Figure: 34 TAC §9.4031(o)

Property Specific Risk Factors

A.   One well lease

B.   Oil lease with high water production

C.   Lease near the end of its economic life

D.   Gas well reservoir under partial or active water drive (recovery uncertain)

E.   Curtailed gas well

F.   Rapidly declining lease

G.   Lease with less than six (6) months production history

H.   Secondary Recovery Project in early stages before fill-up

I.    Offshore oil or gas lease

J.    Unusually high operating expenses (ex: paraffin problems, sour gas, etc.)

K.   The appraiser should add to the base discount rate (WACC) for any other property specific
                   factors that increase the investor’s risk.