Pete Oil

Pete Oil and Friendly Oil own 40% and 60% of the working interest of Lease A, respectively. Assume there is no royalty due from production on this property. Production, oil prices and actual deliveries taken are as follows:

                  Production          Price          Delivery to Pete      Delivery to Friendly
May          900,000 bbls       $105.00            400,000                  500,000
June          820,000 bbls       $104.00            620,000                  200,000
July          830,000 bbls       $102.00            200,000                  630,000

1. State if Pete is overdelivered or underdelivered on a cumulative basis at the end of July and give the amount in barrels.

2. What is Pete’s balance (in dollars) in the Overlifty/Underlift account at the end of July and does that represent a net overlift or net underlift?

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