World Peep Economics

In class exercises

Day 1 The Case Document

Exercise 1 Creating a New Peep Case (see pp. 19-26)
Case Name Class Oil Example (Select type:World Case)
General Parms Tab Fill out the rest of the information on the General Parms Tab.
Include any relevant comments you want to add.
Name: 1 - day2
Evaluation Date
Discount Date
Escalation Date

2007-01
2007-01
2007-01

Enter user parameters as specified

Enter your name for Analyst
Enter Oil for Major Phase
Enter Region West Africa

Links Tab
Model
Congo PSC 2006
Global Parms

FML Default

Exercise 2 Scheduling Production (see pp. 27-38)

Case Name
Products

use case from Exercise 1

Oil with gas

Wells
Production Start

3 oil wells
2007-07

Production

Exponential decline
Initial rate = 450 bbls/day
Decline Rate (eff) = 15%
Final rate = 30 bbls/day
Number of wells = 3
GOR = 620 scf/stb
BTU = 1150

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Exercise 3 Entering Prices and Interests (see pp. 43-61)

Case Name

use case from previous exercises

Price Tab

Oil $20.50/bbl
Oil Transportation Offset $0.75/bbl
Gas $1.95/mmbtu
Gas Quality Adjustment 10% of base price

Interest Tab

100%

Exercise 4 Entering Opex and Capital (see pp. 63-73)

Operating Costs

$800/oil well/month
$0.53 per mcf

Capital

Abandonment Costs 75 M$ at economic limit

Dev G&A = 500 M$ at 2007-01, 2007-03, 2007-05
Dev Drill Success = 950 M$ at 2007-01, 2007-03, 2007-05
Facilities = 400 M$ at 2007-06
Appr Drilling Dry Hole = 150 M$ at 2007-01

Exercise 5 Calculating a case and selecting a report (see pp. 75-82)

1. Save the case and click the Calculate button.
2. To view the calculation report go to the Report Tab and right-click on the
white part of the screen and Select Reports.
3. On the next screen click Add then expand Sectional Reports and
select the Peep Summary Report.
4. Click OK when done.

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Exercise 6 Edit Preferences Exercise:

Setting Preferences (also see Appendix C: Defining Preferences for more
information pp. 175-206)
Setting Edit/Preferences
Objective: The objective of this exercise is to practice setting company preferences. Edit Preferences is
extremely useful as it allows users to set default settings that will automatically apply to selected Peep
documents.
Instructions:
Setup Edit Preferences so that each time Peep is opened up and a new case is created the following
parameters will be used as the default settings.
Objective: The objective of this exercise is to practice setting company preferences.
Startup tab:
1. New cases, models and other documents are
2. New case Defaults:
a. Evaluation Date
b. Maximum Case Length
c. Minimum Number of months to evaluate
d. Global Parms
e. Model

World
2007 01
75
12
FML
Congo

Run Time tab:

3. Escalate at run time
Off
(Note this means that no escalation will be applied when the case is run)
4. Suppress zero (0s) in Grid
On
Database tab:
5. Set all the sources to the database as indicated by the instructor.
Reports tab:
6. Create a new Default Report Section called Class report.prt and use Peep Summary Report as the
default report.

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Exercise 7 Class Gas Example

Case name Create a new case called 1- Gas Example
Case Information
Model: United Kingdom RT
FML Default
Evaluation Date

2007-01

Products

Gas with condensate

Wells

1 gas well

BTU/cf

1057

Create a Gas 1 forecast.

Prod.

Start 2007-01

Production Segment 1

Flat decline
Initial rate = 3287 mscf/day
Duration = 2 years

Production Segment 2

Exponential decline
Initial rate = 3287 mscf/day
Final rate = 131.5 mscf/day
Cum Volume = 4533 MMSCF

Condensate Gas Ratio

Cond. Yield = 10 bbls/mmscf

Pricing

Gas = Use FML Gas Prices file

Cond = Use FML Condensate file
Adjust both by 10% for transportation

Interest

100%

Operating Costs

Gas Well Costs = $6000/well/month

Gas Variable = $0.15 per mcf

Investments

Facilities = 1200 M$ at 2007-01

Drilling Dry Hole = 500 M$ at 2007-01

Save case and calculate. Go to the Report tab and view the Company Summary
report.

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Exercise 8 : Using Scenarios (pp. 87-96)

Objective:
The objective of this exercise is to provide practice for creating scenarios and running scenario
consolidations.

Instructions
There are three parts to this exercise:
Part 1: Create a base case:
Create a base case for this exercise, save it as 1 Class Scenario. Enter the following values for
your base case:
1.

2.

3.

4.

5.
6.
7.

Parms tab:
Evaluation/Start date
2007 / 01
Country
UK
Product tab: Select the Gas 1 button and enter the following forecast.
Start date
2007 / 07
Product
Gas
Decline type
Harmonic
Initial rate
2000 mcf/d
Final rate
100 mcf/d
Volume
2000 MMSCF
Product tab: Select the Condensate button and enter the following forecast. Change the
Condensate Rate Bbl/d column to show it as a ratio of Gas 1 so that it reads
Condensate Cond/Gas 1 Ratio Bbl/MMSCF.
Ratio
15 Bbl/MMCF
Prices:
Gas
$3.00 / MMBTU
Condensate
$20.00 / Bbl ($0.75 offset)
Interests:
100%
Opcost:
Gas 1 Wells
$2000 (Gas 1 - $/Well/Mo)
Capital:
Dev Drilling dry hole
$425 M 2007/01
Dev G&A
$165 M 2007/03
Facilities
$60 M 2007/03
Abandonment costs
$25 M (At economic limit)

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Part 2: Create scenarios:

Enter the following scenarios under the respective tabs:
8. Product tab Gas 1: Note only create scenarios on Gas 1. Do not create scenarios for
condensate.
Low: Create a Low Scenario and make the following changes to the original
scenario.
Decline type Harmonic
Initial rate
1750 mcf/day
High: Create a High Scenario and make the following changes to the
original scenario.
Decline type Harmonic
Initial rate
3000 mcf/day
Dry hole: Add a Dry hole scenario.
9.

Capital Tab:

Low scenario (same as Base except):

a. Dev Drilling dry hole
$375 M$ 2007/01
High scenario (same as Base except):
a. Dev Drilling dry hole
$450 M$ 2007/01
Dry hole scenario
a. Dev Drilling dry hole
$300 M$ 2007/01

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Part 3: Create scenario consolidations

Using Scenario Manager, combine the four scenarios based on the following consolidation
factors
10. Parms/Scenario tab:

Be sure to click the Enable Scenario Consolidations For All Calcs box. Enter
the following values.
Scenario 1:
Base
0.45
Scenario 2:
High
0.20
Scenario 3:
Low
0.25
Scenario 4:
Dry hole
0.10
Calculate the case and check your results

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Exercise : Using Scenarios for Incremental Analysis (pp. 87-96)

Rate Acceleration Well Evaluation
Objective

Use Peep to evaluate the proposed rate acceleration well.

Problem Description
Your company is about to complete the development phase of a small oilfield. There are currently 4 oil
producing wells. A fifth well is being considered in the middle of the field, inside the existing 4 wells.
Reservoir engineering is undecided about the fifth well, since estimates show that the well will recover no
additional oil, but will accelerate recovery. Should the fifth well be drilled?

Reservoir engineering estimates total field annual recovery at:

Yea
r
1
2
3
4
5
6
7
8
9
10
11

Base
Production
(MBO)
1700
1500
1300
1200
1100
900
750
600
450
300
200

Production
with Well 5
(MBO)
1800
1600
1375
1250
1125
900
725
500
400
200
125

Prices
($/bbl)
18
18
18
19
19
20
20
22
22
25
28

Parms Tab

General
Evaluation Date
Discount Date
Escalation Date
Global Parms
Model Select

01/2007
01/2007
01/2007
World.
Congo

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Product Tab
Start Date
01/2007
See table above. Use the base production for the base scenario, and create a new
scenario to represent the field recovery if well 5 is drilled.
WI Tab

100 %
Price Tab

Use prices from table above.

OpCost Tab

$1 MM fixed costs per year

Capital Tab

In the base case, there is no capital expenditure. Create a scenario under the
capital tab to represent the capital associated with drilling well 5. Enter $10
MM in Drilling Tangible and $10 MM in Drilling Intangible in 01/2007.
Run the case under the base case scenario first and view the results. Then, under the
product and capital tabs, change to the rate acc scenarios that you created and rerun the
case to evaluate the rate acceleration well. View the new results and compare.

Part B:
How would I evaluate this well using the Scenario Manager?

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Exercise 11 Preceding Cases (see pp. 180 188)

When a company produces from a primary zone (PDP) that reaches its economic limit, the
company can then start producing from the behind the pipe or secondary zone. Using preceding
cases, a case can be created to evaluate the secondary zone. The start date of this case would be
based on the economic limit of the preceding case that was created to evaluate the primary zone.

Problem Description
Create a Class Preceding case with the following information:

Parms Tab (General side tab)

Evaluation Date:
Discount Date:
Escalation Date:
Global Parms:
State:

01/2007
01/2007
01/2007
FML
Congo

User Parms side tab

Enter your name for Analyst

Enter Oil for Major Phase
Enter Congo for State

Product Tab

Type:
Start Date:
Initial Rate:
Volume:
Time duration:
# Wells

Exponential
01/2007
3000 bbl/d
3400 MSTB
6 yrs.
1

Price Tab

$17 per bbl with 10% offset

Interest Tab
WI
NRI

100%
87.5%

Opcost Tab

Oil Variable
Oil Well

$9 per bbl
$1500/W/M

Capital Tab

Drilling Tangible
Drilling Intangible
Facilities Tangible
Abandonment

$2500
$3500
$500
$50

M$ in 01/2007
M$ in 01/2007
M$ in 01/2007
M$ @ Economic Limit

Calculate, save and close this case.

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Create a new Peep case called Class Development Case with the following inputs:
**Note you could either create a new case or use File>Save as and create a new case
from the previous one with a new name. Then edit the inputs to save time.
Parms Tab (General side tab)

Evaluation Date:
Discount Date:
Escalation Date:
Global Parms:
State:
Escalate at Runtime

01/2007
01/2007
01/2007
FML
Congo
No

User Parms side tab

Enter your name for Analyst

Enter Oil for Major Phase
Enter Region

Product Tab

Type:
Start Date:
Initial Rate:
Volume:
Time duration:

Exponential
01/2007
3000 bbl/d
3400 MSTB
6 yrs.

Price Tab

$20 per bbl with 10% offset

Interest Tab

WI
NRI

100%
87.5%

Opcost Tab

Oil Variable
Oil Well

$10.54 per bbl

$1500/W/M

Capital Tab

Abandonment

$ 60 M$ @ Economic Limit

Workover Tangible

$600 M$

01/2007

Links Tab

Preceding Case: <Select> Class Preceding Case

General Parm Tab

Note that the dates should have shifted. The case should now start 1 month after the
Preceding Case reached it economic limit.

Calculate and save the case.

Note that the dates have changed depending on how the Preceding Case Defaults were
set in the Edit Preferences tab. Also note that in order for this feature to work correctly
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some setup is required in the Peep Result Set table and Edit Preferences. This setup is
usually done by an administrator.

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Exercise 13 Creating Groups and Filters

Instructions:

Create a group called Peep Training. First, manually select the exercises that you
created earlier. Second, build a filter where all the cases where Analyst = <your name>
are used to create a group.
Build a filter named Congo where State = Congo. Go to the All Cases folder and
choose this new filter. Notice the changes to all the folders. Remove the filter you
created and notice the changes.
Build a hierarchy where cases are displayed based on Country and Major Phase.
o Node 1 = Analyst

o Node 2 = Major Phase

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