When production data is reported at a frequency other than monthly, then we distribute the production over the period using this process:
Step 1:
To begin, we need to determine the duration of the production period. This can vary depending on how the states report the data. Sometimes they provide a start and end date, other times they specify the number of days the well was producing, and in some cases, they simply indicate whether it is for a quarter or annual period.
Step 2:
If the number of days the well produced is less than the number of days in the reported production period, we evenly distribute the reduction across each month. For example, if a quarter consists of 92 days and the report indicates that the well produced for 83 days, we would subtract the difference (9 days) evenly from each month. In this case, it would mean subtracting 3 days from each month.
Step 3:
We then evenly divide the production over the monthly periods and create a stair stepped production view.
Step 4:
Then we create a best fit decline over that stair stepped production view to get an overall decline view of the well.
Step 5:
After that, we calculate the decline percent for each monthly period based on the best fit we created.
Step 6:
We then apply those percentages to the stair stepped view to give each month a more “declined” view of production.
Step 7:
Then we have to break it out to daily numbers so that we can ensure the days producing are respected.
Step 8:
The final step is to reconcile the sum of the production to ensure the total production for the reported period matches the reported volume. This is necessary because the decline model we used here fits to the stair stepped volumes, but it’s only a fit. In order to ensure the data matches up, we have compare the values and evenly alter the monthly periods until it does match. For example, we might find that the total is 10 bbls over what was reported. We loop over the months we distributed the production to, and remove a single bbl from each until we get a match.