Reminder: Acronyms and Glossary Page. Two More Definitions Added

Reminder: at my "acronyms and glossary page" I explain some commonly used terms in the oil patch, in corporate presentations, and in financial statements.


Michael Filloon provides nice definitions for internal rate of return (IRR) and net present value (NPV).

NPV is the difference between cash inflows and cash outflows. It shows the overall profitability of each well. This NPV is figured using these values:

• $8.9 Million in Well Costs
• EUR (Estimated Ultimate Recovery) of 600 Mboe
• 5-31-11 NYMEX Strip

This produces a 75% IRR (Internal Rate of Return). The IRR is best described as the rate of growth a project is estimated to generate.