petroleum questions

7/30/2019 Petroleum Questions

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Name: ___________________________________

County: __________________________________

Date: ___________

PETROLEUM PROPERTIESSELF-STUDY TRAINING SESSION

REVIEW QUESTIONS

1. Temperature change with depth is known as the _____________ gradient.

2. Production of multiple petroleum compounds is an indirect consequence of the thermaldegradation and cracking process.

True

False

3 For commercial deposits of petroleum and natural gas to accumulate, there must be:

A rock

A rock

A which restricts movement

4. The three classifications of rocks, according to their origin, are:

1.

2.

3.

5. Sedimentary rocks carry petroleum and natural gas because petroleum was formed in the

_______________________________________.

6. Primary porosity is the result of post-depositional factors.

True

False

7. Permeability is the measure of a rock's to the flow of

_____________________________ through it.

Petroleum Properties Self-Study Review Questions November 20071

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8. The typical petroleum reservoir contains ,

, and , and mayor may not contain a cap of .

9. The petroleum's density is known as the .

10. The lower the API gravity, the less viscous the crude oil.

True

False

11. Natural gas that coexists in crude oil reservoirs is often called

.

12. In order for petroleum to accumulate, some type of mechanismmust exist.

13. Structural traps result from .

14. drainage is generally the most effective reservoir drive

mechanism.

15. What six factors should be considered in evaluating a petroleum property?

16. The lessor of mineral rights will usually retain a .The lessee's interest is often called a .



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17. The proceeds that the working interest receive from the sale of production is called the

____________________________, which represents profits less any royalties paid.

18. For property tax purposes, prior to production, the

of the and generally

represent the current value of the property.

19. In the appraisal of petroleum properties, the appraiser should use market price expectations,

not contract prices.

True

False

20. All recovery projects can be divided into two principal types:

1.

2.

21. plays a prime role in the use of any recovery mechanism.

22. The two basic types of thermal recovery are:

1.

2.

23. , as defined in Rule 468(b),

have a present economic value that is assessable for property tax purposes.

24. The most important factors upon which estimates of reserves are dependent are:

1.

2.

25. The significant difference between the Rule definition and the SPE definition is that Rule468(b) allows inclusion of reserves derived from

for product prices and operating costs.

26. What are the three subclasses within the SPE/SPEE classification of proved reserves?

1.

2.



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3.

27. The five general methods of predicting future recovery from a reservoir are:

1.

2.

3.

4.

5.

28. Reserve estimation by analogy is the most accurate of the methods of predicting future

recovery from a reservoir.

True

False

29. The volumetric method estimates the available in the reservoir, theportion containing , and how much of

the resource can be .

30. The material balance approach to estimate reserves is based on the principle of the

_____________________________________.

31. The decline curves most commonly used by petroleum appraisers are:

1. versus

2. versus

32. At the economic limit, revenues equal .

33. Revenue per barrel should include all revenue attributable to production, including:

1.

2.

34. What is the formula for calculating economic limit?

=



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35. All production decline curves can be analyzed by the

formula.

36. Special cases of hyperbolic decline curves are:

1.

2.

37. For production that has an exponential decline, the resulting graph will be a

.

38. A realistic approach when forecasting production properly accounts for

associated with and .

39. What are the six steps in the appraisal process?1.

2.

3.

4.

5.

6.

40. Of the approaches to value, which is commonly used for petroleum property appraisals?

Comparative Sales

Cost

Income

41. The income approach is any method of an incomestream into a .



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42. The validity of the income approach depends on whether the subject property meets the

following conditions:

43. Property taxes, income taxes, rents, and royalties are legitimate deductions from gross

income.

True

False

44. Discounted cash flow analysis is defined as the analysis of _______________ projections

for each period of time that the property produces _____________________ in order to

compute the ______________________________________ of property assuming a certainrate of return.

NOTE: This version of Assessors' Handbook Section 566 was published in 1996. Since then,

several Property Tax Rules have been amended, have been adopted, or have been repealed.

On page 6-3, both Rules 20 and 21 are relevant. Rules 23 and 24 were repealed in 2002. On

page 6-4, Rule 27 was amended in 2005. Rule 29, which is not listed, is relevant and was

effective February 9, 2002.

45. Wells are classified as .

46. Rule 468 provides that the right to remove petroleum and natural gas from the earth is a

_______________________________________.

47. The base year value for proved reserves must be adjusted ____________________ toaccount for ________________________.



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48. In estimating total current market value, values for wells, improvements, and surface

equipment are determined and subtracted from the total value. The result is the currenttaxable value of the reserves.

True

False

49. The current base year value for the reserves is the:

sum of the value of the _______________________________________________________

less

factored for

added to

50. New discoveries of previously unknown reserves are to be treated as new construction, andare subject to supplemental assessment per Section 75.10(c).

True

False

51. Construction of an improvement or fixture performed for the purpose of normal

maintenance and repair constitutes rather thannew construction, with no change to base year value.

52. Appraisal judgment must be exercised to determine whether the construction or rebuildingof an improvement or fixture is:

1.

2.

3.

53. A well that is permanently abandoned is considered to be removed. This event results in a

negative supplemental assessment.

TrueFalse

54. Production equipment items are classified as , since they

are physically annexed to real property with the intent to remain so indefinitely.

55. Surface facilities are classified as .



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56. Common practice for the appraisal of well and production equipment is to tie the value

directly to:

57. For a new gas well which is not yet connected, the value of improvements, the well, and site

improvements are not assessable.

True

False

58. For traditional petroleum properties, there are typically three revenue streams:

1.

2.

3.

59. Revenues are calculated by multiplying the

times the for each year.

60. Production rates for components of the production stream may be scheduled or may be

based on .

61. The five general expense classifications for petroleum properties are:

1.

2.

3.

4.

5.

62. Property taxes, amortization, depreciation, depletion charges, and rents and royalties for useof the property cannot be considered for property tax valuations.

TrueFalse

63. Generally, variable costs change in relationship to the

on the property.

64. Abandonment costs and environmental cleanup expenses are often accounted for with the

establishment of a .



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65. The economic life of the property is the point where net operating income becomes negative

without any potential to return to positive.

True

False

66. Discounting for petroleum properties is generally done using

.

67. Objective uncertainty represents most of the risk associated with petroleum properties.

True

False

68. List the six types of uncertainty related to petroleum operations.

1.

2.

3.

4.

5.

6.

69. The return demanded by investors with risk.

70. After the discount rate has been selected, and adjustments for _________________ havebeen made, the appraiser the net operating income of

the property to reach a value conclusion.

71. To determine the value of the mineral rights, the estimated value of the active improvements

is offset from the total cash flow value.

True

False

72. New reserves acquire a base year value as of:

73. Both the value and thevalue must be calculated annually. The enrolled value is the lesser of the two values.

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