An Existing Well Is Operating and the Price of Oil

question 15

Multiple Choice

An existing well is operating and the price of oil is $115 per barrel.The effective lease rate and risk free rate are 3.0% and 4.0%,respectively.The constant cost of extraction is $85 per barrel and the volatility of prices is 15.0%.If it costs nothing to shut down the well,at what price would we close the well?

• A) $41
• B) $48
• C) $52
• D) $59

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Definitions:

Gastrostomy Tube

A tube inserted through the abdomen directly into the stomach for feeding purposes, usually when someone cannot eat by mouth.

Parenteral Nutrition

A method of feeding that bypasses the gastrointestinal tract, delivering nutrients directly into the bloodstream.

Dysphagia

Difficulty or discomfort in swallowing, which can be due to a range of conditions affecting the throat or esophagus.

Vitamin K Supplementation

The use of vitamin K given to prevent or treat low levels of this vitamin, which is essential for blood clotting.