New Mexico Oil Lease Production Opportunities

Evaluating Producing Wells Properties

Production History & Decline Trends

When evaluating producing wells, the first thing to examine is the production history. This includes analyzing the trends in oil, gas, and water output over time. Look for stable or increasing production rates, and review decline curves to predict future output. Sudden drops in production or high water cuts can indicate reservoir problems, mechanical issues, or that the well is nearing the end of its productive life. Gathering accurate historical production data is crucial for forecasting revenue and estimating remaining reserves.

Operating Costs & Netbacks

Understanding the operating costs for each well is essential. Break down costs like lifting costs (energy, chemicals, water disposal), maintenance, transportation, and any applicable royalties or taxes. Compare these expenses against the revenue generated to determine the well’s netback (profit after operating expenses). Wells with high operating costs relative to production may not be economically viable, especially if oil and gas prices drop. Identifying low-cost, high-margin wells helps prioritize assets for acquisition or further development.

Infrastructure, Lease Terms & Regulatory Compliance

Evaluate the quality and proximity of surface infrastructure, such as tank batteries, pipelines, and access roads, as they impact operating efficiency and costs. Review lease terms, including royalty arrangements, contract lengths, and surface rights, to avoid unexpected legal or financial exposure. Finally, check the regulatory status of the wells—ensure that all permits are current and that there are no outstanding environmental or abandonment liabilities. Proper due diligence in these areas helps prevent costly surprises after acquisition.