What would your strategy be for negotiating that agreement? What would be the steps required to have an approved unitization agreement in that field?
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Assume your company operates 60% of the wells in an aging field in Scurry County Texas. The field has reached the stage in its development where a waterflood is required or the field will quickly decline into a very large number of marginal wells. Your company has determined that a waterflood is feasible but it would require the cooperation of the other 40% of the operators in the field. Thus an unitization agreement is required. What would your strategy be for negotiating that agreement? What would be the steps required to have an approved unitization agreement in that field?
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- If you consider the payoff from entering into a forward contract does the buyer have more to gain going long than the seller has to lose going short, profits if the price of the underlying at expiration exceeds the forward price and/or gains from owning the underlying versus owning the forward contract are equivalent? Explain why one or more of the options above are correct. Secondly explain why, if any of the remaining options are incorrect.Ben London owns and operates Fantastic Footage, a film-editing company in Los Angeles that does contract work mostly for production companies in Hollywood. Not long ago, a local landscaping business completed nearly $8,500 worth of work around London's offices. While the initial bid seemed a little high for the amount of work that was actually done, there is no question that the work completed was of high quality, and London finally feels comfortable inviting potential clients to meet him at his office to discuss possible deals. However, because of an apparent oversight, the landscaping contractor never submitted a bill. It's been more than 15 months since the completion of the project, and London has come to conclude that the contractor somehow lost track of the project. He is thinking about calling the company to ask for a final invoice so that he can settle up, but business has been really slow over the last year or so, and it hasn't been easy to pay all of the bills as it is.…Ben London owns and operates Fantastic Footage, a film-editing company in Los Angeles that does contract work mostly for production companies in Hollywood. Not long ago, a local landscaping business completed nearly $8,500 worth of work around London's offices. While the initial bid seemed a little high for the amount of work that was actually done, there is no question that the work completed was of high quality, and London finally feels comfortable inviting potential clients to meet him at his office to discuss possible deals. However, because of an apparent oversight, the landscaping contractor never submitted a bill. It's been more than 15 months since the completion of the project, and London has come to conclude that the contractor somehow lost track of the project. He is thinking about calling the company to ask for a final invoice so that he can settle up, but business has been really slow over the last year or so, and it hasn't been easy to pay all of the bills as it is.…
- The outcome of a negotiation could turn out to be: i) A Win-Win situation ii) A Win-Lose situation iii) A Lose-Lose situation iv) Beyond intractability situation Explain with at least an illustrative example what each of these outcomes imply.The Rolling Hills Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of 1 day or less: Contract 1: $50 for the day Contract 2: $30 for the day plus $0.20 per mile traveled Contract 3: $1.00 per mile traveled 1. Plot separate graphs for each of the three contracts, with costs on the vertical axis and miles traveled on the horizontal axis. 2. Express each contract as a linear cost function of the form y=a+bX. 3. Identify each contract as a variable-, fixed-, or mixed-cost function. First let's draw the graph for contract 1.Give a detailed explanation of whether the following statements are true or false. • The buyer of an option has an obligation to purchase the underlying asset in the case of a call, or sell in the case of a put, which the seller of an option has the right to deliver in the case of a call, or take delivery in the case of a put. • Call-put parity implies that currency puts and calls written with exercise prices at the forward rate will have different values because, if the foreign interest rate exceeds the domestic rate, the forward rate is at a discount; therefore, the exchange rate is expected to depreciate, making the put more valuable
- You are a corn producer. Today, May 1, you have planted corn and you expect a crop of over 1,500,000 bushels. You would like to sell the crop soon after the October harvest. You are fairly certain that prices are heading down, so you want to lock in a price for December delivery. The performance bond deposit of $1,000.00 per contract and possible performance bond calls will not cause you a cash-flow problem. You decide to sell three hundred December corn futures contracts (5,000 bushels each, or 1,500,000 bushels). The December futures price today is $5.6125 and the local forward cash for December is $5.2125. Brokerage fees for each contract is $25.00 round-turn. In December, futures prices have fallen to $5.6000 and cash prices to $5.2000. Date Cash Market Futures Market Basis May December Results In May do you take a long or short position in the futures market? In December, what do you do in the futures market?…You are a soybean oil plant manager and know that you will need 1 million bushels of soybeans to keep the plant operating in the month of July. In January, you are fairly certain soybean prices are going to go up, so you want to lock in prices for June purchase. You decide to hedge and purchase 200 July soybean contracts. In January, the July futures price is $14.4850 with a basis of $0.25. Brokerage fees for each contract is $5.00 round-turn. In July, futures prices are $14.2250 with a basis of $0.55. Date Cash Market Futures Market Basis January July Results In January do you take a long or short position in the futures market? In July, what do you do in the futures market? Cash market? What is the cost from the cash market? Was there a gain or loss in the futures market? What was the net profit/loss in the futures market (don’t forget the brokerage fees) What happened to basis? Was this a scenario a long hedge or a…A contract with a vendor stipulates a cost plus incentive fee contract. The contract has a target cost of $150,000. The vendor’s target profit is set at 10% and the share ratio is 80/20. The minimum fee the seller will accept is $12,000 and the maximum fee you are willing to pay is $20,000. The actual cost of the contract ends up being $175,000. What is the total cost of the contract to the buyer? $195,000 $167,000 $185,000 $187,000
- A contract requires payments of $8,000 and $6,000, 30 days and 60 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a rate of return of 6% simple interest?Ellen is a leading comedian in the USA. A movie producing company and a TV network both want exclusive rights to her latest comedy series. The TV network is willing to pay a single lump sum, but if she signed with the movie company, the sum she receives will depend on how the market responds to her series. The network is willing to pay a flat $900,000-00. The movie company is prepared to pay $200,000-00, $1,001, 000-00, and $3,000,000-00 for a ‘Minimal Hit’, ‘Average Hit’, and ‘Massive Hit’, respectively. The statisticians are forecasting a 30% probability of a minimal hit, 60% for an average hit, and a 10% for massive hit. Required: a) Construct a decision tree of the above situation clearly identifying the decision and chance nodes. b) What are the expected payoffs for each decision and what would be your recommendation to Ellen? c) If Ellen had the relevant information on all the possibilities, what would be her expected payoff? d) What price would you recommend she pays to acquire…In the standard P-A model, P sets the parameters of the contract: the base pay k and the piece rate m. Suppose A would set the parameters. What statement is correct? Piece rate would be lower (to avoid spending too much effort) and base pay higher Piece rate would be the same and base pay higher (to extract a higher surplus) Both parameters would be the same Piece rate would be higher (to get a better pay per unit of effort) and base pay the same