Well event/0 has a TVD of 3,500 m and MD of 3,600 m. Well event/2 has a TVD of 3,600 m and MD of 3,800 m. Well event/3 has a TVD of 3,300 m and MD of 3,400 m. All three events report gas production and qualify for the NGDDP benefits.
Benefit of the deepest lateral well event/2:
For the MD between 2,000<Depth<=3,500 the amount equals to (3,500 m- 2,000 m)* $625/m= $937,500.
For the MD between 3,500<Depth<=4,000 the amount equals to (3,800 m- 3,500 m)* $2,500/m= $750,000.
Total benefit is $1,687,500.
The measured depth at the start of the well event/ 0 leg is 2,300 m. Therefore, the length of the lateral from the kick-off point to the perforation is 1,300 m (3,600 m – 2,300 m).
Benefit of the additional leg:
For the TVD>=3,500 m the amount equals to 1,300 m* $2,500/m=$3,250,000.
The measured depth at the start of the well event/ 3 leg is 2,300 m. Therefore, the length of the lateral from the kick-off point to the perforation is 1,100 m (3,400 m-2,300 m).
Benefit of the additional leg:
For the TVD<3,500 m the amount equals to 1,100 m* $625/m=$687,500.
Total royalty adjustment for this well is $5,625,000 ($1,687,500 + $3,250,000 +$687,500).