Sam Owns an Oil Field with a Number of Producing

Multiple Choice

Sam owns an oil field with a number of producing wells.In the past,he has started and stopped production of these wells as the price of oil fluctuated over time.Assume the government imposes additional requirements on non-producing wells that are still production capable.These requirements are expected to increase the cost of stopping well production by 30 percent.As a result,Sam should be:

A) keeping all wells open continuously.
B) closing wells only if he plans to keep them closed permanently.
C) willing to keep wells operating at a lower level of profitability than he has in the past.
D) increasing the cost of capital he applies to his well evaluation analysis.
E) opening wells at a lower p_open price.