Abstract: This paper analyzes characteristics of different development stages of reservoir and actual production data and develops a cost budget model for cost variation in these stages as quadratic equation of one variable with the boundary conditions of this model. According to the basic principle of the best profit, the method for determination of optimum rate of production on different oil prices is derived, by which the best profit in certain time can be obtained. The case study shows that the calculation result using this derived method is in accordance with real situation of the oil field.

Key words: cost, model, production, benefit, method