Decline Curve
A plot of a well's production over time. Oil and gas wells start strong and fall off, so the curve maps how fast output drops.
A decline curve charts how a well's oil or gas production falls over time. Almost every well produces hardest in its first months, then declines as reservoir pressure drops. The curve fits that pattern to a math model so you can forecast future volumes.
Shale wells in the Permian or the Bakken decline steeply early — often losing the majority of their first-year rate within a couple of years — then flatten into a long, slow tail. Conventional vertical wells usually decline more gently. The shape of the curve drives the well's estimated ultimate recovery and the value of the royalty attached to it.
When you evaluate a royalty, the decline curve tells you whether the income stream is mostly behind you or still ahead. See our guide on mineral rights value for how this feeds a price.