Technical question for bankers in Oil & Gas / Energy groups
This question is very basic, this is why I ask you the experts.
For some reason, I always assumed that oil wells operate 365 days a year, 24/7. Is this is in fact the case? What is the industry average for number of operating days per year for a developed oil well (if there is such a gauge)?
Any informed answers will be greatly appreciated. This is one of the driving assumptions of my CF model.
Cheers!
PDP reserves run 365 days a year, sometimes there will be a mechanical error that keeps the rig down for a short period of team, but that's usually di minis in the scope of the year. If the reserve has to be shut in for a significant period of time you'll move it to a different reserve class. That's what should drive your model instead of days operating per year.
Stringer Bell thank you for your reply. One clarifying question, PDP reserves are those that fall into 1P (or P90) category. Is this correct?
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