) = e -0
0 = 0.2876/year

If we divide this value by 12, we get

.02397 per month. Each of these has its
respective percentage values. Often you
will hear the continuous decline rate, 0,
referred to as the nominal decline rate
and the annual decline rate, d, referred
to as the effective decline rate. The
former is what occurs continuously on a
smooth curve; the latter is based on
values of production at discrete points in
time, for example, from the first day of
the first year to the first day of the
second year. Because production data are
usually reported on a discrete basis (that
is, daily or monthly), we often make use
of the effective as opposed to the nominal
decline rate.
Jan Arps (see Frick (1962)) prepared
a series of tables for constant percentage
decline curves, showing the production
rate and cumulative production over time
for a series of effective decline rates.
One such table appears in Table 1.1. In
it we see columns of production rate,
rate-cumulative production and time for an
effective decline rate of 1 3/4 percent
per month. All data are normalized to the
initial production rate. This means that
the tabulated values must be multiplied by
the initial production rate to get the
actual production rate. For example, if
the initial production rate is 10,000
bbl/month and we wish to know values at
the end of the year, we enter the table at
the twelfth month and multiply each value
by 10,000. This would give us a pro-
duction rate in the twelfth month of 8090
bbl/month and a cumulative production of
 -

Table 1.1
Constant Percentage Decline Table

Effective decline
1 3/4% per month
Time,
months
Rate Cumulative

1 0.9825000 0.9825000
2 0.9653062 1.9478063
3 0.9484134 2.8962196
4 0.9318162 3.8280358
5 0.9155094 4.7435452
6 0.8994880 5.6430331
7 0.8837469 6.5267801
8 0.8682814 7.3950614
9 0.8530864 8.2481478
10 0.8381574 9.0863053
11 0.8234897 9.9097949
12 0.8090786 10.7188735
24 0.6546082 19.3912851
36 0.5296295 26.4079477
48 0.4285119 32.0849793
60 0.3466998 36.6781441
72 0.2805074 40.3943754
84 0.2269525 43.4010986
96 0.1836224 45.8337740
108 0.1485650 47.8019996
120 0.1202007 49.3944488
107,188 barrels during the first year. A
number of these tables appear in Appendix
B for easy reference.
One definition that we should provide
you with before continuing is that of the
loss-ratio. It is defined as the inverse
of the nominal decline rate or:

loss-ratio = g
dq/dt (1.16)

The loss-ratio is often applied to

tabulated production data to see how the
ratio trends with time. For constant
percentage or exponential decline, the
loss-ratio is constant.

Work problems 7.4, 7.5, and 7.6.

 Unit 3

Unit 3, the video program that

accompanies this manual, consists of an
interview with Mr. Ron Samuels, President
of Dwight's Energydata in Dallas. He
shows how one commercial facility collects,
collates, and makes available to clients
production data from hundreds of thousands
of wells monthly. A copy of the curve plot-
ted in the program appears in Appendix B.

Unit 4

1.5 We are now ready to discuss the use

Collection, of production data. Before doing so, we
Analysis and
Smoothing of should give you some idea as to how data
Production are collected, recorded, and made avail-
Data able to the user. Your company very
likely has its own computer data base
system and records production data from
your wells. Alternatively, there may
exist commercial service centers that
record production
data that is submitted to governmental
agencies by operating companies. These
companies sell such data as a service to
users. Owights and Petroleum Information
provide such a service within the United
states in many forms, i.e., magnetic tape,
microfiche, hard copy, or online computer-.
search. The use of the computer for such
purposes is, of course, ideal.
There are a number of practical
realities of plotting production data
which must be considered in order to
obtain accurate decline curves. We may
divide our discussion into three principle
areas: (1) how we distinguish changes in
the production response of the reservoir
from changes in wellbore conditions or
operating practices; (2) how production
data is prepared for extrapolation; and
(3) how we incorporate changes in
operating practices (for example, the
addition of a new well to production or
the installation of artificial lift) into
our decline curve analysis.
 Let us begin with the first item
above. Because decline curves are intended
to represent the behavior of the reservoir,
the data used in developing them should
not include wellbore interference, lifting
equipment failure, or temporary operating
practices.
An accurate decline curve will not be
given for data projected into the future
that reflect, for example, a poorly
operating pump that will soon be repaired,
a damaged formation that will soon be
stimulated, or the low production period
during a well workover. It is the
engineer's job, then, to review the raw
production data in order to distinguish
reservoir performance from that caused by
transient operating practices. Also, by
practicing good judgment, the engineer
should restate the data for decline curve
analysis. Once this is done, the data
should accurately reflect the performance
of the reservoir for this well or field.
 Table 1.2
Production Data for a Six Month Period

Month Production Rate

1 15,000
2 9,500
3 16,200
4 8,700
5 10,900
6 6,500

Our second concern is the way in

which raw data is handled. Let us use the
raw production data shown in Table 1.2 to
analyze the decline performance of a
particular well over a six-month period of
time. Because wells are seldom produced
in the same way each day or month, the
plot of rate versus time for these dis-
crete points shows some scatter (Fig. 1.19).
If we join the points together we obtain a
saw-toothed line. In order to obtain a
single straight line on semi-log paper
that we expect for the rate-time curve, we
have three choices. We may "eyeball" the
data; that is, on a somewhat arbitrary
Fig. 1.19 Semi-log plot of data points
showing scatter.

q
!()9

10.000

1.000
1 2 3 4 5 6
Months
 basis, draw the best straight line that we
see through the points. Although somewhat
inaccurate, this procedure is often used.
Alternatively, we may smooth the data by
using a method of averages. Finally, as a
third alternative, we may use one of
several methods to find the equation of
the straight line that fits the given data
points.
The method of eyeballing is one that
everyone understands, so we will move
directly to the other two options: the
ways in which data may be smoothed or,
alternatively, how a best straight line
fit is calculated.

1.5.1 We may begin with the methods for

Data smoothing data. One way of smoothing the
Smoothing
data provided to us is to add the
production for a three-month period, that
is, quarterly, and then plot the three-
month production at the mid-point of the
quarter (Fig. 1.20). The plot point for
the first three months, then, would be at
the middle of the second month; the plot
point for the second quarter would be at
the middle of the fifth month; and so on.
A straight line is then drawn through the
points and, by dividing the quarterly
production rate by three for any given
month, we have an average value of the
monthly production rate.
There is a second method for averag-
ing data which is even more widely used.
It is referred to as the moving average.
In this method, we must first select the
number of points over which we would like
to carry out a moving average.
In looking at our sample data points,
we observe that they appear to be cycli-
cal with a period of about three months.
We assume, then, a three-point moving
average. The procedure is quite straight
forward. We add the production for the
first, second, and third months, divide the
sum by three, and plot the resulting value
fig.1.2.9 Smoothing of sample data 100,000
quarterly.

q
log
10,000

2 3 4 5 6
Months

Fig. 1.21 Smoothing of sample data using

100,000 _ - - - - - - - - - - - - ,
three-point moving averages.

q
log
10,00 a l-~·+-~+

1.00 0 ..............- - """-""""-_--',

1 2 3 4 5 6
Months
at the second month. Then we add the pro-
duction for the second, third, and fourth
months, divide by three, and plot the
resulting average at the third month.
This procedure is continued until we no
longer have three-month periods of produc-
tign straddling the plot point. For our
sample well, our final plot point would be
at the fifth month. With these new data
points, we have smoothed the original data
and can now draw a single straight line
through the average values (Fig. 1.21). In
doing so, we remember that the best fit is
one where the area above the line that we
draw is equal to the area below the line.
The number of points to include in
a moving average procedure depends on
the nature of the data. It should be
recognized, however, that the more points
included, the less evident small varia-
tions will become.
The third method for obtaining the
required decline curve through the
 scattered points uses methods of graphical
mechanics to find a straight line equation.
In order of increasing complexity,
these methods include: (1) slope-intercept,
(2) selected points, (3) the method of
averages, (4) the method of moments, and
(5) the method of least squares. We shall
discuss below all but the fourth method.

1.5.1.1 In the method of slopes and inter-

The Method of
cepts, the data points are plotted on the
Slopes and
Intercepts coordinate paper which is expected to give
a straight line relationship. A person
entering the data then "eyeballs" the best
straight line through the points. By
noting the point of intersection of this
line with the vertical axis and by
measuring the slope of the line, the two
constants needed for the straight line
relationship may be determined. Shown in
 Fig. 1.22, are the underlying equations,
graphical procedures, aAd equation of the
straight line for linear, semi-log, and
log-log data plots. Note that they are
drawn for a declining slope as we would
have for decline curves. The limitation
of this method is that the straight line
drawn through the data points is not
unique -- it is subject to the attitude
and "eyes" of the person doing the work.

1.5.1.2 In using the method of selected

The Method
points, we would again plot the data on
of Selected
Points the appropriate graph paper and "eyeball"
the best straight line through the
points. We then select two points on the
line, preferably toward each end of the
line, and use the values at those points,
plus the general form of the underlying
equation, to calculate the two unknown
constants of the equation. Each point
gives an equation and the two equations
will provide the equation of the line.
 · 1 ..L"2
F'K. I\kthod of slopes and intercepts linear coordinates

b m = ~q
Dot
(note: Do q is «0);
Doq so m will be «0)
q
q = mt + b
Dot

sernl-loq
m = ~ = -1
Dot Dot
100
(note: one cycle on the log scale)
b log q = mt + log b
q 10
q = b(10)mt
Do log q q = be 2.3mt
1.0
Dot

.1
 Sample Problem: An engineer feels
that flow rate versus cumulative produc-
tion will plot as a straight line on linear
graph paper. He assembles his data, plots
it on the appropriate scales, draws the
best straight line through the data, and
then selects tW9 points near the ends of
the line. He proceeds to use the method
of selected points for this analysis. The
two points had the following values:

--9..- ~
200 5200
75 9600

The basic equation is:

q =m Np + b

Using the data points we have:

200 = 5200 m + b

75 = 9600 m + b

Solving for m and b we find:

q = -.0284 Np + 347.69
 1.5.1.3 We know that our basic rate-time
TRe Method
equation is a straight line on semi-log
of Averages
paper. Note that this could be rewritten
further as:

-0
log qt = 2.3 t + log qi

This is again a straight line. We shall

proceed using the natural-log form. In
order to obtain the equation for a unique
line, we must calculate values for the two
unknown constants by writing and solving
two equations. To do this using the
method of averages, we divide the given
data points into two sets, usually 3 to 6
points each. The data sets are selected
at each end of the range of information
provided. The data set at one end
provides the first equation; the data set
at the other end provides the second
equation. If, for example, we have six
months of data, each set will consist of
three months: Set 1 will consist of the
first three months, and Set 2, the second
three months. If we write the equation
for each month and sum the three points
for each set, we obtain the two equations
shown here:

Set 1: LIn Q
t = -0 L t + n (In Q.)
1

Set 2: LIn Q
t = -0 L t + n (In Q.)
1

This allows us to solve for q. and 0 and

1

then to write our specific equation for

qt in terms of time, t. It is this
specific equation, then, that we use to
extrapolate our data into the future.

Sample Problem: We should apply the

method of averages to the six-month
production data that we introduced earlier
(Table 1.2). We divide the data into two
sets: Set 1 for the first three months
and Set 2 for the second three months.
Giving the data equations for each set,
we obtain:
 Set 1: 28.468 = -60 + 3 In q.
1

Set 2: 27.147 = -150 + 3 In q.

1

Solving gives:

o = 0.1468 limo; q.1 = 17,728 bbllmo

qt = 17,728e-O.1468 t

1.5.1.4 The method of least squares is consid-

The Method
of Least ered to provide a "best fit" equation to a
Squares series of data points in the sense that it
is founded on the following relationship:
that the sum of squares (of the
differences between the actual data points
and the points calculated from the "best
fit" straight line) has a minimum value.
If our best-fit criterion is applied to
the variable on the vertical axis (the
usual case), then we have:

2
L(Y - Yc) = a minimum (1.17)
 ,
where y is the value of the given data at
point n, and y is the value calculated
c
using the empirical equation at point x.
The summation is made over all data points
(assuming there are no "outliers" that
should be discarded as being non-represen-
tative). The procedure for satisfying the
"minimum" criterion is straightforward.
We first substitute the equation for the
expected straight line for y into Eq
c
1.17. This gives us an equation with two
unknowns, for example, a and b. The
values of these constants must be found so
that a minimum is obtained. For this to
occur, the derivative of the relationship
(first with respect to a, and then with
respect to b) must be equal to zero. This
gives us the two equations with which we
may solve for the two unknowns. As an
example, let's assume that y will be
c
the equation of a straight line on linear
coordinate paper:

Yc = ax + b (1.18)
 SUbstituting, we get:

L(Y - ax + b)2 =a minimum (1.19)

Taking the derivative (first with respect

to a, and then with respect to b) and
setting the results equal to zero gives
the following two equations:

L(y-ax-b) = 0

and

L-2x (y-ax-b) = o.

This gives the two "least squares" equations:

Ly = a LX + nb
(1 .20 )

and

LXy 2
= a LX + b LX (1.21)
where n is the number of data points.
Comparable equations which solve for
values of 0 and qi (lla and b") for
exponential, harmonic, and hyperbolic
decline are given in Appendix C.

Sample Problem: Assuming that the

data of Table 1.2 will give a straight line
on semi-log paper, find the best straight
line using the method of least squares.
Referring to Appendix C, we find Eqs C-2
and C-3 to be the applicable ones. We
calculate the needed values for these
equations as follows:

Lt = 21 LIn qt = 55.615
Lt 2 = 91 Lt In qt = 192.456
(2t) 2 = 441 n = 6

from Eq C-2:

In q.1 =
(91) (55.615) - (21)(192.456)
6 (91) - 441
= 9.708
q.
1
= 16,449 bbl/mo
from Eq C-3:

o = (21) (55.615) - 6(192.456)

6 (91) - 441

= 0.1255 limo

The "best fit" using the method of least

squares gives:

qt = 16,449 e-0.1255t

This gives a somewhat different result

from what we calculated using the method
of averages. Here the straight line has a
less steep slope and a lower value of
q .. Using the method of least squares,
1

we would predict a monthly production rate

in the twenty-fourth month as 809 bbl/mo,
whereas the method of averages would give
523 bbl/mo. There is a significant
difference.
 1.6 Now that we know that we must analyze
Incorporating -
production data before accepting its
Changes in
Operating validity, and that valid data points must
Practice be smoothed before calculating the best
straight line, we should say a few words
about how to incorporate changes in
operating practices into our decline curve
analysis. We shall do this by looking at
a few specific examples.
The addition of new wells will cause
an increase in monthly production for a
lease and will add an upward swing in our
decline curve for the total lease (Fig.
1.23). The best way to incorporate this
effect is to plot production rate on a
per-well basis for the lease.
Well stimulation should also cause an
increase in production rate, but will not
necessarily affect the ultimate reserves
that are to be produced from the well
(Fig. 1.24). An increase in production
rate early in the life of the field can
Fig.1.23 Plotting rate on a per-well basis.

Field
q
log

Time )

Fig. 1.24 Effect of well stimulation.

q
log

o
Time )

Fig.1.25 Effect of artificial lift.

q
log

o
Time )
significantly influence the decline rate
and the overall economics~

The addition of artificial lift to an

oil well will cause an increase in produc-
tion rate for a period of time, and an
increase in producible reserves over those
realized from natural flow alone (Fig.
1.25).
The introduction of enhanced recovery
methods, such as waterflooding or CO
2
injection to a reservoir, should increase
the ultimate producible reserves. The
production rate will also be increased
until the displacement front reaches the
producing well (Fig. 1.26). These effects
should be incorporated into the decline
curve, but guidance should be sought from
suitable reservoir engineering studies.
A change in product value or opera-
ting costs will change the economic limit
of production and, thus, the crude
reserves (Fig. 1.27). A review of the
economic limit, then, should be made
annually.
.. 1.26 Effect of enhanced recovery

q
log

o
Time )

.1.27 Effect of product price.

q
log

o
Time )

. 1.28 Production profile for well

producing from fractured reservoirs.

o
o
Time )
 Fractured reservoirs provide a special
problem for decline curve analysis. During
the early stages of production in these
reservoirs, a well will produce at a
reasonably high rate while the fracture
zones are being depleted (Fig. 1.28). The
production rate will drop off substantially
as the rate of production from the tighter
matrix into the open fractures begins to
control production rate. The time at which
the production will drop from one level to
another, and the rate of production after
the drop has occurred, are usually not
known. Estimating production from frac-
tured reservoirs during the early stages
of production, then, is similar to the
problem of estimating future production
from a well which is being restrained at a
constant production level by proration or
engineering limits. Well tests are often
helpful, but most experienced engineers
will look to nearby wells or to comparable
fields in order to obtain an estimate of
what the ultimate decline rate might be.
 There are many other examples where
--
care must be taken during the extrapola-
tion of decline curves. You have probably
already thought of some.

WORK EXERCISES 7.7 and 7.8

Unit 5

1.7 We now have a good understanding of

Summary of the sequence of events that should occur in
the Procedures
to be Followed order to prepare a proper decline curve.
in Preparing We should take a moment to summarize.
Decline
First, we review the data and discard
Curves
nonperformance or faulty performance data.
Second, we plot the data as rate-time and
rate-cumulative production curves (Fig.
1.29). The rate-time curve is plotted on
semi-log paper and the rate-cumulative
production on linear coordinate paper
(Fig. 1.30). Unless we have a tight
reservoir, both of these plots should be
straight lines and extrapolated as such.
Cjg.1.29 Plot data.

q q
log

o
o o
Time )

=jg.1.30 Smooth data and add Economic

Limit.

q q
log

" o
o o
Time )
If we have a tight reservoir, it is likely
that a hyperbolic decline followed by a
constant percentage decline will be more
appropriate. Third, we smooth the data or
find the best straight line for the points
given and calculate the economic limit
production rate (Fig. 1.31).
Before proceeding further, we check
to be sure that no new operating practice
has been recently imposed, nor will be
imposed in the near future. Satisfying
ourselves on this point, we are free to
calculate or draw the straight lines on
the two plots.
We remember to spread out the produc-
tion near the end of the life of the well
because the constant percentage decline
curve tends to be conservative in this
region. We now have our production rate
versus time profile and our reserves (Fig.
1.32). Before committing ourselves to
these values, we must check to see if they
are reasonable. To do this, we see whether
Fig. 1.31 Ultimate decline curves.

q q
log

o
o o
Time-s-e)

Fig. 1.32 pl{/z versus G p for a gas reservoir.

o
o
Gp
 they compare with the recoverable reserves
--
calculated on a volumetric basis. We also
check to see if they compare favorably
with other wells in the area. If the
estimated reserves are too high or the
production life too long, we check to be
sure that there are no infill locations
which could be drilled to produce these
large reserves. If so, we must cut back
on the reserves of the well for which we
are making an estimate.

1.8 We should now take a few minutes to

Estimating
discuss the estimating of gaswell
Caswell
Reserves reserves. We know that for a fixed volume
gas reservoir (that is, where there is no
water encroachment), the plot of PR
divided by z (the gas compressability
factor at that pressure) versus Gp (the
cumulative gas produced) yields a straight
line on linear paper. This follows from
the gas law. As we see in Fig. 1.32, the
end points of the line are the original
reservoir pressure, p.,
1
div ided by its
compressibility faCtor at zero cumulative
production, and the other end represents
the original gas-in-place.
A gaswell will no longer flow when
the average reservoir pressure drops to a
value where it is equal to the pressure in
the wellbore imposed by the back-pressure.
The wellbore back-pressure, Pwf (Fig.
1.33a) is the sum of the back-pressure
imposed by the sales line at the surface,
plus the pressure losses that occur in the
gathering system and the tubing. Thus, for
example, if the sales line back-pressure
is 600 psi, the gathering system pressure
loss 25 psi, and the tubing pressure loss
50 psi, the wellbore pressure imposed by
the accumulation of these three values
will be 675 psi. When the average
reservoir pressure falls to this value, no
further flow will occur. This "No Flow"
point should not be confused with the
economic limit production rate.
Fig.1.33 Calculating back-pressure at the Pressure losses in -
sandface: gathering system = 25psi Sales Line

f~-+- Pressure loss in tubing = 50psi

a) Without compression

Pressure losses in

I
gathering system = 25psi Sales Line
=
Suction pressure 150psi

/\.~:""--l
Sales line
backpressure

~+--Pressure loss in tubing = 50psi

.-Flow

Pwf = 225psi
b) With compression
 If, for this example, the original
reservoir pressure had been 1,700 psi, and
its z value 0.87, then the end point of
the curve, as shown in Fig. 1.34(a), would
have been 1954. The other end point would
have been the original gas-in-place. In
this case, .we are told that it is 10.5 BCF.
To determine the cumulative production at
a "No Flow" average reservoir pressure of
675 psi, we divide this value of pressure,
by its z value (in this case, 0.92) and
obtain a value on the vertical axis of
733.7. Moving horizontally to the inven-
tory line and then down, we see that
the reserves that could be produced at
this terminal pressure would be 6.54 BCF
(Fig. 1.34(b)).
If we were to install a compressor
(Fig. 1.33b) at the point of sale with a
4:1 compression ratio, the minimum suction
pressure would be about 150 psi. If, to
this suction pressure, we add the gather-
ing system pressure loss and the tubing
Fig.l.J4a Sample calculation of effect of
back-pressure on reserves.
1(:354,,

o
o 10.5
Gp(BCF)

Fig.l.34b Reserves with a back-pressure of

675 psi.
1·· j:) ,1

Pn
z

o
o 6.5 10.5
Gp(BCF)

Fig.l.34c Reserves with a back-pressure of

225 psi.
1954

234
o
o 6.5 9.2 10.5
Gp(BCF)
pressure loss, we would obtain a "No Flow"
wellbore pressure of 225 psi.
Referring once again to our inventory
curve, we find that the "No Flow" condition
would occur, in this case, at a point on
the vertical axis equal to 225 divided by
its z value, 0.96, or 234.4. This yields
producible reserves of 9.24 BCF (Fig.
1.34(c». The difference between the two
cumulative production values, approxi-
mately 2.7 BCF, is obtained by the
installation of compression. An economic
analysis would have to be made to determine
whether the value of the additional
reserves produced exceeds the capital and
operating costs of the compressor.
The economic limit production rate,
as we learned earlier, is the rate at
which the value of production is equal to
the cost of producing the well. Once we
know this flow rate, we may use the
deliverability curves of the well (see the
Video Library program on Gaswell Testing)
 and the flowing wellbore pressure (imposed
back-pressure) to determine the average
reservoir pressure at the economic limit.
It is a simple matter, then, to find the
PR/z value for this average reservoir
pressure. Then, by using the inventory
curve, we may estimate the total reserves
that would be produced at the economic
limit.

1.9 We must recognize that all of the

The Use of mathematical routines that we have
Computers
to Plot discussed in this module lend themselves
Decline to computer programming with output in
Curves both tabular and graphical form.
Accordingly, it should not be difficult to
write a computer program which would
smooth production data provided as input,
using, for example, the method of least
squares. The program could then contain a
routine to select the appropriate type of
decline curve on the basis that a minimum
standard deviation be obtained from either
 the rate-time or rate-cumulative production
data. Another subroutine could project
future performance, giving printed tables
or computer plots on any scale desired.
Your company very likely has just
such a computer program in its library
which you are free to access. If not,
such programs are available from vendors.
Of course, assuming that you have access
to a microcomputer, and that you have
worked diligently during this module, it
would be an interesting final challenge to
write a program of your own!

1.10 The reserves information that you

Some People calculate for a well or field will be used
Who Rely on
Decline by a number of people in your company to
Curves prepare a schedule of total production by
month or year for the company or for one
of its division. Your reservoir engineers
may review the data to see which wells
might be candidates for stimulation or
enhanced recovery. Your accountants will
want the information to calculate
cost-depletion. And your evaluation
engineer will use the information to
calculate the value of the reserves for
submission to banks for loan purposes, and
very likely to shareholders on annual
reports to show the value of your
company's major assets. You might even
find the exploration specialist,
responsible for discovering the field in
the first place, taking a look at these
values from time to time to see just how
much money he made for the company!
We should remind you of what we said
at the beginning of this module: namely
that production decline curves enable us
to extrapolate historical production data
into the future. It is possible that
these curves will contain substantial
error, especially for extrapolation far
into the future. For this reason, we
recommend, and most companies have, a
policy of annual review. Reserves, then,
 are updated as new information becomes
available.

Work exercise 7.9.

Unit 6

In the video program, this unit

consists of an interview with Forrest
Garb, an experienced reservoir engineer
who is president of J.J. Gruy and
Associates, Inc., in Dallas. In the
interview, Forrest discusses a number of
practical aspects of decline curve
preparation and use.
1.11 References
Campbell, John M., 1959, Oil Property
Valuation, Prentice Hall.

Chatas, A.T., and Yankie, W.W., 1958,

"Application of Statistics to the Analysis
of Production Decline Data," Trans AIME
213, p • 399.

Cutler, W. W., Jr., 1924, "Estimation 0 f

Underground Oil Reserves by Oil-Well
Production Curves," Bull. RI 228, USBM.

Frick, Thomas C. (Editor), 1962, Petroleum

Production Handbook SPE, Dallas, TX,
Chapter 37, Vol. 2: "Estimation of
Primary Oil and Gas Reserves" by J.J. Arps.

Nind, T.E.W., 1981, Principles of Oil Well

Production, McGraw-Hill.

Nomoto, S., 1929, "Statistical

Investigations of Production of Oil Wells
in Japan," Proc. World Energy Cong., Tokyo,

37 Mining & Metallurgy, Part 5, p. 625.

Ramsay, H.J., Jr., 1968, "The Ability of
Rate-Time Decline Curves to Predict Future
Producton Rates," MS Thesis, The
University of Tulsa. For a condensed
summary, see SPE Petroleum Transactions,
Reprint Series #3, 1970, p. 103.

Shea, G.B., Higgins, R.V., and

Lechtenberg, H.J., 1964, "Decline and
Forecast Studies Based on Performance of
Selected California Oil Fields," J. Pet.
Tech, p. 959.
Exercises
NOTE TO THOSE WHO PREFER TO USE 51 METRIC UNIT
In the exercises that follow, you may make the
following unit substitutions without changing the
meaning of the material presented. Even though
this will change the absolute magnitude of quanti-
ties, the underlying concepts and mathematical
relationships will not. Substitutions involved:

US/English Unit 51 Unit

Pressure psi k Pa

Volume bbl

Volume ft 3

7.1 (a) In your own words, what is the definition of proved

reserves?

(b) When and how should each of the four standards for
estimating reserves, as given by the SPE, be applied?

(c) Why is it difficult for the engineer to give a single

value for the proved reserves of a well or field?

7.2 (a) Name some of the variables that are included in

calculating the economic limit production rate?

(b) Even when this rate is reached, are there other

considerations that would suggest keeping the well in
operation?

*Graph paper needed for these exercises is to be found at the

7.3 (a) The general form of all decline curves is given by the
hyperbolic relationship:

o = Kqn = _ dq/dt (see Eq. 7.7)

q

Two special cases exist: when n = 0, we have constant

percentage decline; when n = 1, we have harmonic decline.
Using the above equation, derive general expressions for
production rate versus time and production rate versus
cumulative production. Having derived these two general
expression for any value of n, show their form when n = 0
and n = 1. (Note: This exercise involves a mathematical
derivation which will test your memory of calculus. If
this proves to be difficult or too time consuming, work
through the solution to this portion of the exercise and
proceed to (b».

(b) Analyze each of the six expressions derived in (a)

above and state the type of graph paper, if any, that will
lead to a straight line relationship.

(c) You are told that an oil well, Well A, initially pro-
duces at the rate of 600 bbls/day, and, early in its life,
appears to be declining at the rate of one percent per
month. A second well, Well B, produces at the initial rate
of 300 bbls/day, but has an early decline rate of one-half
percent per month. The economic limit production rate for
both wells is 20 bbls/day, and you wish to know the perfor-
mance of each for several values of n (assume values of 0,
0.5, and 1.0). For each well and each value of n calculate:
(i) the daily production rate and cumulative production
after five years of production, (ii) the cumulative produc-
tion at time of abandonment. What comments can you make?
4 (a) A well initially produces at the rate of 9500 bbls/month
and has an initial decline rate of 2.5 percent per month.
Plot the rate-time and rate-cumulative production curves on
Cartesian and semi-log paper for values of n = 0, O.~, and
1.0. What is the decline rate, in each case, at the end of
five years of production? What observations can be made?

(b) The following production data is given for a well.

Production Rate
Month (bbls/mo)
1 7590
2 6610
3 5780
4 4490
5 3980
6 3540

What type of curve best represents its early history (ie.,

what values of q.,
1
d.,
1
and n)? How close does the
calculated curve match actual production data?

.5 A well producing from a particularly tight reservoir

produces 6292 bbls during its first month of production.
By the end of its twenty-seventh month of production, the
rate has dropped to 730 bbls/mo, and cumulative production
is 55,900 bbls. From wells in the neighborhood it is
expected that its decline rate should not be less then 2.0
percent per month. Calculate the remaining reserves to the
point where it reaches its economic limit of 100 bbls/mo.
What is the remaining life and what is the production rate
at the end of each year, given that there are nine months
in the first year of production?

.6 The nominal production decline rate for a new well is

expected to be 18 percent per year. Production during the
first month was 8600 bbls. Using the Arps tables given in
Appendix B, calculate and list the production rate and
 1
,,
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1 :

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qt vs t
(semt-loq)

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I I

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)0 I I I I I I , I I I I I I I I I I I I I

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
t (years)
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00

).)

100

100 oI I I I I I , I I I I ,
I I I I
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7.7 The following monthly production data is reported for a
well:

Production Rate
Month (bbls/mo)

1 4850
2 3280
3 3800
4 2830
5 2540
6 2040

Calculate the expected production rate in the 12th month

using the following data smoothing procedures:
(a) "eyeball"
(b) two-point moving average
(c) method of averages

7.8 (a) The monthly production rate for a well is known for
various months during its two-year life. Using the method
of least squares, and assuming constant percentage decline,
calculate the production rate in month 120. What is the
standard deviation of the derived equation?

Production Rate
Month (bbls/mo)
1 31,940
3 30,365
7 27,440
12 24,175
14 22,980
18 20,770
24 17,834

(b) If you were not sure of the form of the equation that
best fits the data (exponential, hyperbolic, harmonic), how
would you proceed to find a "best fit?"
 • -tt5
r1~t I±Ii± iTr 1
Solution to Exercise 7.7(a) and (b)
iii,
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 -

•
7.9 (a) A gas well producing from the Devonian formation in
Ward County, Texas, is tested periodically and the
following data is collected:

Average Reservoir Pressure Cumulative Production

(psi) (MCF)

5608 144,941
4910 2,282,721
4537 5,338,601
4055 9,989,696
3631 13,443,654

Calculate the original gas-in-place and the expected volume

to be produced when the reservoir pressure drops to 1200
psi. If compression is added, and it is possible to drop
the pressure as low as 400 psi, what additional volume will
be produced? Use the z-factor correlation given for this
problem.
.
(b) Some years after the above projection is made, we are
provided with the following additional data for the well:

PR G
(psi) (M~F)
2114 27,882,512
1597 32,481,463
1483 36,006,253

How do these results compare with your original projections?

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 ~l
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Appendix A
SPE: Standards Pertaining to the Estimating and Auditing-
of Oil and Gas Reserve Information
 Society of Petroleum Engineers

Standards Pertaining
to the Estimating and Auditing
of Oil and Gas Reserve Information

Approved by SPE
Board of Directors
October 30, 1979

Table of Contents

Article I - The Basis and Purpose of Developing Standards Pertaining to the

Estimating and Auditing of Reserve Information. . . . . . . . . . . . . . . . . . . . .. 1625

Section 1.1. The Nature and Purpose of Estimating and Auditing Reserve
Information " 1625

Section 1.2. Estimating and Auditing Reserve Information in Accordance

with Generally Accepted Engineering and Evaluation Principles. . . . . . .. 1625

Section 1.3. The Inherently Imprecise Nature of Reserve Information. . .. 1625

Section 1.4. The Need for Standards Governing the Estimating and
Auditing of Reserve Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1625

Article II - Definitions of Selected Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1625

Section 2.1. Applicability of Definitions 1625

Section 2.2. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1625

Article III - Professional Qualifications of Reserve Estimators and Reserve

Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1626

Section 3.1. The Importance of Professionally Qualified Reserve

Estimators and Reserve Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1626
 Section 3.2. Professional Qualifications of Reserve Estimators. . . . . . . . . 1626

Section 3.3. Professional Qualifications of Reserve Auditors. . . . . . . . . . . 1626

Article IV - Standards of Independence, Objectivity and Confidentiality for

Reserve Estimators and Reserve Auditors . . . . . . . . . . . . . . . . . . . . . . . . . .. 1626

Section 4.1. The Importance of Independent or Objective Reserve

Estimators and Reserve Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1626

Section 4.2. Requirement of Independence for Consulting Reserve

Estimators and Consulting Reserve Auditors. . . . . . . . . . . . . . . . . . . . .. 1626

Section 4.3. Standards of Independence for Consulting Reserve Estimators

and Consulting Reserve Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1627

Section 4.4. Requirement of Objectivity for Reserve Auditors Internally

Employed by Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1627

Section 4.5. Standards of Objectivity for Reserve Auditors Internally

Employed by Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1627

Section 4.6. Requirement of Confidentiality 1627

Article V - Standards for Estimating Proved Reserves and Other Reserve

Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1627

Section 5.1. General Considerations in Estimating Reserve Information .. 1628

Section 5.2. Adequacy of Data Base in Estimating Reserve Information. .. 1628

Section 5.3. Estimating Proved Reserves . . . . . . . . . . . . . . . . . . . . . . . . .. 1628

Section 5.4. Estimating Proved Reserves by the Volumetric Method. . . . .. 1628

Section 5.5. Estimating Proved Reserves by Analyzing Performance Data. 1628

Section 5.6. Estimating Proved Reserves by Using Mathematical Models.. 1628

Section 5.7. Estimating Proved Reserves by Analogy to Comparable

Reservoirs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1628

Section 5.8. Estimated Future Rates of Production. . . . . . . . . . . . . . . . .. 1628

Section 5.9. Estimating Reserve Information Other Than Proved Reserves

and Future Rates of Production , 1629

Article VI - Standards for Auditing Proved Reserves and Other Reserve

Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1629

Section 6.1. The Concept of Auditing Proved Reserves and Other Reserve
Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1629

Section 6.2. Limitations on Responsibility of Reserve Auditors. . . . . . . .. 1629

Section 6.3. Understanding Among an Entity. Its Independent Public

Accountants and the Reserve Auditors. . . . . . . . . . . . . . . . . . . . . . . . . .. 1629

Section 6.4. Procedures for Auditing Reserve Information. . . . . . . . . . . .. 1630

Section 6.5. Records and Documentation with Respect to Audit. . . . . . . .. 1630

Section 6.6. Forms of Unqualified Audit Opinions. . . . . . . . . . . . . . . . . .. 1630

 Article I - The Basis and Purpose
of Developing Standards Pertaining to the
Estimating and Auditing of Reserve Information I
1.1 The Nature and Purpose of Estimating and Auditing
Reserve Intormation.j Estimates of Reserve Information
are made by or for Entities as a part of their normal
business practices. Such Reserve Information typically
may include, among other things, estimates of (i) the
proved reserves, (ii) the future producing rates from such
proved reserves, (iii) the future net revenue from such
proved reserves and (iv) the present value of such future
net revenue. The exact type and extent of Reserve In-
formation must necessarily take into account the purpose
for which such Reserve Information is being prepared and,
correspondingly, statutory and regulatory provisions, if
any, that are applicable to such intended use of the Reserve
Information.
1.2 Estimating and Auditing Reserve Information in
Accordance With Generally Accepted Engineering and
Evaluation Principles. The estimating and auditing of
Reserve Information is predicated upon certain historically
developed principles of petroleum engineering and
evaluation, which are in turn based on principles of
physical science, mathematics and economics. Although
these generally accepted petroleum engineering and
evaluation principles are predicated on established
scientific concepts, the application of such principles
involves extensive judgments and is subject to changes in
(i) existing knowledge and technology, (ii) economic
conditions, (iii) applicable statutory and regulatory
provisions and (iv) the purposes for which the Reserve
Information is to be used.
1.3 The Inherently Imprecise Nature of Reserve In-
formation. The reliability of Reserve Information is
considerably affected by several factors. Initially, it should
be noted that Reserve Information is imprecise due to the
inherent uncertainties in, and the limited nature of, the
data base upon which the estimating and auditing of
Reserve Information is predicated. Moreover, the methods
and data used in estimating Reserve Information are often
necessarily indirect or analogical in character rather than
direct or deductive. Furthermore, the persons estimating
and auditing Reserve Information are required, in ap-
plying generally accepted petroleum engineering and
evaluation principles, to make numerous judgments based
upon their educational background, professional training
and professional experience. The extent and significance of
the judgments to be made are, in themselves, sufficient to
render Reserve Information inherently imprecise.
1.4 The Need for Standards Governing the Estimating and
Auditing of Reserve Information. The Society of
Petroleum Engineers, a constituent society of the
American Institute of Mining, Metallurgical, and
Petroleum Engineers (the "Society"), has determined that
the Society should adopt these Standards Pertaining to the
Estimating and Auditing of Oil and Gas Reserve In-
formation (the "Standards"). The adoption of these
IThC!iC Standards Pertaining to (he Evurnaung and Auditing of Oil and Gas Reser v(
lnforrnar ion (the "Standards.") are nOI intended to bind the members of the Society of
Petroleum Engineer» (the "Society") or anyone else, and rhe Society imposes no vane.
nons for rhe nonuse of these Standards . Each person evurnaung and audiung 011 and ga\
Reserve Information 1\ encouraged 10 exeter..e hi .. or her 0""" Judgment concer nmg the"
rnaner , \('1 forth In these Standards The: Socretv welcomev comment-, and \uggnle:d
changes In regard to the-,e Standards.
, of conducting such exploration or production; or (iii) the
"Defrruuonv arc: \('1 forth rn Sn"IHlIl 2,2 for certain 01 (he tcr ruv that are: not
defined In theve St andar dv
Standards by the Society fulfills at least three useful ob-
jectives.
First, although some users of Reserve Information are
cognizant of the general principles that are applied to data
bases in determining Reserve Information, the judgments
required in estimating and auditing Reserve Information
and the inherently imprecise nature of Reserve In-
formation, it has become increasingly apparent in recent
years that many users of Reserve Information do not fully
understand such matters. The adoption, publication and
distribution of these Standards should enable users of
Reserve Information to understand these matters more
fully and therefore avoid placing undue reliance on
Reserve Information.
Secondly, the wider dissemination of Reserve In-
formation through public financial reporting, such as that
required by various governmental authorities, makes it
imperative that the users of Reserve Information have a
general understanding of the methods of, and limitations
on, estimating and auditing Reserve Information.
Thirdly, as Reserve Information proliferates in terms of
the types of information available and the broader
dissemination thereof, it becomes increasingly important
that Reserve Information be estimated and audited on a
consistent basis. Compliance with these Standards is a
method of facilitating evaluation and comparisons of
Reserve Information by the users thereof.
In order to accomplish the three above-discussed ob-
jectives, the Society has included in these Standards (i)
definitions of selected terms pertaining to the estimation
and evaluation of Reserve Information, (ii) qualifications
for persons estimating and auditing Reserve Information,
(iii) standards of independence and objectivity for such
persons, (iv) standards for estimating proved reserves and
other Reserve Information, and (v) standards for auditing
proved reserves and other Reserve Information. Although
these Standards are predicated on generally accepted
petroleum engineering and evaluation principles, it may in
the future become necessary, for the reasons set forth in
Section 1.2, to clarify or amend certain of these Standards.
Consequently, the Society may, in appropriate future
circumstances, determine to amend these Standards or
publish clarifying statements.
Article II - Definitions of Selected Terms
2.1 Applicability of Definitions. In preparing a report or
opinion, persons estimating and auditing Reserve In-
formation shall ascribe, to proved reserves and other
significant terms used therein, the definitions promulgated
by the Society or such other definitions as he or she may
reasonably consider appropriate in accordance with
generally accepted petroleum engineering and evaluation
principles; provided, however, that (i) such report or
opinion should define, or make reference to a definition
of, each significant term that is used therein and (ii) the
definitions used in any report or opinion must be con-
sistent with statutory and regulatory provisions, if any,
that apply to such report or opinion in accordance with its
intended use.
2.2 Defined Terms. The definitions set forth in this Section
2.2 are applicable for all purposes of these Standards:
(a) Entity. An Entity is a corporation. joint venture,
partnership, trust, individual or other person engaged in (i)
the exploration for, or production of, oil and gas; (i i) the
acqusiiion of properties or interests therein for the purpose
le:,"luall~
ownership of properties or interests therein with respect to
rich such exploration or production is being, or will be,
ndueted.
(b) Reserve Estimator. A Reserve Estimator is a person
10 is designated to be in responsible charge for
imating and evaluating proved reserves and other
'serve Information. A Reserve Estimator either may
rsonally make the estimates and evaluations of Reserve
formation or may supervise and approve the estimation
d evaluation thereof by others.
.c) Reserve Auditor. A Reserve Auditor is a person who
Iesignated to be in responsible charge for the conduct of
I audit with respect to Reserve Information estimated by
hers. A Reserve Auditor either may personally conduct
audit of Reserve Information or may supervise and
prove the conduct of an audit thereof by others.
(d) Reserve Information. Reserve Information consists
various estimates pertaining to the extent and value of
and gas properties. Reserve Information may, but will
t necessarily, include estimates of (i) proved reserves, (ii)
: future production rates from such proved reserves, (iii)
: future net revenue from such proved reserves and (iv)
e present value of such future net revenue.
Article III - Professional Qualifications
of Reserve Estimators and Reserve Auditors
I The Importance of Professionally Qualified Reserve
.tlmators and Reserve Auditors. Reserve Information is
epared and audited, respectively, by Reserve Estimators
.d Reserve Auditors, who are often assisted by other
ofessionals and by paraprofessionals and clerical per-
nnel. Reserve Estimators and Reserve Auditors may be
employees of an Entity itself or (ii) stockholders,
oprietors, partners or employees of an independent firm
petroleum consultants with which an arrangement has
en made for the estimating or auditing of Reserve In-
rmation. Irrespective of the nature of their employment,
-wever, Reserve Estimators and Reserve Auditors must
examine the data base necessary to estimate or audit
-serve Information; (ii) perform such tests, and consider
ch matters, as may be necessary to evaluate the suf-
:iency of the data base; and (iii) make such calculations
d estimations, and apply such tests and standards, as
ay be necessary to estimate or audit proved reserves and
her Reserve Information. For the reasons discussed in
ction 1.3, the proper determination of these matters is
ghly dependent upon the numerous judgments Reserve
.tirnators and Reserve Auditors are required to make
.sed upon their educational background, professional
lining and professional experience. Consequently, in
der to assure that Reserve Information will be as reliable
possible given the limitations inherent in the estimating
.d auditing process, it is essential that those in respon-
ile charge for estimating and auditing Reserve In-
rrnation have adequate professional qualifications such
those set forth in this Article Ill.
2 Professional Qualifications of Reserve Estimators. A
-serve Estimator shall be considered professionally
ialified in such capacity if he or she has sufficient
.ucational background, professional training and
ofessional experience to enable him or her to exercise
udent professional judgment and to be in responsible
arge in connection with the estimating of proved reserves
id other Reserve Information. The determination of
'lether a Reserve Estimator is professionally qualified
quid be made on an individual-by-individual basis. A
.serve Estimator would normally be considered to be
ratified if he or she (i) has a minimum of three years'
practical experience in petroleum engineering or petroleum
production geology, with at least one year of such ex-
perience being in the estimation and evaluation of Reserve
Information; and (ii) either (A) has obtained, from a
college or university of recognized stature, a bachelor's or
advanced degree in petroleum engineering, geology or
other discipline of engineering or physical science or (B)
has received, and is maintaining in good standing, a
registered or certified professional engineer's license or a
registered or certified professional geologist's license, or
the equivalent thereof, from an appropriate governmental
authority or professional organization.
3.3 Professional Qualifications of Reserve Auditors. A
Reserve Auditor shall be considered professionally
qualified in such capacity if he or she has sufficient
educational background, professional training and
professional experience to enable him or her to exercise
prudent professional judgment while acting in responsible
charge for the conduct of an audit of Reserve Information
estimated by others. The determination of whether a
Reserve Auditor is professionally qualified should be made
on an individual-by-individual basis. A Reserve Auditor
would normally be considered to be qualified if he or she
(i) has a minimum of ten years' practical experience in
petroleum engineering or petroleum production geology,
with at least five years of such experience being in the
estimation and evaluation of Reserve Information; and (ii)
either (A) has obtained, from a college or university of
recognized stature, a bachelor's or advanced degree in
petroleum engineering, geology or other discipline of
engineering or physical science or (B) has received, and is
maintaining in good standing, a registered or certified
professional engineer's license or a registered or certified
professional geologist's license, or the equivalent thereof,
from an appropriate governmental authority or
professional organizat ion.
Article IV - Standards of Independence,
Objectivity and Confidentiality for Reserve
Estimators and Reserve Auditors
4.1 The Importance of Independent or Objective Reserve
Estimators and Reserve Auditors. In order that users of
Reserve Information may be assured that the Reserve
Information was estimated or audited in an unbiased and
objective manner, it is important that Reserve Estimators
and Reserve Auditors maintain, respectively, the levels of
independence and objectivity set forth in this Article IV.
The determination of the independence and objectivity of
Reserve Estimators and Reserve Auditors should be made
on a case-by-case basis. To facilitate such determination,
the Society has adopted (i) standards of independence for
consulting Reserve Estimators and consulting Reserve
Auditors and (ii) standards of objectivity for Reserve
Auditors internally employed by Entities to which the
Reserve Information relates. To the extent that the ap-
plicable standards of independence and objectivity set
forth in this Article IV are not met by Reserve Estimators
and Reserve Auditors in estimating and auditing Reserve
Information, such lack of conformity with this Article IV
shall be set forth in any report or opinion relating to
Reserve Information which purports to have been
estimated or audited in accordance with these Standards.
4.2 Requirement of Independence for Consulting Reserve
Estimators and Consulting Reserve Auditors. Consulting
Reserve Estimators and consulting Reserve Auditors, or
any firm of petroleum consultants of which such in-
dividuals are stockholders, proprietors, partners or em-
ployees, should be independent from any Entity with
respect to which such Reserve Esurnators, Reserve
Auditors or consulting firm estimate or audit Reserve
Information which purports to have been estimated or
audited in accordance with these Standards.
4.3 Standards of Independence for Consulting Reserve
Estimators and Consulting Reserve Audttors.' Consulting
Reserve Estimators and consulting Reserve Auditors, and
any firm of petroleum consultants of which such in-
dividuals are stockholders, proprietors, partners or em-
ployees, would not normally be considered independent
with respect to an Entity if, during the term of their
professional engagement, such Reserve Estimators,
Reserve Auditors or consulting firm
(a) Investments. Either owned or acquired, or were
committed to acquire, directly or indirectly, any material
financial interest in (i) such Entity or any corporation or
other person affiliated therewith or (ii) any property with
respect to which Reserve Information is to be estimated or
audited;
(b) Joint Business Venture. Either owned or acquired, or
were committed to acquire, directly or indirectly, any
material joint business investment with such Entity or any
officer, director, principal stockholder or other person
affiliated therewith;
(c) Borrowings. Were indebted to such Entity or any
officer, director, principal stockholder or other person
affiliated therewith; provided, however, that retainers,
advances against work-in-process and trade accounts
payable arising from the purchase of goods and services in
the ordinary course of business shall not constitute in-
debtedness within the meaning of this Section 4.3(c);
(d) Guarantees of Borrowings. Were indebted to any
individual, corporation or other person under cir-
cumstances where the payment of such indebtedness was
guaranteed by such Entity or any officer, director,
principal stockholder or other person affiliated therewith;
(e) Loans to Clients. Extended credit to (i) such Entity or
any officer, director, principal stockholder or other person
affiliated therewith or (ii) any person having a material
interest in any property with respect to which Reserve
Information was estimated or audited; provided, however,
that trade accounts receivable arising in the ordinary
course of business from the performance of petroleum
engineering and related services shall not consititute the
extension of credit within the meaning of this Section
4.3(e);
(I) Guarantees for Clients. Guaranteed any indebtedness
(i) owed by such Entity or any officer, director, principal
stockholder or other person affiliated therewith or (ii)
payable to any individual, corporation, entity or other
person having a material interest in the Reserve In-
formation pertaining to such Entity;
(g) Purchases and Sales of Assets. Purchased any
material asset from, or sold any material asset to, such
Entity or any officer, director, principal stockholder or
other person affiliated therewith;
(h) Certain Relationships With Client. Were directly or
indirectly connected with such Entity as a promoter,
)For purposes of (his Secuon 4.3. the rerm "arfilialcd" shall. with respect 10 an
Enlil)'. describe the relationship of a person 10 such Entity under circumstances in which
such person directly, or indireclly through one or more intermediaries, conrr ols or i\
connotled by. or is under common control wuh. such Emuv: provided. however. th at
commercial bank s and other nona fide financtal mstn uuons vhall nOI be conodered ro be
affiliated With the Enut y to ....-hich the Reverve l nfor mauon relatev unlevs such bankv or
instuuuons acnvcty parucrpatc In the management of the- pr oper ues of vucn Entitv.
Unlt\\ the- context requite.. other .... \..c. t he rer rn "rnareria!" vhall. for pur povev of thl\
Section 4.3. be inter preted wu h r ef er e nce to the nCI .... ort h of the convulung Rever ve
Esumator s or the convuhing Reverve AudIIOr\. or an)' firm of pet r oleum consuh ant v of
'Which vuch individuals are «ockholderv. pr ourtet or s , par tnerv or ernnlovee-,
underwriter, officer, director or principal stockholder, or
in any capacity equivalent thereto, or were otherwise not
separate and independent from the operating and in-
vestment decision-making process of such Entity;
(i) Trusts and Estates. Were trustees of any trust, or
executors or administrators of any estate, if such trust or
estate had any direct or indirect interest material to it in
such Entity or in any property with respect to which
Reserve Information was estimated or audited; or
(j) Contingent Fee. Were engaged by such Entitv to
estimate or audit Reserve Information pursuant to' anv
agreement, arrangement or understanding whereby the
remuneration or fee paid by such Entity was contingent
upon, or related to, the results or conclusions reached in
estimating or auditing such Reserve Information.
The independence of consulting Reserve Estimators and
consulting Reserve Auditors, and the independence of any
firm of petroleum consultants of which such individuals
are stockholders, proprietors, partners or employees, shall
not be considered impaired merely because other
petroleum engineering and related services were performed
(i) for such Entity or any officer, director, principal
stockholder or other person affiliated therewith or (ii) in
regard to any property with respect to which Reserve
Information was estimated or audited; provided, however,
such other services must have been of a type normally
rendered by the petroleum engineering profession.
4.4 Requirement of Objectivity for Reserve Auditors
Internally Employed by Entities. Reserve Auditors who are
internally employed by an Entity should be objective with
respect to such Entity if such Reserve Auditors audit
Reserve Information relating to such Entity which pur-
ports to have been estimated or audited in accordance with
these Standards.
4.5 Standards of Objectivity for Reserve Auditors In-
ternally Employed by Entities. Reserve Auditors internally
employed by an Entity would normally be considered to be
in a position of objectivity with respect to such Entity if,
during the time period in which Reserve Information was
audited, such Reserve Auditors
(a) Accountability to Management. Were assigned to a
staff group which was (i) accountable to upper level
management of such Entity and (ii) separate and in-
dependent from the operating and investment decision-
making process of such Entity; and
(b) Freedom to Report Irregularities. Were granted
complete and unrestricted freedom to report, to the
principal executives and board of directors of such Entity,
any substantive or procedural irregularities of which such
Reserve Auditors became aware during their audit of
Reserve Information pertaining to such Entity.
4.6 Requirement of Confidentiality. Reserve Estimators
and Reserve Auditors, and any firm of petroleum con-
sultants of which such individuals are stockholders
proprietors, partners or employees, should retain in
strictest confidence Reserve Information and other data
and information furnished by, or pertaining to, an Entity
and such Reserve Information, data and information
should not be disclosed to others without the prior consent
of such Entity.
Article V - Standards for Estimating Proved
Reserves and Other Reserve Information
5.1 General Considerations in Estimating Reserve In-
formation. Reserve Information may be estimated through
the use of generally accepted geologic and engineering
lOu; I hat are consistent with both these Standards and
statutory and regulatory provisions which are ap-
ible to such Reserve Information in accordance with its
ided use. In estimating Reserve Information for a
ierty or group of properties, Reserve Estimators will
rmine the geologic and engineering methods to be used
stimating Reserve Information by considering (i) the
iciency and reliability of the data base; (ii) the stage of
.loprnent: (iii) the performance history; (iv) their
-rience with respect to such property or group of
ierties, and with respect to similar properties; and (v)
significance of such property.or group of properties to
aggregate oil and gas properties and interests being
nated or evaluated. The report as to Reserve In-
nation should set forth information regarding the
mer in which, and the assumptions pursuant to which,
1 report was prepared. Such disclosure should include,
ore appropriate, definitions of the significant terms
j in such report, the geologic and engineering methods
measurement base used in preparing the Reserve
irrnation and the source of the data used with regard to
iership interests, oil and gas production and other
.orrnance data, costs of operation and development,
duct prices, and agreements relating to current and
ure operations and sales of production.
Adequacy of Data Base in Estimating Reserve In-
mation. The sufficiency and reliability of the data base
of primary importance in the estimation of proved
erves and other Reserve Information. The type and
mt of the data required will necessarily vary in ac-
dance with the methods employed to estimate proved
crves and other Reserve In formation. In this regard,
ormation must be available with respect to each
-perty or group of properties as to operating interests,
.ense interests and revenue interests and future changes
any of such interests that, based on current cir-
nstances, are expected to occur. Additionally, if future
revenue from proved reserves, or the present value of
h future net revenue, is to be estimated, the data base
iuld include, with respect to each property or group of
iperties, costs of operation and development, if
iilable, product prices and a description of any
eements relating to current and future operations and
es of production.
; Estimating Proved Reserves. The acceptable methods
estimating proved reserves include (i) the volumetric
·thod; (ii) evaluation of the performance history, which
iluation may include an analysis and projection of
xiucing ranges, reservoir pressures, oil-water ratios,
s-oil ratios and gas-liquid ratios; (iii) development of a
uhernatical model through consideration of material
lance and computer simulation techniques; (iv) analogy
other reservoirs if geographic location, formation
aracteristics or similar factors render such analogy
propriate. In estimating proved reserves, Reserve
tirnators should utilize the particular methods, and the
mber of methods, which in their professional judgment
e most appropriate given (i) the geographic location,
rmation characteristics and nature of the property or
oup of properties with respect to which proved reserves
e being estimated; (ii) the amount and quality of
ailable data; and (iii) the significance of such property or
oup of properties in relation to the oil and gas properties
th respect to which proved reserves are being estimated.
4 Estimating Proved Reserves by the Volumetric
.ethod, Estimating proved reserves in accordance with
e volumetric method involves estimation of oil in place
based upon review and analysis of such documents and
information as (i) ownership and development maps; (ii)
,
geologic maps; (iii) electric logs and formation tests: (iv)
relevant reservoir and core data; and (v) information
regarding the completion of oil and gas wel1s and any
production performance thereof. An appropriate
estimated recovery factor is applied to the resulting oil in
place figure in order to derive estimated proved reserves.
5.5 Estimating Proved Reserves by Analyzing Per-
formance Data. For reservoirs with respect to which
performance has disclosed reliable production trends,
proved reserves may be estimated by analysis of per-
formance histories and projections of such trends. These
estimates may be primarily predicated on an analysis of the
rates of decline in production and on appropriate con-
siderations of other performance parameters such as
reservoir pressures, oil-water ratios, gas-oil ratios and gas-
liquid ratios.
5.6 Estimating Proved Reserves by Using Mathematical
Models. Proved reserves and future production per-
formance can be estimated through a combination of
detailed geologic and reservoir engineering studies and
mathematical or computer simulation models. The validity
of the mathematical simulation models is enhanced by the
degree to which the calculated history matches the per-
formance history. Where performance history is
unavailable, special consideration should be given to
determining the sensitivity of the calculated ultimate
recoveries to the data that is the most uncertain. After
making such sensitivity determination, the proved ultimate
recovery should be based on the selection of the most likely
data encompassed within the ranges of their uncertainty.
5.7 Estimating Proved Reserves by Analogy to Com-
parable Reservoirs. If performance trends have not been
established with respect to oil and gas production, future
production rates and proved reserves may be estimated by
analogy to reservoirs in the same geographic area having
similar characteristics and established performance trends.
Where appropriate, proved reserves may be estimated
using multiples of current rates of production.
5.8 Estimated Future Rates of Production. Future rates of
oil and gas production may be estimated by extrapolating
production trends where such have been established. If
production trends have not been established, future rates
of production may be estimated by analogy to the
respective rates of production of reservoirs in the same
geographic area having similar geologic features, reservoir
rock and fluid characteristics. If there is not available
either (i) production trends from the property or group of
properties with respect to which proved reserves are being
estimated or (ii) rates of production from similar reser-
voirs, the estimation of future rates of production may be
predicated on an assumed future decline rate that takes
into proper consideration the cumulative oil and gas
production that is estimated to occur prior to the predicted
decline in such production in relation to the estimated
ultimate production. Reservoir simulation is also an ac-
cepted method of estimating future rates of production.
Irrespective of the method used, however, proper con-
sideration should be given to (i) the producing capacities of
the wells; (ii) the number of wells to be drilled in the
future, together with the proposed times when such are to
be drilled and the structural positions of such wells; (iii) the
energy inherent in, or introduced to, the reservoir; (iv) the
estimated ultimate recovery; (v) future remedial work to be
performed; (vi) the scheduling of future well aban-
 (vii) normal downtime which may be an-
donments;
and (viii) artificial restriction of future
ticipated;
rates that is attributable to statutory and
producing
provisions, purchaser proration and other
regulatory
factors.
5.9 Estimating Reserve Information Other Than Proved
Reserves and Future Rates of Production. A Reserve
Estimator often estimates Reserve Information other than
proved reserves and future rates of production in order to
make his or her .report more useful. Proved reserves net to
the interests appraised are estimated using the Entity's net
interest in the property or group of properties, or in the
production therefrom, with respect to which proved
reserves were estimated. The nature of the net interest of
the Entity may be established or affected by any number of
arrangements which the Reserve Estimator must take into
account. Estimated future revenues are calculated from the
estimated future rates of production by applying the
appropriate sales prices furnished by the Entity or by using
such other data as may be required by statutory and
regulatory provisions that are applicable to such report in
accordance with its intended use. Where appropriate, the
Reserve Estimator deducts from such future revenues
items such as (i) any existing production or severance
taxes, (ii) taxes levied against property or production, (iii)
estimates of future operating costs and (iv) estimates of
any future development, equipment or other significant
capital expenditures required for the production of the
proved reserves. Such deductions normally include various
overhead and management charges. For some purposes, it
is desirable to subtract income taxes and other govern-
mental levies in estimating future net revenues.
In estimating future net revenues, the Reserve Estimator
should consider, where appropriate, any likely changes (i)
from historical operating costs, (ii) from current estimates
of future capital expenditures and (iii) in other factors
which may affect estimated limits of economic production.
Article VI- Standards for Auditing Proved
Reserves and Other Reserve Information
6.1 The Concept of Auditing Proved Reserves and Other
Reserve Information. An audit is an examination of
Reserve Information that is conducted for the purpose of
expressing an opinion as to whether such Reserve In-
formation, in the aggregate, is reasonable and has been
estimated and presented in conformity with generally
accepted petroleum engineering and evaluation principles.
As discussed in Section 1.3, the estimation of proved
reserves and other Reserve Information is an imprecise
science due to the many unknown geologic and reservoir
factors that can only be estimated through sampling
techniques. Since proved reserves are therefore only
estimates, such cannot be audited for the purpose of
verifying exactness. Instead, Reserve Information is
audited for the purpose of reviewing in sufficient detail the
policies, procedures and methods used by an Entity in
estimating its Reserve Information so that the Reserve
Auditors may express an opinion as to whether, in the
aggregate, the Reserve Information furnished by such
Entity is reasonable and has been estimated and presented
in conformity with generally accepted petroleum
engineering and evaluation principles.
The methods and procedures used by an Entity, and the
Reserve Information it furnishes, must be reviewed in
sufficient detail to permit the Reserve Auditor, in his or
her professional judgment, to express an opinion as to the
reasonableness of such Entity's Reserve Information. In
_~ . L _ _ .. -1:.: ~ __ ...I•• __ .-. .......
dependent estimates of Reserve Information for parucutar
properties. The desirability of such reestimation will be
determined by the Reserve Auditor exercising his or her
professional judgment in arriving at an opinion as to the
reasonableness of the Entity's Reserve Information.
6.2 Limitations on Responsibility of Reserve Auditors.
Since the primary responsibility for estimating and
presenting Reserve Information pertaining to an Entity is
with the management of such Entity, the responsibility of
Reserve Auditors is necessarily limited to any opinion they
express with respect to such Reserve Information. In
discharging such responsibility, Reserve Auditors may
accept, generally without independent verification, in-
formation and data furnished by the Entity with respect to
ownership interests, oil and gas production, historical
costs of operation and development, product prices,
agreements relating to current and future operations and
sales of production, and other specified matters. If during
the course of the audit, however, questions arise as to the
accuracy or sufficiency of any information or data fur-
nished by the Entity, the Reserve Auditor should not rely
on such information or data unless such questions are
resolved or the information or data is independently
verified. If Reserve Information is used for financial
accounting purposes, certain basic data would ordinarily
be tested by an Entity's independent public accountants in
connection with their examination of the Entity's financial
statements. Such basic data would include information
such as the property interests owned by the Entity,
historical production data and the prices, costs and
discount factors used in valuations of proved reserves.
Reserve Auditors should, however, review estimates of
major expenditures for development and equipment and
any major differences between historical operating costs
and estimated future operating costs.
6.3 Understanding Among an Entity, Its Independent
Public Accountants and the Reserve Auditors. An un-
derstanding should exist among an Entity, its independent
public accountants and the Reserve Auditors with respect
to the nature of the work to be performed by the Reserve
Auditors. Irrespective of whether the Reserve Auditors are
consultants or internally employed by the Entity, the
understanding between the Entity and the Reserve
Auditors should include at least the following:
(a) Availability of Reserve Information. The Entity will
provide the Reserve Auditors with (i) all Reserve In-
formation prepared by such Entity, (ii) access to all basic
data and documentation pertaining to the oil and gas
properties of such Entity, and (iii) access to all personnel
of such Entity who might have information relevant to the
audit of such Reserve Information.
(b) Performance of Audit. The Reserve Auditors will (i)
study and evaluate the methods and procedures used by the
Entity in estimating and documenting its Reserve In-
formation; (ii) review the reserve definitions and
classifications used by such Entity; (iii) test and evaluate
the Reserve Information of such Entity to the extent
considered necessary by the Reserve Auditors; and (iv)
express an opinion as to the reasonableness, in the
aggregate, of such Entity's Reserve Information.
(c) Availability of Audit Report to Independent Public
Accountants. The Reserve Auditors will (i) permit their
audit report to be provided to the independent public
accountants of the Entity for use in their examination of its
financial statements and (ii) be available to discuss their
audit report with such independent public accountants.
(d) Coordination Between Reserve Auditors and In-
_ .............: .. 1'>. : .....
rlono",r/onf Pllhlir ArrnJJt1lnnff:: T'h» Rp<;.prvp Au d it or s and

~ Entity's independent public accountants will coor-
late their efforts and agree on the records and data of
~Entity to be reviewed by each,
in the case of an audit to be conducted by consulting
serve Auditors, it is preferable that such understanding
documented, such as through an engagement letter
ween the Entity and the consulting Reserve Auditors.
Procedures for Auditing Reserve Information.
espective of whether the Reserve Information pertaining
an Entity is being audited by consulting Reserve
.ditors or Reserve Auditors internally employed by such
tity, the audit should be conducted in accordance with
, following procedures:
a) Proper Planning and Supervision. The audit should
adequately planned and assistants, if any, should be
iperly supervised.
b) Early Appointment of Reserve Auditors. Where
propriate, early appointment of Reserve Auditors is
vantageous to both the Entity and the Reserve Auditors.
-rly appointment enables the Reserve Auditors to plan
.ir work so that it may be done expeditiously and to
[ermine the extent to which such can be completed prior
the balance sheet date. Preliminary work by the Reserve
.. uditors benefits the Entity by facilitating the efficient
d expeditious completion of the audit of such Entity's
serve Information.
c) Disclosure of the Possibility of a Qualified Audit
iinion. Before accepting an engagement, Reserve
iditors should ascertain whether circumstances are likely
permit an unqualified opinion with respect to an En-
{'S Reserve Information and, if such will not, they
ould discuss with such Entity (i) the possible necessity of
-ir rendering a qualified opinion and (ii) the possible
nedies to the circumstances giving rise to the potential
alification of such opinion.
(d) Interim Audit Procedures. Many audit tests can be
nducted at almost any time during the year. In the course
interim work, the Reserve Auditors make tests of the
.tity's methods, procedures and controls to determine
: extent to which such are reliable. It is acceptable
actice for the Reserve Auditors to complete substantial
rts of an audit examination at interim dates.
When a significant part of an audit is completed during
~ year and the Entity's methods, procedures and controls
~ found to be effective, the year-end audit procedure
iy primarily consist of an evaluation of the impact of
w data. The Reserve Auditors must nevertheless be
tisfied that the procedures and controls are still effective
the year end and that new discoveries, recent oil and gas
oduction and other recent information and data have
en taken into account. Reserve Auditors would not be
quired to retest the data base pertaining to an Entity's
operties and interests unless their inquiries and ob-
rvations indicate that conditions have changed
mi ficantly.
(e) General Matters To Be Reviewed With Respect to
'serve Information. An audit of the Reserve Information
rtaining to an Entity should include a review of (i) the
-licies, procedures, documentation and guidelines of such
uity with respect to the estimation, review and approval
its Reserve Information; (ii) the qualifications of
-serve Estimators internally employed by such Entity;
i) ratios of such Entity's proved reserves to annual
eduction for, respectively, oil, gas and natural gas
[uids: (iv) historical reserve and revision trends with
speer to the oil and gas properties and interests of such
uity; (v) the ranking by size of properties or groups of
operties with respect to estimates of proved reserves or
t:
the future net revenue from such proved reserves; (vi) the
percentages of proved reserves estimated by each of the
various methods s...t forth in Section 5.3 for estimating
proved reserves; and (vii) the significant changes occurring
in such Entity's proved reserves, other than from
production, during the year with respect to which the audit
is being prepared.
(f) Evaluation of Internal Policies, Procedures and
Documentation. Reserve Auditors should review and
evaluate the internal policies, procedures and documen-
tation of an Entity to establish a basis for reliance thereon
in 'determining the nature, extent and timing of the audit
tests to be applied in the examination of such Entity's
Reserve Information and other data and matters. The
internal policies, procedures and documentation to be
reviewed with respect to an Entity should include (i)
reserve definitions and classifications used by such Entity;
(ii) such Entity's policies pertaining to, and management
involvement in, the review and approval of Reserve In-
formation and changes therein; (iii) the frequency with
which such Entity reviews existing Reserve Information;
(iv) the form, content and documentation of the Reserve
Information of such Entity, together with such Entity's
internal distribution thereof; and (v) the flow of data to
and from such Entity's reserve inventory system .
(g) Testing for Compliance. Reserve Auditors should
conduct tests and spot checks to confirm that (i) there is
adherence on the part of an Entity's internal Reserve
Estimators and other employees to the policies and
procedures established by such Entity; and (ii) the data
flowing into the reserve inventory system of such Entity is
complete and consistent with other available records.
(h) Substantive Testing. In conducting substantive tests,
Reserve Auditors should give priority to each property or
group of properties of an Entity having (i) a large reserve
value in relation to the aggregate properties of such Entity;
(ii) a relatively large reserve value and major changes
during the audit year in the Reserve Information per-
taining to such property or group of properties; and (iii) a
relatively large reserve value and a high degree of un-
certainty in the Reserve Information pertaining thereto.
The amount of substantive testing performed with respect
to particular Reserve Information of an Entity should
depend on the assessment of (i) the general degree of
uncertainty with respect to such Reserve Information, (ii)
the evaluation of the internal policies, procedures and
documentation of such Entity and (iii) the results of the
compliance testing with respect to such Entity. Such
substantive testing could therefore appropriately range
from a limited number of tests to the complete estimation
of Reserve Information with respect to a majority of an
Entity's reserves.
6.5 Records and Documentation With Respect to Audit.
Reserve Auditors should document, and maintain records
with respect to, each audit of the Reserve Information of
an Entity. Such documentation and records should in-
clude, among other things, a description of (i) the Reserve
Information audited; (ii) the review and evaluation of such
Entity's policies, procedures and documentation; (iii) the
compliance testing performed with respect to such Entity;
and (iv) the substantive tests performed in the course of
such audit.
6.6 Forms of Unqualified Audit Opinions. Acceptable
forms of unqualified audit opinions for consulting Reserve
Auditors and Reserve Auditors internally employed by
Entities are attached (0 these Standards as, respectively,
Exhibits "A" and "B,"
 Exhibit" A" - Illustrative Unqualified Audit
Opinion of Consulting Reserve Auditor"
[Date]
Entity
[Address)
Independent Public Accountants of Entity
[Address I
Gentlemen:
At your request, we have examined the estimates as of
[dates] set forth in the accompanying table with respect to
(i) the proved reserves of Entity, (ii) changes in such
proved reserves during the period indicated, (iii) the future
net revenue from such proved reserves and (iv) the present
value of such future net revenue. Our examination in-
cluded such tests and procedures as we considered
necessary under the circumstances to render the opinion set
forth herein.
[A detailed description of the audit should be set forth.)
We are independent with respect to Entity as provided in
the Standards Pertaining to the Estimating and Auditing
of Oil and Gas Reserve Information promulgated by the
Society of Petroleum Engineers.
It should be understood that our above-described audit
does not constitute a complete reserve study of the oil and
gas properties of Entity. In the conduct of our report, we
have not independently verified the accuracy and com-
pleteness of information and data furnished by Entity with
respect to ownership interests, oil and gas production,
historical costs of operation and development, product
prices, agreements relating to current and future
operations and sales of production, and [specify other
information, data and matters upon which reliance was
placed). We have, however, specifically identified to you
the information and data upon which we so relied so that
you may subject such to those procedures that you con-
sider necessary. Furthermore, if in the course of our
examination something came to our attention which
brought into question the validity or sufficiency of any of
such information or data, we did not rely on such in-
formation or data until we had satisfactorily resolved our
questions relating thereto or independently verified such
information or data.
Please be advised that, based upon the foregoing, in our
opinion the above-described estimates of Entity's proved
reserves and other Reserve Information are, in the
aggregate, reasonable and have been prepared in ac-
cordance with generally accepted petroleum engineering
and evaluation principles as set forth in the Standards
Pertaining to the Estimating and Auditing of Oil and Gas
Reserve Information promulgated by the Society of
Petroleum Engineers.
[Insert, where appropriate and to the extent warranted
by the Reserve Auditor's examination, whether the
Reserve Information is in conformity with specified
governmental regulations.)
[Optional: This letter is solely for the information of
Entity and for the information and assistance of its in-
dependent public accountants in connection with their
review of, and report upon, the financial statements of
Entity. This letter should not be used, circulated or quoted
for any other purpose without the express written consent
of the undersigned or except as required by law.]
Very truly yours,
RESERVE AUDITOR
By _ her opinion the nature and ext en I of the qualificanons to such opinion and
Exhibit "8" - Illustrative Unqualified Audit
Opinion of Reserve Auditor Internally
Employed by an Entity"
[Date)
Entity
[Address)
Independent Public Accountants of Entity
[Address]
Gentlemen:
I have examined the estimates as of [dates] set forth in
the accompanying table with respect to (i) the proved
reserves of Entity, (ii) changes in such proved reserves
during the period indicated, (iii) the future net revenue
from such proved reserves and (iv) the present value of
such future net revenue. My examination included such
tests and procedures as I considered necessary under the
circumstances to render the opinion set forth herein.
[A detailed description of the audit tests and procedures
may be set forth.)
I meet the requirements of objectivity for Reserve
Auditors internally employed by Entities as set forth in the
Standards Pertaining to the Estimating and Auditing of
Oil and Gas Reserve Information promulgated by the
Society of Petroleum Engineers.
It should be understood that my above-described audit
does not constitute a complete reserve study of the oil and
gas properties of Entity. In the conduct of my report, I
have not independently verified the accuracy and com-
pleteness of information and data furnished by other
employees of Entity with respect to ownership interests, oil
and gas production, historical costs of operation and
development, development, product prices, agreements
relating to current and future operations and sales of
production, and [specify other information, data and
matters upon which reliance was placed). I have, however,
specifically identified to you the information and data
upon which I so relied so that you may subject such to
those procedures that you consider necessary. Fur-
thermore, if in the course of my examination something
came to my attention which brought into question the
validity or sufficiency of any of such information or data
I did not rely on such information or data until I had
satisfactorily resolved my questions relating thereto or
independently verified such information or data.
~l~ase be advised that, based upon the foregoing, in my
opiruon the above-described estimates of Entity's proved
reserves and other Reserve Information are, in the
aggregate, ~easonable and have been prepared in ac-
cordance with generally accepted petroleum engineering
and evaluation principles as set forth in the Standards
Pertaining to the Estimating and Auditing of Oil and Gas
Reserve Information promulgated by the Society of
Petroleum Engineers.
[Insert, where appropriate and to the extent warranted by
the Reserve Auditor's examination, whether the Reserve
Information is in conformity with specified governmental
regulations.]
Very truly yours,
RESERVE AUDITOR
By _
'If a Reserve Auditor is unable 10 grve an unqualified oprruon as 10 an
Ent itvv Reserve l nfor rnauon , t he Reserve Auditor should set Iort h in his or
the reasons t her efor .
Appendix B
Tables of Constant Percentage Decline Curve (Reference 4).
Copy of computer output and generated graphic prepared at
Dwight's Energy Data and shown in Unit 3.
bles for Constant-percentage Decline

fective Decline 1;.4 to 4% Per Month

I
Effective decline Effecti"e decline Effecti\'c decline Effective decline I Eff ective decline Effective decline

'ime,
Yo % per month J.i % per men th ~. % per month

-
I % per month
~--~----- - ~ ~~
I J.' '70 pe r month I r~ % per month
I,, months
Time,
onth. I
Rate Cumulative Rate Cumulat.ive Rate Cumulati\'c! Itate Cumulat.ive Ra te iCumulative Rate Cumulativel

-- - ---- --~

I
I 0.9975000 0.997500010. 9950000 o 9950000 0.9925000 0.9925000,0 9900000
1 o 990000010.
9875000 0.9875000 0.9850000 0.9850000 1
2 0.9950063 I. 99250630. 9900250 1.9850250 0.9850562 I. 97755630 9801000, 1,97010000 9751562 1.9626563 0.9702250 1.9552250 2
3 0,9925187 2.9850250 1 0 . 9 8 5 0 7 5 0 2.9700999:0,9776683 2,9552246\0.9702990 2.9403990 O. 9629668 2.9256230 0.9556716 2,9108966 3
4 0.9900374 3.9750624 0.9801495 3.95024940.9703358 3.9255604 0.9605960 3,9009950:0,9509297 1.8765528 0.9413366 3.8522332 4
5 0.9875623 4.9626248 0.9752488 4,925498110,9630583 4.8886187 0.9509900 4,8519851 4.8155959 0.9272165 4.7794497i 5
10,9390431
6 0.9850934 5.9477182 0.9703725 5.8958706 O. 9558354 5.8444541 0.9414801 5,7934652 5.7429009 0.9133083 5.6927580 6
7 0.9826307 6.9303489 0.9655206 6.8613913 0.9486666 6.9731207 0.9320653 6.7255306 10.921'3051 6.6586147 0.8996086 6.5923666 7
8 0.9801741 7.9105230 0.9606931 7.8220843 0.9415516 7.7346722 o
9227447 7.6482753 10,9157137
0.9042673 7.5628820 0.8861145 7.4784811 8
9 0.9777237 8.8882467 0.9558896 8.7779739 0.9344900 8,6691622 0.9135173 8.5617925 0.8929640 8.4558460 0.8728228 8.3513039 9
10 0.9752794 9.8635261 0.9511101 9.7290840 0.9274813 9.5966435 0.9043821 9.4661746 0.8818019 9.3376479 0.8597304 9.2110343 10
II 0.9728412 10.8363673 0.9463546 10.6754386 0.9205252 10.5171686 0.8953383 10.3615128 0.8707794 10.2084273 0.8468345 10.0578688 II
12 0.9704091, 11.8067763 0.9416228 II. 6170614 0.9136212 11.4307899 0.8863849 11.2478977 0.8598947 11.0683220 0.8341320 10.8920008 12
1
24 0.94169>81 23,2641790 0.8866535 22.5559511 0.8347038 21.8742023 0.7856781 21. 2178644 0.7394118 20.5859132 0.6957761 19.9773671\ 24
36 0.9138282 34.3825469 0.8348932 32.8562594 0,7626031 31. 4155252 0.6964132 30.0550922 28,7700393 0.5803691 27.5557615 36
48 0.8867872' 45,1719121 0.7861544 42.5552644 0.6967304 40, 1326804 0.6172901 10,6358223
37. 888277r' 5467402 35.8075257 0.4841044 33.8771427 48
60 0.8605463 55.6420099 0,7402610 5 1.6880687 0.6365477 48.0968584 0.5471566 44.8314939 0.4701390 41.8590228 0.4038070 39. 1500088; 60
72 0,8350820 65.8022881 0.6970466 60.2877255 0,5815635 55.3731006 0,4849910 50.98585620,4042700 47.0626730 0.3368283 43.5482749 72
84 0.8103711 75.6619141 0,6563550 68.3853585 0,5313287 62,0208300 0.4298890 56.4409899 O. 3476296 51,5372641 0,2809593 47.2170094 84
1
96 0,7863915 85,2297847 0.6180388 76.0102745 0.4854H2 68.09433660 3810471 61. 2763380 0.2989248 55,3849412 50.277218 I i 96
10,2343571
108 0,7631215 94.5145332 0.5819595 83, 1900692,0, 4435021 73,6432212'0,3377544 65,5623173 0,2570438 58,6935382,0.1954848 52.8298360, 108
120 0.7405400 103.5245374 0,5479863 89.9507277 4051929 78,7127999 2993804 69 3613447 0.2210306 61. 5385833( 1630601 54,9590562, 120
1 10 1 10 !

Effective decline Effective decline Effective decline Effective decline Effective decline Effecti"e decline
I y. % per month 2% per month 2).2 % per month 3 o/c per month 3).2 % per month 4 o/c per month
me, Time.
Gths months
Rate Cumulative Rate Cumulative Rate Cumulative Rate Cumulative Rate Cumulative Rate I Cumulative
---
I 0.9825000 0.9825000 0.9800000 0.9800000 0.9750000 0.9750000 0,9700000 0.9700000 0.9650000 0.9650000 0.9600000 0.9600000 I
2 0.9653062 1.9478063 0.9604000 1.9404000 0.9506250 1.9256250 0.9409000 1.9109000 0.9312250 1.8962250 0.9216000 1,8816000 2
3 0.9484134 2.8962196 0.9411920 2.8815920 0.9268594 2.8524844 0.9126730 2.8235730 0.8986321 2.7948571 0.8847360 2.7663360 3
4 0.9318162 3.8280358 0.9223682 3.8039602 0.9036879 3.7561723 0.8852928 3. 7088658 0.8671800 3.6620371 0.8493466 3.6156826 4
5 0.9155094 4.7435452 0.9039208 4.7078810 0.8810957 4.6372680 0.8587340 4.5675998 0.8368287 4.5988658 0.8153727 4.4310553 5
6 0.8994880 5.6430331 0.8858424 5.5937233 0.8590683 5.4963363 0.8329720 5.4005718 8.8075397 5. 3064055 0.7827578 5.2138130 6
7 0.8837469 6.5267801 0.8681255 6.4618489 0.8375916 6.3339279 0.8079828 6. 2085547 0.7792758 6.0856813 0.7514475 5.9652605 7
8 0.8682814 7.3950614 0.8507630 7.3126119 0.8166518 7. 1505797 0.7837434 6.9922981 0,7520012 6.8376825 0.7213896 6.6866501 8
9 0.8530864 8.2481478 0.8337478 8. 1463597 0.7962355 7.9468152 0.7602311 7.7525291 0.7256811 7.5633636 0.6925340 7.3791841 9
10 0.8381574 9.0863053 0.8170728 8.9634325 0.7763296 8.7231448 0.7374241 8.4899532 0.7002823 8.2636459 0.6648326 8.0440167 10
II 0.82H897 9.9097949 0.8007313 9.7641638 0.7569214 9.4800662 0.7153014 9.2052547 0.6757724 8.9394183 0.6382393 8.6822561 II
12 0.8090786 10.7188735 0.7847167 10.5488805 0.7379984 10.2180646 0.6938424 9.8990970 0.6521204 9.5915387 0.6127098 9.2949658 12

!4 0.6546082 19.3912851 0.6157803 18.8267637 0.5446416 17.7589797 0.4814172 16.7675099 0.4252610 15.8463764 0.3754133 14.9900821 24
\6 0.5296295 26.4079477 0.4832131 25.3225570 0.4019446 23.3241626 0.3340277 21.5331058 0.2773214 19.9252836 0.2300194 18.4795354 36
48 0.4285119 32.0849793 0.3791854 30.4199145 0.2966344 27.4312584 0.2317625 24.8396782 0.1808469 22.5852220 0.1409351 20.6175575 48
.0 0.3466998 36.6781441 0.2975531 34.4198961 0.2189157 30.4622883 O. 1608067 27.1339192 O. 1179339 24.3198220 0.0863523 21. 9275445 60
'2 0, 2805074 40.3943754 0.2334949 37. 5587485 0.1615594 32.6991834 0.1115745 28.7257601 0.0769071 25. 4509900 0.0529089 22.7301864 72
J4 O. 2269525 43.4010986 0.1832274 40.0218585 0.1192306 34. 350008l 0.0774151 29.8302468 0.0501527 26. 1886477 0.0324178 23.2219728 84
'~6 0.1836224 45.8337740 0.1437816 41.9547020 0.0879920 35.5683143 0.0537139 30. 59658t5 0.0327056 26.6691>893 0.0198627 23.5232952 96
08 0.1485650 47.8019996 O. 1128278 43.4714366 0.0649379 36.4674222 0.0372690 31. 1283054 0.0213280 26.9833863 0.0121701 23~7079184 108
20 0.1202007 49.3944488 0.0885379 44.6616435 0.0479241 37. 1309623 0.0258588 31. 4972345 0.0139084 27.1879545 0.0074567 23.8210388 120
 es for Constant-oercentage Decline

ctive Decline 4 V:z to 10% Per Month

I Effective decline
4 72 '70 per month
Effective decline
5'70 per month
Effective decline
5~~ '70 per month
Effective decline
6'70 per month
Effective decline
6H'70 per month
Effective decline
7 % per month
Tirnc.
c. -------- 11IClntlis
ths
Rate Cumulative Rate Cumulative Rate Cumulative I Rate Cumulative Rate Cu mulat ive I Rate II c:
.UIIlU I
a'trv«

94500001~.
I I
---._---'--'--- ------------l-----\-- - _.. ' ..

0. 95500°°1 0.9550000 0.9500000 0.9500000 0.9450000' 0. 9400000 0.940000° 0. 9350000lo. 9300000 09300000 I
I
2 0. 9120250 1.8670250 0.9025000 I. 8525000 0.8930250 1.838025~0.8836000 1.82360001°.9350000 1.80922500.8649000 1 7949000 2
1 2.6819336 1°.8742250
2.65418400.8174004 2.6266254,0.8043570 2 5992570 3
3 0.8709839 2.7380089 0.8573750 2. 7098750 0.8439086 10.8305840
4 0.8317896 3.5697985 0.8145063 3.5243813 0.7974937 3.4794273,0.7807490 3.4349330 0.7642694 3.3908947\0.7480520 3.3473090 4
5 0.7943591 4.3641576 0.7737809 4.2981622 0.7536315 4.2330588 4. 1688370 0.7145919 4.1054866 4.0429974 5
1°.7339040 1°.6956884
4.77363000.6469902 4.6899876 6
6 0.7586129 5.1227705,0.7350919 5.0332541 0.7121818 4.9452406,0.6898698 4.8587068 0.6681434
7 0.7244753 5.84724581°.6983373 5.7315914 0.6730118 5.6182523'0.6484776 5.5071844 0.6247141 5.3983440 0.6017009 5.2916884 7
8 0.6918739 6.5391198 6.3950118 0.6359961 6.254248~0.6095689 6.1167533 0.5841076 5.9824517 0.5595818 5.8512702 8
1°.6634204 6.8552648 6,6897481 0.5461407 6.5285923 0.5204111 6 37168D 9
9 0.6607396 7.19985940.6302494 7.0252612 0.6010163
10.6310063 7. 83086571 0.5987369 7.6239982 0.5679604 7.42322530.5386151 7.2283632 0.5106415 7.0392338 0.4839823 6.8556636 10
° 1°.5729948
7. 3057072 II
I 1°.6026111 8.43347680.568800 I 8. 1927983 0.5367226 7.9599479 7.7346614 0.4774498 7.5166836
2 10.5754936 9.0089703 0.540360 I 8. 733158Y. 5072029
1°.5062982
8.4671508\0.4759203 8. 2105817( 4464156 7.9630992 1°.4501035
0.4185963 7.72H6l; 12

4 0.3311928 14.1935746 0.2919890 13. 4522087 0.2572548 12.76171400.2265001 12.11816420.1992869 1 I. 51795071°.1752229 10. 95775H 24
6 0.1905993 17.1772810 0.1577792 16. 00219510.1304804 14.9399289 10. 1077960 13.9778620:0.0889648 13.10489170.0733476 12 3112384 36
8 0. 1096887 18.8943847 0.0852576 17. 3801062 O. 0661800 16. 0447258iO. 0513023 14.86293000.0397153 13.813327°1°.0307031 12. 8778022 48
° 0.0631251 19.8825668 0.0460698 18. 1246743 O. 0335667 16.60508200.0244158 15.2841517 0.0177295 14.12958350.0128522 13. 1149617 60
2 0.0363281 20. 4512592 0.0248943 18.52700920.0170251 16. 8892962[ 72
4 0,0209066 20.7785380 0.0134519 18.7444149 84
6 0.0120316 20.9668849 0.0072689 18.8618923 96
'8 0.0069241 21. 0752773 0.0039278 18.9253724 108
:0 0.0039848 21.1376564 0.0021224 18.9596745 120

Effective decline Effccti ve decline Eflective decline Eff cctivc decline Effective decline Effective d ecl me
7 H '70 per month 8'70 per month 8H'70 per month 9 % per month 97~ % per month 10'70 per month
.e,
.tus

Rate , Cumulative Rate

I - -
Time,
ruon the
Cumulative Rate Cumulative Rate Cumulative Rate Cumulative Rate Cu mula trve
.- --~-
---- ---- ---
i
I 109250000 0.9250000 0.9200000 0.9200000 0.91500001 0. 9150000 0.9100000 0.910000010. 9050000 0.9050000 O. 9000000 0. 9000000 I
2 0.8556250 I. 7806250 0.8464000 1.7664000 0.83722501 I. 7522250 0.8281000 1.7381000 o. 8190250 1.7240250 0.8100000 I. 7100000 2
l 0.7814531 2.5720781 0.7786880 2.5450880 0.7760609 2. 5182859 0.7535710 2.4916710 0.7412176 2.4652426 2. 4390000 3
4 0.7320941 3.3041723 0.7163930 3.26148100.7009457 3.2192316 0.6857496 3.1774210 0.6708020 10.7290000
3. 1360446,0.6561000 3. 0951000 4
S 0.6771871 3. 9813594 0.6590815 3.9205625\0.6413653 3.8605969 0.6240321 3.8014528 0.6070758 3.743120410.5904900 3. 6855900! 5
6 0.6263981 4.6077574 0.6063550 4.5269175,0.5868493 4.4474462 0.5678693 4.3693220 0.5494036 4.2925239 1°.5314410 4. 2170310' 6
7 O. 5794182 5.1871756 0.5578466 5.08476411°.5369671 4.9844133/0.5167610 4.8860830,0.4972102 4.7897342 O. 4782969 4. 6953279 7
8 0.5359618 5.7231375 0.5132189 5. 5979830 0. 4913249 5.4757381 0.4702525 5. 356335~0. 4499753 5. 2397094 0.4304672 5 1257951 8
9 0.4957647 6.2189022 0.4721614 6.0701443 0.4495623 5.9253004 0.4279298 5.7842654 1°.4072276 5.6469370 0.3874205 5. 5132156 9
'0 o 4585823 6.6774845 0.4343885 6.5045328 0.4113495 6.3366499 6. 1736815 O. 3685410 6.0154780 0.3486784 5. 8618940 10
'I 0.4241887 7.1016732 0.3996374 6.9041701 0.3763848 6.713034610.3894161
0.3543687 6.5280502 0.3335296 6. 3490076 0.3138106 6 1757046 II
12 0.3923745 7.4940477 0.3676664 7.2718365 0.3443920 7.0574267'0.3224755 6.8505257 0.3018443 6.6508519 0.2824295 6. 4581342 12

24 O. 1539578 10.4345211 0.1351786 9.9454463 0.1186059 9.487948310.1039904 9.0596524 0.0911100 8.6583736 0.07976644 8.2821020, 24
16 0.0604091 II. 5882879 0.0497006 10.9284428 0.0408469 10.3250006,0.03353441 9.7720416 0.0275010 9.2643325 o 02252840 8.7972445 36
48 0.0237030 12.0409966 0.0182732 1'.2898575 0.0140673 10.613274710.0108140 10.0017697 0.0083010 9.4472378 000636269 8 9427359,1 48
00 0.0093004 12.21862801
I i
NIGHTS ENERGYDATA, IOC. *TARS* RUN DATE: 08/10/82
GAS-~L HISTORY DATA CURRENT THRU: 03/31/82
DIST. ~8A TEXAS (~ (1222,475,050619 , )

~ERATOO (1705656) WELL NA/'E WEll I

HILL ~IT 1U

IDENT. NUMBER STATE DIST COUNTY (1475) LCCATI~

050619 TX 8 WARD

--._- ----
API • FIELD <I 92692840) RESERVOIR

3023100 BLOC!< 16 (DEVONIAN) ~IAN

GAS LIQ GAS LIQ TEMP

TO U/PERF lIPERF OATH OATH GRAV GRAV GRAD N-FACTM

17100 11325 11 no INTRT HOBTR .62 57.2 .800

OOHP 1ST PROD LAST PROD STATUS

DATE DATE DATE DATE STATUS

71102 71106 82/03 ACT

aJt1 THRU LPD (-AS C\J1 CIJ1 nRJ LPD COND CUt1
GAS/HCF SINCE DATE COOD/BBLS sna DATE
-----
36789654 FPDAT 138795 FPDAT
IJWIGHTS Q£RGYDATA, nc, ITARSI ~ DATE: 08/1Ql82
GAS WElL HISTOOY DATA CURRENT THRU: 03/31/82 ~

nIST. 8&8A TEXAS GAS <1222,475,050619 , )

IH GAS TEST HFORMATI~ IH

- - ----- - - -- -- ----- -- ------- -----

TEST ~ BBlS/DAY BBlS/DAY
DATE CtJf TO TEST ~IP IW BHPIZ T POTENTIAl Fl~ WATER COOl
- ---- --- - ---- -- --- ----
710212 0 «25 5599 5378 C1 93065 0 0 0
710528 0 1125 1463 1633 C2 5800 520 5 1
710618 144941 4433 5608 5382 C2 29441 1597 1 0
711213 2282721 3828 4910 4965 C2 27105 1512 16 0
720418 5338bOl 3511 4537 4716 C2 25100 1430 12 0
721116 9989696 3110 4055 4365 C2 23600 1358 8 0
730502 13443654 2783 3631 3994 C2 19712 1125 8 0
731015 16275933 2604 3407 3794 C2 17872 1165 7 47
740621 20074174 2278 mo 3390 C2 14400 13'"6 7 38
741025 21799425 2127 2792 3184 C2 13300 1175 8 32
750505 23898341 1990 2611 2987 C2 12976 998 5 14
750822 24915615 1872 2454 2808 C2 10700 1125 6 19
751015 2S4S4S'"LS 1828 2395 2737 C2 10100 1200 5 14
760522 27182650 1678 2208 2532 C2 9000 1099 5 9
761013 27822512 1608 2114 2419 C2 8900 1100 2 4
7/0b09 29298431 1490 1954 2226 C2 7600 1050 3 5
771002 29823408 1505 1975 2252 C2 7608 1065 3 3
781001 31593946 1250 1631 1837 C2 3200 1200 0 0
790219 32033296 1250 1631 1837 C2 6100 1000 0 0
'90523 32481463 1225 1597 1794 C2 S800 1005 2 3
791111 33203769 1030 1336 1481 C2 4500 9SO 3 0
800410 33743432 1140 1483 1657 C2 3900 1000 3 3
801222 34808SS7 1100 1429 1591 C2 b300 325 7 3
810103 34874111 1140 1483 1657 C2 6500 475 6 3
810726 36006253 1140 1483 1657 C2 6000 350 6 6
811110 36289797 980 1269 1401 C2 5300 575 3 3
811204 3637299S 1100 1429 1591 C2 5250 bOO 3 0
~IGHTS E~YDATA, INC. fTARSI RW DATE: 00/10/82 -
GAS WELL HISTORY DATA CURRENT THRU: 03/31/82
DhT. 8lc8A TEXAS GAS <1222,475,050619 , )
Hf MNJAL PROOOCTI~ HISTORY 1M

------ ----
YEAR ANtl./tOffit GAS/IU COOD/BBLS
---- ----
1971 MMJAl. 2669105 18955

1972 ANNUAL 8262476 52441

1973 ANNLW.. 6543993 35491
1974 AtH.JAL 5171145 16330
1975 AtflIAL 3517040 5827
1976 ANNUAl 2210294 3193
19n AtKIAL 1836581 1912
1978 ANtlIAL 1621953 681
1979 ANNJAL 1518289 1012
1980 ANN.W.. 1506075 1279
1981 AtflIAL 1600816 1432
1982 YTD 331887 242
 f
IllIGHTS ENERGYOOTA, INC. fTARS' ~ DATE: 08/10/82
GAS WELL HISTORY DATA CrnROO TlftJ: 03/31/82
DI5T. 8&8A TEXAS GAS (1222,475,050619 , )

... I1ONT...,Y PRODUCTION HISTORY H*

------- ------- -----
YEAR ANNL/MOOH GAS/I'tF COND/BBLS
------- ------- ------
JAN 117902 86
FEB 131439 93
MAR 145633 109
APR 143824 100
HAY 142958 96
JJN 142601 95
J1. 138988 100
AI.X' 125880 72
SEP 120679 61
OCT 139973 69
NOV 57581 4Q
rEC 110831 91
1979 ANNA 15182B9 1012

JAN 115871 41
FEB 116821 24
MAR 124900 97
APR 105951 82
MAY 109744 94
.D 88384 83
..u. 14b88S 142
AOO 104902 109
SEP 149032 136
OCT 161806 165
tffl 102543 113
rEC 179236 193
1980 AtftW.. 1506075 1279
JAN 171604 175
FEB 162075 156
t1AR 172875 162
APR 178713 133
HAY 160393 162
~ 168735 176
.u. 1SS066 133
AOO 15859 0
SEP 102620 6b
OCT 110167 111
tffl 105270 55
rEC 97439 103
1981 AtfUlL 1600816 1432

JAN 121241 119

FEB 124993 110
""1'1 QC;Lc;.'1 1'1
[+i!':,i..!TS E~;~;:;:(,Y~iATA, I~C, fTA~'Sf RUN DATE: 07/14/82
i:'A'; iHElL H!'3TI:Ii.'V DATA CljPRENT THRU: 0V3U32
DI'3T, 8~8A TEXAS GAS (~222,475,(l5061'? ,!jl

0,0 :;iXI, 0 1600,0 2<1(10,0 ;:200,(1 4(1l)O.0 4;;tl().;) 560(l,U

0,0 I--------- I---(1----- Z--------- I--------,. I--------- I----,)---- I------Z-- I
I I I I I I I I
I 1 I 1 I 01 IZ I
I I 1 1 1 1 1 1
1 I 1 I 1 I 1 1
~,OOI---------i---------I---------I---------I---G-----l--------Z1---------1
! I! 1 1 1
1 1 1 1
1 1 I I
1 I 1 1 1 I I I
10.001---------1---------1---------1--------01---------1----Z----1---------l
I I I I ! I I 1
I I ! I I I
I I 0 Z I
I 1 1 I 1 I !
15,001---------1---------1---------1---------1---------1---------;---------[
I I ! 10 I ZI I I
1 1 I I
I I 1
(: I I i i 1 I I
U 2(1, ;:~) 1---------!--------- [-------')-1---------I-Z------- I--------- !--------- :
I'l 1 I ! I r I
1 i"i Z 1
B 1 ! 1
'. I i I (lIZ! 1 I i
25. ()(i I--------- I ---------! --0------ ~ --- Zl----; --------- 1--------- ! --------- !
1 1 I I I I
I !O I Z
I (I Z
1 (1/ Z1 ! I I I
30. 1)0!---------I--------OI-------Z-i---------I---------1---------1--------- 1
I I I ! i
I I 00 ! ZZ 1 I
I 1 (I ZI I 1
o !Z I I 1 1
::5 .. i)(Q--------- I (i ZZ-------- r---------! --------- I --------- I--------- J
i 100 ZE .
1
1
I I I 1 I i i
40.(~I---------!---------I---------i---------I---------1---------1---------1
I I I I i I I
1 I 1 1 1. I 1
1 I 1 1 • wHSIP = (I. 1 I
I ! ! I I ,PHP/ Z = Z. I 1
4S.~)I---------j---------I---------i---------l--. CQMMON = C .---1---------1
I I I 1 I !
1 1 I .
I I 1
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,00 IU. IX>\)

I\" A

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Vi I
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~
IV
I

IV V'IV J\
.....
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V

V1 I
v. r» -~i
~

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\.

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o
n E
<,
en
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CD
L.J
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I . en
c:
C1l
"0
c:

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10.000
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U

"'I
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V
II\J

1.000 10
71 72 73 7. 78 78 n 78 78 1IO 81 B2 B3 ~ III IIlI B7 IIlI IIlI 1IO

Retr1eval Code: 222 475 050819 08/10/82 12: 22

'----'
 GAS DECLINE CURVE

BHP/Z o
BHP/Z LINE
WHSIP c
WHSIP LINE

10

10
o
-______ 0

)0
o 8
o 0
C~Cn
o

0
1 1 1 1 2 2 2 2 3 3 3 3
2 5 7 0 2 5 7 0 2 5 7 0 2 5 7
.5 .0 .5 .0 .5 .0 .5 .0 .5 .0 .5 .0 .5 .0 .5
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 , .
0
.0
0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

CUM TO TEST
Appendix C
-
Equations to be Used in Applying the Method of Least
Squares to Exponential, Harmonic and Hyperbolic Decline
 APPENDIX t:

Equations to be Used in Applying

the Method of Least Squares to
Exponential, Harmonic and Hyperbolic Decline

The followin~ is a list of equations to be employed in the

application of the least squares method to decline curves. For
a discussion and derivation of the equations, the reader is
referred to the fine development by Chatas (1958). Note that the
basic equations, in some cases, have been re-written in a more
suitable form and that in Equations C-13 and C-16 the symbol
x has replaced n to avoid confusion.

Exponential Decline

1. Rate vs. time

General Equation:

-Dt
q. e C-l
1

By means of the least-squares method:

In q. = C-2
1

D = C-3

2. Rate vs. cumulative production

= q.
1
- DN
P C-4

C-5

n
 2 Np . Lqt - n LN p qt
C-6
D =
L(N ) 2 - ( LN ) 2
p
n
p

Harmonic Decline

1. Rate V5. time

1 C-7

q.
1
= C-8

Lt. Lqt - n Lqt t

D. =
1
2 C-9
n Lq - Lt . Lqtt
tt

2. Rate V5. cumulative production

D.N
_ 1 P
q. C-10
q. e 1
1

L(l~ )2
P C-ll
In q.1 =
_ ( LN ) 2
P

LN p . Lln qt - n LN p ln qt
D.
1
= q.
1
n L(N ) 2 _ ( LN ) 2 C-12
P P
yperbolic Decline

1. Rate vs. time

q.
l
C-13
I
(I +xD. t.) x
l

I
-
x

q.
l
= C-14

x x
n :Lt qt - :Lt :Lqt
I C-15
D.
l
= -X
x 2 x
:Lt . :Lt qt - n :Lt qt

2. Rate vs. cumulative production

I-x -x I-x
qt = (x-I) D.q.
l l
N
P
+ q.
l
C-16

""(N)2 "" I-x _ ' N ""N I-x

~ P . ~qt ~ P . ~ p qt
C-17
q.
l
=

x C-18
qi
D. = --
l I-x'
tandard Deviation

S.D. C-19

where: c = computed (rate) from

decline equation.