rough sums, page-4

The way you would value it would be by predicting the future cash flows and then having to discount them back into present value. The basic formula for this is present value = (cash flow yr 1 / ((1+ discount rate)^1) ) + (cash flow year 2/ (1 + discount rate)^2) etc. The discount rate is pretty much adjusting for the risk of future cash flows. So the further away the cash flow is the less it is worth in todays value due to the future being unforeseeable. It is actually quite hard to estimate the actual value of the well accurately considering that a change of 0.5% in discount rate can change the present value quite dramatically!