Variabl Costs

Oil and gas shale production economics are creating an era of low cost energy in the US. But how do you decide if drilling one well is any more profitable than drilling another well next door or in a different basin? Just like with any other investment opportunity you compare net present values (NPV) and internal rates of return IRR). Today we continue our rundown of shale production financial return calculations with a review of variable production costs and NPV.