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Geology QUESTION #10661
Question 1
In a petroleum exploration scenario, if $\$8{,}000$ was spent on a field and oil sells at $\$40$ per barrel, the minimum number of barrels needed to break even is:
  • 200 barrels✔️
  • 100 barrels
  • 50 barrels
  • None of these
Correct Answer Explanation
Break-even calculation: $\text{Barrels required} = \dfrac{\text{Total Cost}}{\text{Price per barrel}} = \dfrac{\$8{,}000}{\$40/\text{bbl}} = \mathbf{200 \text{ barrels}}$. The discovery of 2,000 barrels at \$40/bbl generates revenue of \$80,000, which well exceeds the \$8,000 cost. The minimum to recover costs is 200 barrels. This simple break-even concept underpins petroleum economics and investment decision-making.